explanade
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- May 10, 2008
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Never heard of this but it's a rough approximation or starting point for thinking about how much to save for retirement.
https://www.travelandleisure.com/tr...lctg=d60154956f69ab584141e6d0bf753000a604385b
No assumptions about returns or inflation or references to Social Security, other retirement savings like 401k or IRA.
$80k is a decent salary so $40k a year may not be too little to maintain a similar lifestyle.
If someone made say $200k, then $100k is still a healthy budget but maybe when making $200k, it funded a bigger lifestyle.
She gives just a very broad description of FIRE:
Then suggestions of side hustles and passive investment such as rental properties.
In the broadest outlines, retiring at 55 fits in with what this travel magazine site promotes, in a way.
OTOH, they want to promote tourism so even if this "financial wellness educator" touted LBYM principles, that would go against what the site is promoting, because they're trying to get its readership to spend on travel both before and after retirement.
To figure out just how much money you need to save to retire by 55, Doe suggests using a common rule of thumb: take your current salary and multiply it by 10. Keep in mind that this is just a jumping off point — there are many other factors you'll need to consider. To that end, Doe takes this formula and builds off of it. She offers the following example:
"If you earn $80,000 per year, the formula states you will need to have access to $800,000 to retire. Now, keep in mind, if you are planning to retire at 55, you will (heaven willing) need to have enough saved for 20 years or more. Using the formula I just shared, that means you will be living on $40,000 per year or half of the salary you were accustomed to ($800,000 over 20 years). For some people, this would not be enough. Or, $40,000 per year may be enough if you choose to retire in a part of the world where the cost of living is [lower than you're used to]. My suggestion is to use the formula to set a baseline. Then, do research on what it would cost to live the lifestyle you wish to experience in retirement."
https://www.travelandleisure.com/tr...lctg=d60154956f69ab584141e6d0bf753000a604385b
No assumptions about returns or inflation or references to Social Security, other retirement savings like 401k or IRA.
$80k is a decent salary so $40k a year may not be too little to maintain a similar lifestyle.
If someone made say $200k, then $100k is still a healthy budget but maybe when making $200k, it funded a bigger lifestyle.
She gives just a very broad description of FIRE:
Want to make it to retirement even sooner? There are ways to do it, but it means putting in a lot of effort. Doe suggests looking into the F.I.R.E. approach; F.I.R.E. stands for Financial Independence Retire Early.
"The basic premise of F.I.R.E. is to cut expenses drastically and live off of 25-50 percent of your income," Doe explains. "With the extra money you have, you invest it into low-fee funds such as index funds."
Then suggestions of side hustles and passive investment such as rental properties.
In the broadest outlines, retiring at 55 fits in with what this travel magazine site promotes, in a way.
OTOH, they want to promote tourism so even if this "financial wellness educator" touted LBYM principles, that would go against what the site is promoting, because they're trying to get its readership to spend on travel both before and after retirement.