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Just starting out on ER and working all the numbers (budgets, FireCalc, and my own spreadsheets) it seems to me that ER is a matter and analyzing the risks vs. the rewards. The risks are both financial and emotional; the rewards are mainly life style. Each person needs to determine if the rewards out way the risks based on their own analysis.
On the risk side no system can guarantee that a certain withdraw rate will be successful because you can not predict the future of the market or your own situation. Sure you can get a high probability of success but you can never reach 100%. And what if you get a major medical problem or you or your family has a financial tragedy that’s going to eat up a big portion of your savings. There are many factors that are just out of your control and therefore can not be predicted. On the other hand the rewards of ER can be great. Some people can tolerate a lot of risk and therefore ER on a small nest egg, others can’t tolerate risk and require a much larger amount.
For us the risk is low enough and the rewards great enough to warrant ER. But who knows what will happen in the future? One of my main motivations is that I won’t take enough risk in my life and end up wishing I had. I figure if things go bad I can always get a job (“Welcome to WM”) and start over with a new plan.
Anyone else think of ER this way?
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