Joachim, thanks for reading and commenting. It is possible to do 4% per year on $1 million, but it’s not my preferred method for a few reasons. First is that I am looking for quite a bit more than $40k per year. I have four children and like to travel, etc. The second is that if the $1 million is invested in stocks and bonds, then you have to sell them off. In a good market year, this is easy to do, but what if the market drops 40%? Do you still sell? If you do, you will take a major hit. You may have to do this with a 401k because they aren’t very flexible, but there are other ways to prepare for (early) retirement.

That is why I prefer to put the $1 million into cash producing assets. I can live on the cash flow without having to sell the assets. So I could make $70k per year in cash flow and then still have $1.08 million at the end of the year investing passively in real estate syndications, for example. I like this better than selling my assets to eat.