I was reading some posts by Financial Samarai, in which he seems to imply that an early retiree should base the 4% withdrawal on what you have in your taxable account and act as if your tax-deferred retirement accounts don't exist. (See attached screenshot)
I had been assuming that during the time you're only drawing from taxable accounts (because you're not old enough to draw from tax-deferred accounts), you base the 4% on total of taxable + tax-deferred accounts.
For example, suppose:
2m in taxable
2m in tax-deferred
Current age: 50.
You can safely withdraw 4% of 4 million: 160k.
Yes, your taxable accounts will go down relatively fast, but they will recover later when you begin getting SS and drawing from your tax-deferred accounts.
Financial Samarai seems to be saying you can safely withdraw 4% of 2 million: 80k.
Am I reading him right? If so, is he shock jocking for clicks? Or does he have a valid point?
He seems to be trying to build up a huge amount of wealth to create rich heirs. I don't really see the point of that. Money is great, but having too much leads to problems in life (imo).