FUEGO
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 13, 2007
- Messages
- 7,746
I was doing some back of the envelope calculations to see what One More Year (OMY) would get me. It surprised me how much OMY means to a very early retiree (someone under 40 at FIRE) which is how I would classify my plan.
Take a 35 year old wannabe retiree with $1.5 million in their portfolio and a savings rate of $90,000 per year (probably not that rare for those very early retirees aiming for an under-40 retirement age).
One more year at a 5% real return rate equals $165,000 larger portfolio in real terms, or $5400 in additional annual spending during ER (using a 3.25% withdrawal rate). An 11% boost to annual spending or a large margin of extra safety.
This is roughly the situation I may experience in another few years. Even if I have enough it may be worthwhile to put in another year or two simply to have more safety or the option of a higher withdrawal rate.
Take a 35 year old wannabe retiree with $1.5 million in their portfolio and a savings rate of $90,000 per year (probably not that rare for those very early retirees aiming for an under-40 retirement age).
One more year at a 5% real return rate equals $165,000 larger portfolio in real terms, or $5400 in additional annual spending during ER (using a 3.25% withdrawal rate). An 11% boost to annual spending or a large margin of extra safety.
This is roughly the situation I may experience in another few years. Even if I have enough it may be worthwhile to put in another year or two simply to have more safety or the option of a higher withdrawal rate.