Is $2.5M Enough To Spend $100K A Year In Retirement, Or Will Taxes Make That Impossible?

Core Insights - The article discusses the feasibility of generating a $100,000 annual retirement income from a $2.5 million nest egg, emphasizing the importance of considering both withdrawal rates and taxes [2][4][8] Withdrawal Rate Considerations - Traditionally, a 4% withdrawal rate was recommended for a sustainable retirement income, allowing for a $100,000 annual withdrawal from a $2.5 million account [2] - Experts have revised this recommendation to a more conservative 3.7% due to lower projected returns and longer life expectancies [3] - Individuals willing to take on more risk may still opt for the 4% rule, but it is advised to save more for a financial cushion [4] Tax Implications - Taxes play a significant role in determining the actual income available for spending during retirement [5][8] - Utilizing Roth accounts can mitigate tax concerns, allowing for tax-free withdrawals if rules are followed, thus enabling retirees to spend the full $100,000 without tax deductions [6][8]