When we are talking about $2M for retirement, we assume that $2M is investable asset, not including your primary residence. The reason being is that we need the asset to generate income and your primary residence is part of your asset, but it does not generate income. The assumption is that the $2M is not being touched, you will live off the income generated from that $2M.
If you invest this $2M in S&P500, that will generate $200K income based on historical average annual return of 10%. Since this is for generating income for retirement, you have to use a balanced approach to your investment. You cannot put all $2M in S&P500 to assume the stock market risk. You need to invest in bonds to reduce the stock market risk. The normal practice is to allocate 50% in stock and 50% in bond for your retirement investment at or during your retirement years. This way, your risk is reduced, as well as your income from the investment. I have a post explaining why we use 50/50 allocation in the retirement account for managing the stock market risk.
Here comes the 4% withdrawal guideline, we don't know that this 50/50 investment allocation will generate what % of returns, some years, it will be 10% or more and the other years, it will be 0%. That is why a lot of investment advisors use 4% withdrawal rule. Based on the 4%, you can withdraw $80K every year from this $2M without touching the principal.
Yes. If your current income is around $100K, this uses 75% rule which means that you can live off $75K during your retirement years. There are some costs associated with working years are gone, like commuting cost, lunch at work, office attire expense, etc.
If you are 62 years old, you can get Social Security Income (SSI) about $25K, then you will only need $50K from your retirement account. Based on 4% rule, you only need $1.25M to generate this $50K. You can retire with $1.25M in your retirement account.
No. If your current income is around $300K, you can't retire with $80K retirement income. It is too big an adjustment of your life style to retire with $2M. 75% of $300K is $225K, to get this $225K, you will need $5.625M
At 62, even though you have $25K SSI, you still need to generate $200K from your retirement account, which means that you need $5M.
Maybe. If your current income is around $200K, you can't retire. It is too big an adjustment of your life style to retire with $2M. You will need $3.75M to generate $150K income.
But you might be able to retire if you can withdraw SSI at 62, you get $25K SSI, you will only need $125K income which needs $3.125M to generate. In this case, you might be able to retire by adjusting your life style and living expense. For example, trade down your house for a smaller one, etc.
The above examples are all very general. You can adjust them based on your own situation. You might have more SSI, or withdraw more than 5% from your retirement account to make up the difference, etc.