The Motley Fool Discussion Boards

Previous Page

Retirement Discussions / FIRE Wannabees


Subject:  Re: 2006 FIRE Update Date:  1/4/2007  10:04 PM
Author:  bighairymike Number:  3945 of 5232

I really have no prediction of when we will FIRE. It now appears that 10NW/AI won't be enough as I have a son now at age 1, and possibly another in the future. My goal is still at age 40, 8 years from now, which at 11% stock market returns would put us at ~16 NW/AI, a comfortable retirement.

I am going to pick on this metric a little bit. I don't intend to be critical or contentious but in the spirit of helping a fellow Fool, I want to give you some things to think about. First of all, you are to be commended for having a plan, keeping records, setting goals, measuring against those goals. That puts you way ahead of many.

But getting to the root of the matter, your NW/AI metric is puzzling to me. For instance, if your income goes up $50K, your NW needs to go up by $280K just to stay at your current 5.6 NW/AI ratio. Even if you save the entire $50K and it earns another $50K, the $100K addition to your NW would still pull down your NW/AI ratio.

A more conventional metric would be shoot for a NW = 25 * AE. Where AE is your estimated annual post retirement living expense whch may be more or less than your current AI.

Just something to think about ....

Best wishes.... bhm

Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us