4 ms·
x: How much do you need to live for a year? y: How much do you need to retire forever? y = 25x
by miguelrochefort 9y ago
x: How much do you need to live for a year?
y: How much do you need to retire forever?
y = 25x
- amdavidson 9y agoWhy do you assume no returns in those 25 years of retirement?
- MagnumOpus 9y agoHe does. He says "forever" not 25 years. (Research has shown that 4% drawdown of your wealth every year combined with an investment into stocks (assets with 3.5-4% post-inflation return) will generally preserve your capital stock - and even in the worst cases won't completely erode it. 100%/4% = 25
- ataturk 9y agoThe problem is that x is not a known amount. We have inflation and rising health insurance costs, as well as other unknowns like that. So while 25x is a great thing to say, I am sitting here with > 25x and I'm not shuffling off to early retirement yet as much as I want to because it's imprudent. If had 100x then there's probably enough slop in the calculation to get a positive experimental outcome (in this case retiring early and not running out of money). It's fucking ridiculous how much money we "need" for retirement in the US in order to live even modestly because everything is designed to fleece us.
- xchaotic 9y agoThat assumes that you'll live until 90. What if you live longer?
- miguelrochefort 9y agoThis works if you retire at 20 and live to 100. Withdraw 4% every year and you can live on your investments forever.