5 ms·

I wonder what people like The Mad Fientist, Mr. Money Moustache, and other FIRE advocates would say to this. Personally, I think $3 million is quite lavish. I

by xedrac 4y ago

I wonder what people like The Mad Fientist, Mr. Money Moustache, and other FIRE advocates would say to this. Personally, I think $3 million is quite lavish. I suspect I could make it work on $1 million and be quite comfortable.

Paraesthetic 4y ago
Now, but maybe not in 30 years after inflation
- mouse_ 4y ago
  30 years is a lot for retired individuals..
- cpncrunch 4y ago
  You would have it invested somewhere that generates a return above inflation.
  - asdff 4y ago
    Some of these calculators (maybe all?) assume this wad of money you retire with is stored under your mattress.
    - Thorrez 4y ago
      Any example of a calculator assuming it's stored under a mattress? Here's[1] an article on the 4% rule, and it clearly is about invested money: > The rule applies to a hypothetical portfolio invested 50% in stocks and 50% in bonds. [1] https://www.schwab.com/learn/story/beyond-4-rule-how-much-can-you-spend-retirement https://www.schwab.com/learn/story/beyond-4-rule-how-much-ca...
- readthenotes1 4y ago
  The harshest test for the 4% rule was the 1970s. We might have been calling it The 6% rule otherwise...
- deleted 4y ago
  [deleted]
jacquesm 4y ago
Not a chance. Unless you want to live in a place without facilities and a functioning economy. Inflation alone will take care of your million quite handily. Of course if you're 85 already then you'll manage but if you're in your 20's or 30's I can pretty much guarantee you that this is too little. Also: taxes, setbacks, health, children, divorces, stuff breaking that needs to be replaced and so on. A million all at once is a lot of money, but spread out over the course of a lifetime in the developed world it isn't all that much.
- nighthawk454 4y ago
  It's a common misconception that inflation drags you down with these methods. The real question is will $40k/yr work (or the inflated equivalent) cover your lifestyle. That's where major lifestyle adjustments you mentioned could matter. > ... If you have $1 million saved for retirement ... you could spend $40,000 in the first year of retirement following the 4% rule. > Beginning in year two of retirement, you adjust this amount by the rate of inflation. ... In year three, you’d take the prior year’s allowed withdrawal, and then adjust that amount for inflation. > One common misconception is that the 4% rule dictates that retirees withdraw 4% of their portfolio’s value each year during retirement. The 4% applies only in year one of retirement. After that inflation dictates the amount withdrawn. The goal is to maintain the purchasing power of the 4% withdrawn in the first year of retirement. https://www.forbes.com/advisor/retirement/four-percent-rule-retirement https://www.forbes.com/advisor/retirement/four-percent-rule-...
  - jacquesm 4y ago
    Inflation reduces the purchasing power of your remaining savings with the same degree that it reduces the purchasing power of what you've already withdrawn. In other words: you'll be withdrawing more and more over time to keep up with the compound effect of inflation on your savings. And there is no law that says inflation should be between 0 and 3%, as the last couple of years have amply demonstrated.
    - bushbaba 4y ago
cko 4y ago
I used to follow them with enthusiasm. Then I learned that the 4% rule applies to a thirty year retirement, not FIRE. Also these people have major blog income. I FIRE'd with $850k without owning a primary residence. I spend like $800 a month. I would love to have blog income like them - it makes a huge psychological difference. These days I believe that having a free and clear place to live really helps and that a 2.5% rule is more robust. What a surprise.

by xedrac 4y ago

Paraesthetic 4y ago

Now, but maybe not in 30 years after inflation

mouse_ 4y ago
30 years is a lot for retired individuals..
cpncrunch 4y ago
You would have it invested somewhere that generates a return above inflation.
- asdff 4y ago
  Some of these calculators (maybe all?) assume this wad of money you retire with is stored under your mattress.
  - Thorrez 4y ago
    Any example of a calculator assuming it's stored under a mattress? Here's[1] an article on the 4% rule, and it clearly is about invested money: > The rule applies to a hypothetical portfolio invested 50% in stocks and 50% in bonds. [1] https://www.schwab.com/learn/story/beyond-4-rule-how-much-can-you-spend-retirement https://www.schwab.com/learn/story/beyond-4-rule-how-much-ca...
readthenotes1 4y ago
The harshest test for the 4% rule was the 1970s. We might have been calling it The 6% rule otherwise...
deleted 4y ago
[deleted]

jacquesm 4y ago

Not a chance. Unless you want to live in a place without facilities and a functioning economy. Inflation alone will take care of your million quite handily. Of course if you're 85 already then you'll manage but if you're in your 20's or 30's I can pretty much guarantee you that this is too little. Also: taxes, setbacks, health, children, divorces, stuff breaking that needs to be replaced and so on. A million all at once is a lot of money, but spread out over the course of a lifetime in the developed world it isn't all that much.

nighthawk454 4y ago
It's a common misconception that inflation drags you down with these methods. The real question is will $40k/yr work (or the inflated equivalent) cover your lifestyle. That's where major lifestyle adjustments you mentioned could matter. > ... If you have $1 million saved for retirement ... you could spend $40,000 in the first year of retirement following the 4% rule. > Beginning in year two of retirement, you adjust this amount by the rate of inflation. ... In year three, you’d take the prior year’s allowed withdrawal, and then adjust that amount for inflation. > One common misconception is that the 4% rule dictates that retirees withdraw 4% of their portfolio’s value each year during retirement. The 4% applies only in year one of retirement. After that inflation dictates the amount withdrawn. The goal is to maintain the purchasing power of the 4% withdrawn in the first year of retirement. https://www.forbes.com/advisor/retirement/four-percent-rule-retirement https://www.forbes.com/advisor/retirement/four-percent-rule-...
- jacquesm 4y ago
  Inflation reduces the purchasing power of your remaining savings with the same degree that it reduces the purchasing power of what you've already withdrawn. In other words: you'll be withdrawing more and more over time to keep up with the compound effect of inflation on your savings. And there is no law that says inflation should be between 0 and 3%, as the last couple of years have amply demonstrated.
  - bushbaba 4y ago

cko 4y ago

I used to follow them with enthusiasm. Then I learned that the 4% rule applies to a thirty year retirement, not FIRE. Also these people have major blog income. I FIRE'd with $850k without owning a primary residence. I spend like $800 a month. I would love to have blog income like them - it makes a huge psychological difference. These days I believe that having a free and clear place to live really helps and that a 2.5% rule is more robust. What a surprise.