Mark Moss compares two $5 million retirement strategies over 20 years. Person A withdraws $750,000 yearly and stays at $5 million. Person B avoids withdrawals and lets the portfolio compound to $82 million, a $49 million difference driven by strategy, not returns.
So Person A, as I said, is this gray line right here. They're both starting at $5 million here. And Person A here is selling a little bit of their assets, like their personal advisor tells them to do, the financial advisor tells them to sell a little bit per year. But because they're making 15% return, it's growing at the same rate that they're drawing down. And at the end of 20 years, Person A still has $5 million. Not bad, right? I mean, shoot, they're pulling out $750,000 a year for 20 years, and they still have the same amount of money. They didn't spend it down. Amazing. Most people would be pretty happy with that. But all we're going to do is change the variable of the system they're using to retire and look at person B. Person B at the end of 20 years ends up with $82 million worth of assets, not $5 million. We're talking about $82 million. That's a $49 million gap. Now, why is there a gap? Person A is selling a little bit of their assets each year to fund their lifestyle, but because they're doing really well, 15% a year, it's staying about the same. Of $5 million.
