Originally Posted by kcowan
All these rules of thumb are just starting points. There is no substitute for some detailed planning. We did a detailed budget at retirement and tracked actuals for three years. The total was very close but the detail was substantially different. Family situations and health can be bigger variables than planned spending.
Now we do more tax planning and do not track actuals although we have all the data.
YES YES YES.
I like how people snip reply to argue without seeing whole picture.
The 25X is a planning figure.
25X gross salary?
25X gross salary+bonuses
25X yearly spending?
will person be traveling.
25X=.04=4% SWR ... so anyone talking 4% SWR is talking 25X, it's just a matter of what the "principal amount" should be.
I need to plan 20-30 years out. I need a goal, because a goal makes it easier to measure success/failure. I base my goal on my salary/ my wife's salary (GROSS pay, without bonuses) and regular retirement age (67-68).
Realizing that we save 16% of our gross pay, FICA/medicare is about 7% more, and our mortgage is around 40% of our gross pay, I could see myself retiring on "50%" of what I've projected.
But travel expenses and healthcare expenses could be 50% of current gross pay just as easily in retirement. I need a number to plan from, and I think gross pay is the closest place to start.
If you use a different number to plan with, feel free to share.
One aspect I like to suggest with financial planning is it's like "peeling an onion" there are many layers.
The simplest plan is save x% and be debt free.
Then there is an insurance layer.
Then there is a tax layer
then there is a quality of living layer
then there is an estate planning layer
then there is an early retirement layer
then there is a child's education layer
then there is a taking care of elderly parents layer.
And I'm sure many of you have other layers to consider. FIRE means most of the layers, IMO, are accounted for.