Making 8% on a reasonably safely diversified portfolio, or living off the earnings of that?
There is no safe investment today yielding 8%.
+1. 8% CAGR may be a reasonable assumption over a 30 year investment horizon, where the money is untouched. But if you're living off your earnings, you need to be in stable investments.
On top of that, the $2m cash payment I mentioned becomes just over $1m after federal and NJ state tax. Even if you got your 8% on that $1m - which we've established is unreasonable - that's $80k per year. But you'd also be paying ~30% of that $80k each year in federal and NJ state capital gains taxes, because that $80k is pure gains. So now we're talking about living on $56k after tax a year, even for a 40 year old who hasn't incurred most of the big expenses of child rearing?