How much does one need to retire? Not in actual dollars but multiples of annual expenses.

[SunGuy]

As one of the pioneers of the FIRE movement I am happy to share this with you!

You need about 300x your monthly expenses to retire. If you want an extra cushion get more, if you plan to barista FIRE or work a part time fun job, you need less.

 

[ShokWaveRider]

As one of the pioneers of the FIRE movement I am happy to share this with you!

You need about 300x your monthly expenses to retire. If you want an extra cushion get more, if you plan to barista FIRE or work a part time fun job, you need less.

So in other words 25 x annual expenses. That is OK if one is over 70 (these days). A 65 year old would most likely need more like 30.

 

[Surewhitey]

I have a pretty extensive spreadsheet for our future 40 years with very modest growth and realistic lumpy stuff & current 32.5X expenses & we can expect to have our home plus a future million at ages 94&100.

There is a 99% certainty we will not make it to that so we are good. Just waiting on DW to "feel it"... SS & pension (small) is a big buffer eventually.

 

[SunGuy]

So in other words 25 x annual expenses. That is OK if one is over 70 (these days). A 65 year old would most likely need more like 30.

Yes, and also don't forget to account for the lack of job related expenses that you no longer need. I highly recommend the books 'Your Money or Your Life', and 'Early Retirement Extreme'.

 

[Handymike]

House is paid, no car payments, Kaiser medical, other than utilities, not many bills. Live in SoCal, eat out 3=4 times a week, travel as much as we want. Bills are about $40k per year. We have about
30 times annual expenses in retirement. Don't need to touch it. SSA pays normal expenses annually. Return on ROTH is about $80k per year tax free.

 

[COcheesehead]

Yes, and also don't forget to account for the lack of job related expenses that you no longer need

And include all the spare time expenses you’ll incur

 

[Fermion]

Return on ROTH is about $80k per year tax free.

I wish we could have done the mega Roth thing for about 15 years before we retired. Only have about $350k in Roths now and I don't think that would generate $80k unless I put it in bitcoin.

 

[Max Valerion]

So in other words 25 x annual expenses. That is OK if one is over 70 (these days). A 65 year old would most likely need more like 30.

If I want to spend $100,000 per year and I retire at 70 with $2.5m and SS that covers more than half of my spending my guess is I am going to die with way too much money in the bank and WAAAAAAAYYYYY too much time in the rear view. How would I even spend that much from 70 until I no longer feel like doing anything (10 - 15 years AT BEST)??

Still not grasping how "early retirement" is not early at this forum.

 

[Diogenes]

Retiring at 50 - One needs 40 x annual expenses including healthcare costs.
Retiring at 60 - One needs 30 x
Retiring at 65 - One Needs 25 x
Retiring at 70 - One needs 20 x

Alternative view here. The portfolio needs to grow, adjusted for inflation. So if Smith retired in the year 2000, with $1M, today his portfolio needs to be around $2M, maybe $2.5M... otherwise he's failed. But to me, merely being a tad above breaking even, adjusted for inflation, is also a failure. The portfolio should grow in absolute terms. How much? Depends on our success as an investor... our willingness to take risks, and to manage them. And our luck.

My personal conclusion is that defined-benefit pensions (including SS) should cover ALL of one's expenses.. except maybe for the lumpy ones, or the occasional indulgences.

 

[SecondCor521]

Still not grasping how "early retirement" is not early at this forum.

It is, but not as early early as some other places on the web, and the members here vary in their risk tolerances regarding when to pull the ripcord. I retired at 46 and have been on this forum a long time.

 

[Gumby]

If I want to spend $100,000 per year and I retire at 70 with $2.5m and SS that covers more than half of my spending my guess is I am going to die with way too much money in the bank and WAAAAAAAYYYYY too much time in the rear view. How would I even spend that much from 70 until I no longer feel like doing anything (10 - 15 years AT BEST)??

