When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
That's great for you. Do you think everyone on here do that? Or do you think if they're trying to retire as early as they safely can, that being reminded of irregular large expenses might be helpful?When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.
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When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
Include everything, and don't forget "everything" includes taxes.
I read the OP's question to mean "do you include all expenses, or only non-discretionary?". I think it makes sense to do both calculations. Depending on how desperate you are to get out of the workforce, you may be more or less willing to forego discretionary expenses if your portfolio experiences a bad sequence of returns. So it's good to know if you at least have the bare minimum to survive the worst cases.
Include everything, and don't forget "everything" includes taxes.
When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.
As much as I hate to quote Anthony Robbins...
After he put out his personal finance book, I came across a few reviews and discussions on it. One concept I liked was how he characterized different levels of financial independence:
I would edit it to 4 levels, taking Freedom down a notch and adding a top level of Financial Abundance.
- Financial Security = Core spend is covered
- Financial Independence = Overall regular spend is covered
- Financial Freedom = Everything you want to buy is covered
Without putting a tag on it, the rungs of my Financial Independence ladder are as follows:
- My passive income covers my half of our core spend (utilities, groceries, etc. No discretionary)
- My passive income covers my half of our average yearly spend (including travel, fun, eating out)
- My passive income covers all of our core spend
- My passive income covers all of our average yearly spend
- My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr.
- My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr and we can be splurgy.
The missus and I kind of calculate our FIRE separately because she has a DB plan (though we still keep a holistic view on things).
I calculate my FIRE, against all these levels but I specifically want to achieve level 5 so if the missus' retirement nest egg/DB Pension doesn't pan out, I've got it covered. If it does pan out, then we can hit level 6.
What dollar amount do you use to figure international expenses for 6 months? Just curious.