Yes, this thing is flawed in that it does not take inflation into account. If you spend $30k/yr right now, this assumes you'll only ever withdraw that much. In fact, to support the same standard of living, you'll need to withdraw a bit more each year. With 2.5% assumed inflation, this means that $30k will need to turn into $60k over the course of 27-28 years.
Looking at it from the other side of the coin, if you only ever withdraw 4%/yr (or whatever you set it at) and don't reduce your net worth, the purchasing power of that 4% will be cut in half over the course of 27-28 years.
If you're a high-earning 30 yr old who has saved $1 million and think you can live off that for the rest of your life, you're kidding yourself.
Yes, this thing is flawed in that it does not take inflation into account. If you spend $30k/yr right now, this assumes you'll only ever withdraw that much. In fact, to support the same standard of living, you'll need to withdraw a bit more each year. With 2.5% assumed inflation, this means that $30k will need to turn into $60k over the course of 27-28 years.
Looking at it from the other side of the coin, if you only ever withdraw 4%/yr (or whatever you set it at) and don't reduce your net worth, the purchasing power of that 4% will be cut in half over the course of 27-28 years.
If you're a high-earning 30 yr old who has saved $1 million and think you can live off that for the rest of your life, you're kidding yourself.