Still not grasping how "early retirement" is not early at this forum.

How about we do this? You retire when you want to retire and the rest of us will retire when we want to retire, and we can all co-exist happily together. It's not a contest.

The fact that someone on this board retired at 53 years and 2 months and a different person retired at 65 years and 10 months tells you nothing about your own readiness to retire (or theirs). If you're looking for validation, you're probably in the wrong place.

 

[JackJester]

It is, but not as early early as some other places on the web, and the members here vary in their risk tolerances regarding when to pull the ripcord. I retired at 46 and have been on this forum a long time.

According to this poll, most folks on this forum have retired 5-10 years before eligibility for SS. What age people on ER actually retired

 

[SecondCor521]

According to this poll, most folks on this forum have retired 5-10 years before eligibility for SS. What age people on ER actually retired

Sure. There have been threads here to debate what "early" means; I'm not sure if that thread is one of those or not. Personally I'm not interested much in that sort of debate.

 

[Diogenes]

According to this poll, most folks on this forum have retired 5-10 years before eligibility for SS. What age people on ER actually retired

This doesn't surprise me. There is much sense in having a large gap between FI and RE. A frugal, highly-compensated employee might reach FI in the sense of Mr. Money Mustache in his or her mid-30s, but for whatever reason, chooses to work full-time for another 20 years. To my earlier point, our actual age-of-retirement is often not much younger than the median American age of 61-62. So many factors conspire to make it so, even for folks of modest needs and surfeit of money.

What does surprise me, is that apparently most of the regular-posters on this Forum are of quite advanced years. Occasionally we get an update such as "Greetings! Last year, I retired at age 55, and now at 56 I feel great! I should have retired sooner!" ... this is fantastic. But such folks rarely engage in social commentary, investment-strategy debate, talk about EVs and so on. They make their triumphant updates, and disappear. The people who do post regularly about their next car purchase, or their approach to buying a house, or their thoughts on the S&P 500, tend to be 70+. Sure, these folks may have successfully retired 15-20 years ago, but now they've aged into the traditional "senior citizen" age-range.

A specific example is the unrelenting unanimity in choosing a taller vehicle, because supposedly it's easier to enter/exit them. And that modern "driver safety aids" are a must-have. And there I was, daydreaming that this might be the venue to bench-race dream sports cars, that we could never afford in our youth, but that now perhaps we can!

 

[Max Valerion]

How about we do this? You retire when you want to retire and the rest of us will retire when we want to retire, and we can all co-exist happily together. It's not a contest.

The fact that someone on this board retired at 53 years and 2 months and a different person retired at 65 years and 10 months tells you nothing about your own readiness to retire (or theirs). If you're looking for validation, you're probably in the wrong place.

Wow what's with the hostility?

I am just asking about the numbers. Retiring at 70 with 25x and SS seems extremely conservative to me. That would mean you plan to live to 100??

 

[SecondCor521]

Wow what's with the hostility?

Tone can be hard to read in writing. Your incredulity could be read as other things.

I am just asking about the numbers. Retiring at 70 with 25x and SS seems extremely conservative to me. That would mean you plan to live to 100??

Some people want to leave a legacy to charity or their family. Or they expect higher expenses later in life, like LTC. Or they want to ramp up their travel or general expenses. In a few select cases, they enjoy their job more than anything else they could do.

Generally speaking, the other person may have reasons for their accumulation which make sense to them but they either haven't explained it to you (because they don't owe you an explanation) or it doesn't apply to you (because your situation is different from theirs).

Or, they could just be more conservative and that's OK too.

 

[ShokWaveRider]

Wow what's with the hostility?

I am just asking about the numbers. Retiring at 70 with 25x and SS seems extremely conservative to me. That would mean you plan to live to 100??

What about contingencies for long term care?

