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Comment by Swizec | Hacker News Reader

> Apparently his FIRE number is $40M

> it can reflect a level of anxiety about the cost of living

I think a lot of people (especially young) just haven't done the actual math. Or have lifestyle desires beyond basic not-working.

You can FIRE living in SF for $4M. This gives you $160,000/year basically in perpetuity. If you do it right, there's little to no income tax on that money so 160k should be plenty enough for a 1-person income. 4-person families survive (in SF) on less household income than that.

But yeah a 4M exit is definitely not classic ferrari or even flashy lambo levels of wealth.

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FWIW, the 4% rule is for safe withdrawals for around 30 years of retirement, as in, you retire at 65 and you hope to live until 95, and even then it has a non-zero chance of running out of money. It's not a percentage you should use if you want to retire at 40.

At $4 million, GP might have been hand-waving a 4% annual rate of return and keep the principle intact.

4% is the standard number that's quoted by pretty much any financial planner. It's based on backtesting and assume that there's be large downswings along the way.

You have a lot more flexibility around those downswings at 40 than you do at 80. For example you could retire but continue doing work that brings you joy and also happens to make money. A lot of people in this situation start lifestyle businesses or do consulting work, for example.

At $4mm in a market account (not 401k), you also have the option to take out margin loans at shockingly low interest. This gives you untaxed cashflow without touching your principal. 160k untaxed is a lot more cashflow than the same number in salary or retirement distributions.

It's very rational to overshoot in that situation. If you build your lifestyle and then FIRE, you are derisking your budget while you still have income.

But wanting to change your lifestyle when you retire is incredibly risky, especially if you're young without life experience.

Any misstep costs you a fraction of lifetime earnings, and there's no way to recover it.

well you certainly could get the lambo, it would just be 10% of your net worth, which is already far less (ratio) than what most Americans pay for their car...

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