Half a million dollars. It sounds like the end of the movie.
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Then somebody runs the 4% rule on it and the number that comes out is $20,000 a year.
Which sounds like the beginning of a much worse movie.
Both reactions are wrong, because both are answering a question that doesn't matter. Whether $500,000 works has almost nothing to do with $500,000.
It depends on your gap, the distance between what you spend and what already arrives without your portfolio's help.
Two people with the identical $500,000 can be running a 2% withdrawal rate and an 8% withdrawal rate. One is fine. One is in trouble. Same balance.
Let's do the math properly. 👇