A 27-year-old Reddit user has $4.5 million in trust funds, granting him $130,000 annually. With annual expenses of $110,000 and savings of $120,000, he is contemplating buying an $850,000 home. While the trust allows withdrawals for property purchases, he must consider how this would affect his ongoing income and the principal balance of the trust. At a safe withdrawal rate, he could access up to $166,500 annually. As long as his income remains stable post-purchase, buying a home might be a viable option despite potential long-term asset considerations.
Based on where he lives, the minimum cost of a home would be $400,000 but he really wants an $850K property.
With $4.5 million at a safe 3.7% withdrawal rate, the Redditor could theoretically get as much as $166,500 per year from the trust without a big risk of running the account dry.
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