Core Insights - The article discusses the financial considerations for an individual planning to retire with a net worth of $3 million and a monthly living expense of $5,000, emphasizing the importance of understanding the distribution rate of withdrawals [1][4]. Asset Composition - The composition of net worth is crucial; it should be assessed whether assets are primarily liquid (stocks, cash) or illiquid (real estate), as this affects withdrawal capabilities [2][3]. - A hypothetical scenario illustrates that if a home valued at $2 million is owned outright, only $1 million in liquid assets would be available for withdrawals, leading to a 6% annual withdrawal rate, which is significantly higher than the recommended 2% [4]. Withdrawal Strategy - A low withdrawal rate (2%) is generally considered safe and minimizes the risk of depleting funds, while a higher rate (6%) increases the risk of running out of money [1][4]. - It is essential to balance liquid and illiquid assets when determining a sustainable withdrawal strategy and retirement income plan [5].