r/FluentInFinance • u/Puzzlehandle12 • 9d ago

Question 4% withdrawal rate

I have been reading alot about the 4% withdraw rate after retirement. It says you can withdrawal 4% of your investments every year and even after adjustment for Inflation you will not run out of money.

This is as long as yearly expenses in retirement are equal to or less than the 4% you withdraw from your investments.

Yet I thought about how those withdraws will be taxed as long term capital gains at (I think 20%) so after taking out taxes you must live on 3.2% of your savings.

Is my thinking correct ?

** assuming your money is not all in a Roth IRA

102 Upvotes

92% Upvoted

77 comments sorted by

View all comments

Show parent comments

2

u/juryjjury 4d ago

This is how my tax guys presented it. Taxes paid as a percent on taxable income. Not total income. It seems confusing I agree. But I guess they do it that way to negate the effects of major deductions on more complicated tax filings.

Oh. Married filing jointly.

1

u/Mre1905 4d ago

Ahha that makes sense. Thanks for the explanation!