 

[big-papa]

Instead of multiple of expenses, the funded ratio (sometimes called the funding ratio) is, I believe, a better approach: What’s Your Funded Ratio? — Oblivious Investor

What I did was, using amortization, calculated what my withdrawal would be of today was my retirement date. Once that number passed the amount of what our expenses were, included taxes, with a sufficient margin that I felt could also cover discretionary expenses, I retired. The math behind this is similar to the math behind the funded ratio with the major difference being the discount rate commonly used by funded ratio calculation (long TIPS yields) vs. expected returns used by amortization (weighted expected returns of each asset held)

Example of withdrawal methods that use amortization include VPW, ABW, and TPAW, all described over on bogleheads.
I would never use an SWR approach for withdrawal calculations - that's ultimately where multiple of expenses is derived - for example the 4% rule implies 25X expenses (1/4%).

Cheers

 

[Gumby]

Wow what's with the hostility?

I am just asking about the numbers. Retiring at 70 with 25x and SS seems extremely conservative to me. That would mean you plan to live to 100??

Then you should not retire at 70 with 25x and SS. I'm not hostile to your position; you should retire whenever you feel comfortable doing so. That's what I did.

You should ask yourself why you care whether others agree with your assessment of an appropriate level of assets and income before retiring? I don't ask anyone here to agree with mine.

 

[Max Valerion]

Then you should not retire at 70 with 25x and SS. I'm not hostile to your position; you should retire whenever you feel comfortable doing so. That's what I did.

You should ask yourself why you care whether others agree with your assessment of an appropriate level of assets and income before retiring? I don't ask anyone here to agree with mine.

Isn't this a forum to debate ideas? Can we not disagree without all of this??

 

[Gumby]

I'm here to discuss ideas and provide useful information to the extent I can. Certainly you're free to discuss whether a 4% withdrawal rate and SS will see most people from age 70 through the rest of their lives given the likely contingencies. In fact, I would say that, if we accept Bengen and the Trinity study, you are probably right that it will. And I think a fairly large number of people here would say the same thing. The issue is that you want "a debate" and for someone to declare you the winner. Since I just did that, what more do you want?

 

[MichaelB]

Isn't this a forum to debate ideas? Can we not disagree without all of this??

This didn’t help

Still not grasping how "early retirement" is not early at this forum.

You can only define what is early for you, not anyone else. You also define your own willingness to accept financial risk, but you shouldn’t judge others by that same measure.

I can assure you that there is no uniform view “on this forum” regarding what age is appropriate or how much money is needed.

 

[Al18]

The link in post #37 shows of those who participated in the poll, 30% retired at 50-55 and 40% retired 56-60.

I shot for 25x and retired around 30x. Since always LBYM for my working life, I’m still working on expanding my spending and enjoying the ride.

 

[TheWizard]

Wow what's with the hostility?

I am just asking about the numbers. Retiring at 70 with 25x and SS seems extremely conservative to me. That would mean you plan to live to 100??

No hostility here, just different situations.
My original target age to retire was around age 56, but with a hefty retirement income.
No idea if age 56 would actually have worked out since I got divorced age 48.

I didn't hate my engineering work so I soldiered on until age 62 and eventually cut loose with a decently FAT retirement...

 

[TickTock]

Instead of multiple of expenses, the funded ratio (sometimes called the funding ratio) is, I believe, a better approach: What’s Your Funded Ratio? — Oblivious Investor

I would never use an SWR approach for withdrawal calculations - that's ultimately where multiple of expenses is derived - for example the 4% rule implies 25X expenses (1/4%).

I read the article and downloaded the Excel file. I kept Piper's 1.6% real discount rate and $1,000,000 portfolio and made all income $0 and all expenses $40,000. Funded ratio for the 30 year retirement was 103%. So, very close to the 4% rule with a 1.6% discount rate.

I do like the Funded Ratio concept, especially for matching assets to spending over time.

I think that a tool for adjusting WR for future spending and income changes would be useful. And yes, I'm aware that you can do both of those in FireCalc.