Given current fixed income returns, if I had $2 million, my annual draw from it would not exceed $60,000.
Yes, I think that is much more sensible.
Another factor is how long you are likely to live. Those with good health and good genes are going to have to make that money stretch a lot thinner.
I’d say fixed income isn’t diversified enough and doesn’t produce enough. I built some passive income through free and clear rental real estate. For example, I built a 4 unit building about 18 years ago. It’s paid off and produces about $22k annually in net income from an investment of just over $300k. I stole a little rental house in foreclosure. It paid a 9% return for 5 years until I sold it this year and more than doubled my initial investment.
I hold a private mortgage on a building that pays 5.75%. I’m in first position with only 27% of the building’s value at risk. I told the owner I’d love it if he defaulted. I’d own a $550k building for $150k plus foreclosure costs.
A little creativity and proper timing goes a long way.