4 ms·

I think the main problem is by the time you've made the $2.5M required to passively make $5k/month your lifestyle and expenses probably exceed $60k/year. It's

I think the main problem is by the time you've made the $2.5M required to passively make $5k/month your lifestyle and expenses probably exceed $60k/year. It's hard to imagine this reduction in expenses but I guess that's the reality of retirement.

froindt 9y ago
That goes to show how frugality and not allowing lifestyle creep makes all the difference. At the end of the day, it's not your salary that matters but your percent of income saved. Two people can follow the same trajectory even when starting at different salaries and retire at the same time even if one makes double the other. There are of course some caveats. 40k/year has less room for cuts if there's a down year than 80k/year. Also, 2.5 M for 60k/year is not a great strategy (100% CD's). While it's for all intents and purposes guaranteed, it's incredibly conservative. That's a 2.4% withdrawal rate. That would hardly keep up with inflation. The Trinity study shows 4% to have not than a 0 balance 95% of the time on a 30 year time horizon (I believe with an 80/20 split of stocks and bonds, but that's from memory). Many times you'd end up with far more than you started retirement with. A 3% withdrawal rate (while invested in stocks and bonds) would almost guarantee perpetual money on a 50+ year horizon. To quote one of the top posts on /r/financialindependence, build the life you want then save for it. Find what makes you happy and spend money on that. Cut money on things that don't add much marginal happiness. http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...