Financial Independence / Retire Early Calculator

Same here. My "retirement" will likely just be me teaching or doing some other kind of work that has a much lower earning potential, but still would be considered a traditional job. My retirement savings are meant to make up for that.

Maybe! But I’m getting tired of working even if it’s interesting. I’d rather now spend time with family or travel.

I may do some coding but certainly not 40 hours a week with managers looking over my shoulder.

I'm in the latter category also. Had a job off-shored at the end of 2019 and was out of work and thinking about retiring then. I didn't look too hard for another job but found one. I also didn't do much with my time off.

That's the RE part of FIRE. The FI part is nice though. I didn't stress out about looking for a job during a pandemic where companies suddenly shut down hiring. And I don't stress out about my job now. If there's any stress, I remind myself about FI. And if there's still stress after that, I'll just quit, it's Machu Picchu time.

IME, when you talk to people it's about quickly getting to the point that you could retire, if you wanted/needed to.

Fits my experience well. It is work until you’re wealthy enough, then it is play. When my friends say they want to “retire early”, they all mean “do what I actually want with my time”. I’m continuously surprised how many people don’t realize money equals freedom and instead consider it a shallow pursuit. Getting the wrong message from scrooge and the wolf of wall street perhaps. You can sit around playing guitar all day, or whatever it may be…but you need money. It is fungible for all things in our society - time, votes, work, resources.

Retirement doesn’t mean you have to move to Florida to golf and flirt with grannies. The point is that you can do whatever you want - it might be some sort of work.

It’s a question of what would I do if I didn’t have to build my whole life around working 8 hours every weekday

Yes, exactly this. I found work stressful and fraught when I needed the money. Once I didn’t, I was free to enjoy the work I enjoy.

If anything, the flexibility in my schedule from financial independence opens me up to a lot of unpaid work I don’t enjoy (helping with my aging mother) because I’m the one who can. Ironically now that I don’t have to work, I wish I had more time to work!

I used to want to retire early and ASAP, firmly in the "lean fire" category.

Then I found a job which pays significantly under market but that I actually enjoy doing. My priorities have changed a lot.

Unfortunately said job is highly unstable and provides little opportunity for transferrable skills, so I still aim for a 50% savings rate, for peace of mind.

That's why there's a distinction between FI (financial independence) and RE (retire early). One can be financially independent without having to retire early. You also might be missing the definition of retirement that's usually used in FIRE, which is that you can go do whatever you want without needing to treat it as a job; it doesn't mean to just laze around on a beach somewhere as one might normally think of retirement.

> The general FIRE modus operandi is to live very financially frugally for a period of time (several years or more) to save as much money as possible to, well, retire early (or at least be comfortable with a less intensive and lower paying job).

This is a subset. The only real mechanism/requirement is saving enough to retire or be financially independent, over whatever timeframe you want. That means typically means 20-30% or higher savings rate on income. One way to increase your savings rate is to have low expenses -- live frugally, as you say. The other way is to have high income.

My problem is I like building things for fun, and things cost money

2% is awfully difficult to achieve without some radical lifestyle adjustments before and certainly after retirement.

Nonetheless, it’s a good idea. Instead of cash, however, I would opt for paid part-time work if possible.

A large cash reserve isn’t protected against inflation nor will it grow; the downsides are too big imho.

I think it is warranted to have a conservative estimate given the aging of the population pyramid. There will be more demand for labor relative to supply than post WW2 decades which saw the opposite, increasing amounts of supply of labor relative to demand.

Although, more than cash, a few loyal and useful kids would be a much better play to mitigate those risks.

> The 4% rule may not be entirely reliable. See: Ben Felix’s YouTube video on the topic.

Felix (and Cameron) recently interviewed Bengen (who came up with the rule) on their Rational Reminder podcast, and it may actually be 4.5% now:

* https://rationalreminder.ca/podcast/135

* https://www.youtube.com/watch?v=_nYTrCxluaY

In 2006 he had it at 4.5% and in October 2020 at 5%:

* https://www.fa-mag.com/news/choosing-the-highest-safe-withdr...

The reason being is inflation.

The really high inflation of the 1970s (and 1980s) chewed up savings for retirees and brought down SAFEMAX down, but in the 1950s and '60s it was actually 5% per Bengen.

Agreed. This may be what your video talks about, but the decrease in interest rate over the last 40 years has a lot to do with the increase in stock market valuations. Interest rates are E/P, the correspondence with a stock market P/E is straightforward. Interest rates are now at zero and can only go in the opposite direction. And probably will since everybody is now concerned about inflation.

If you haven't already, check out the "Projection method" drop down. If that isn't accounting for portfolio volatility, can you explain how it should do so?

This shouldn't be a problem if you're invested. There's a reason the S&P went up almost 30% this year - a lot of it was an adjustment for the boost in money supply.

Most of your retirement savings will be in equities and other assets that have inherent protection from inflation.

You will want a few years spending in cash or near-cash assets, there are inflation protected securities that you can use for that.

The historical models account for inflation -- including vastly higher rates than we are experiencing today.

Your exposure to inflation is limited to cash balances, and therefore shouldn't a big concern. A bigger problem is, in my opinion, the low interest rates, because that means you'll be forced to take on risk (e.g. invest in stocks, rather than treasuries) if you want to get any meaningful return on you investments.

you gotta buy stonks

I got a similar result! I put in my age (59) and my liquid savings amount and got the answer:

> You can retire in -13.4 years at age 45.

I'm not sure, given inflation and the taxes that I'm going to want to retire while I can still earn an income.

You can use https://projectifi.io for that. I use it since I'm Ozzie and it's properly accounting for Australian Superannuation.

It depends on your retirement goals. Some people prefer the "financial independence" aspect in order to have the freedom to do or work on things they're interested in and brings them happiness rather than for the sake of just money.

> Who wants to “retire” and do nothing for the rest of your life?

This is an extremely reductive characterization of retirement. There's no rule you have to do nothing.

> buy whatever stuff truly makes you happy, and your savings give you flexibility. Like taking a year off between jobs, etc.

You could definitely do this in "retirement."

i wanna do stuff just not at my job

Buying stuff is not a universal recipe for happiness.

Neither is retirement, obviously, but you are correct that being financially independent gives you the freedom do do what you want. Whether that is time off between jobs, working on independent projects, etc.

> Just save a ton, buy whatever stuff truly makes you happy, and your savings give you flexibility.

Retirement simply means that you could just live off of your savings interest. But that doesn't mean that you have to stop working.

For me, this is about three things: 1) Prioritizing joyful experiences, social connections, self-development and happiness over (expensive) material possessions 2) Being financially responsible, knowing how much I earn, owe, spend and save 3) Maximizing future life options involving less well-paying jobs (working part-time, retiring, taking some time off, starting a new career, whatever) when I get bored/burnt out of my current career or get health issues, need to look after a family member etc. So much can happen in a life.

I do. A little. I want to retire at 60. My SO is younger than me by nearly a decade. If I retire at 60, I figure we can have a good 10-15 years of traveling and having fun.