Will your net worth cover your lifestyle? | Hacker News Reader

Will your net worth cover your lifestyle?

blog.finiscus.com

2 pointserayalakese5 comments

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TL;DR, in the author’s opinion, no, unless your net worth exceeds 25 times your annual expenses.

Which assumes you’ve got at most 25 years more runtime.

And your expenses don’t go up.

And there’s no inflation.

Never mind some damn fool kicking off any more hot or cold wars or getting too up close and personal with another bat.

The 4% rule is intended to account for inflation. I.e., it expects the growth in nominal dollars to be greater than 4%.

See also https://www.firecalc.com/ which will simulate over every market condition that has occurred so far.

Hi yawpitch,

This is a well-known metric to "estimate" your financial future. You can see the real-world use of this metric if you search for "FI/RE".

I agree with your comment about inflation and will update the post to include some tips on inflation calculation and its effects on net worth over the years.

Thank you

I can see its utility as a very quick and rough “back of the napkin” for (ideally unmarried and with no dependents) man nearing retirement age in the US who expects to drop dead rather suddenly from a single, undiagnosed and untreated, acute health issue, for preference the impact of a large vehicle (and if they do the dependents, said vehicle should be driven by someone with significant liability insurance).

For anyone in the current world’s geopolitical reality who is more than 25 years from the Reaper’s ultimate embrace, and especially anyone who is likely to engage with a for-profit healthcare system in any significant manner, methinks the this may end up being a little optimistic.

That said this is more my cynicism about the likely financial headwinds barreling towards us all than a direct, or in any way mean-spirited, criticism of your work. I appreciate you taking the time to consider my comments, and especially taking the time to work at least inflation impact in as well.

It says "indefinitely" three times. The point is that returns on your investments would be larger than 4%, so you can probably continue "without depleting your principal over time."

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