Re: How much money do you need?
[ QUOTE ]
This is the only reasonable approach to look at the problem. 6% nominal return is pretty reasonable, say munis or the like, and 3% inflation is reasonable as well. 25% for taxes seems is much too low, though - keep in mind that you're talking $600k in income the first year, and it goes up (in nominal terms) thereafter.
[/ QUOTE ]
I'm no expert on the subject, but I believe that certain types of interest (i.e. muni bonds) aren't taxed; dividends, certainly, are taxed at the lower 15% federal rate. Moreover, the first chunk of your $600K is taxed at a much lower rate. So long as you live in Nevada, Florida, or another state-income-tax-friendly jurisdiction, I'd think your overall tax rate could easily be well under the 25% rate you suggest -- and very likely under 15%.
[ QUOTE ]
My rule of thumb is that you can expect to make ~1.5%/year in real, after-tax returns that are sustainable indefinitely. It surprised me at first that the number was so low, but that's the way it worked out. So, for me, ~$8-10M and a paid-off house.
[/ QUOTE ]
That's a very conservative set of assumptions. I suspect a real sustainable rate of return is higher than that; and my number is correspondingly somewhat lower.
|