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. 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 can not put all $2M in S&P500 to assume the stock market risk. You need to invest in bond to offset the stock market risk. The normal pratice is allocate 50% in stock and 50% in bond for your retirement investment. This way, your risk is reduced, as well as your income from the investment.
Here comes the 4% withdrawal rule, 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% or even negative. That is why a lot of invetment 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 living expense is around $100K, this uses 75% rule which means that you can live off 75% of current expense during your retirement years. There are some costs associated with working years are gone, like commuting cost, lunch at work, office attire expense, etc.
No. If your current living expense is around $200K, you can't retire. It is too big an adjustment of your life style to retire with $2M.
Maybe. If your current living expense is somewhere in between the above, you might be able to retire by adjust your life style and living expense. For example, trade down your house for a smaller one, etc.