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Well according to intercst, the safe withdrawal rate is 4% and you would need 25x your FIRE budget to retire. Other than a rather large question as to whether that is remotely accurate long term (a diversified portfolio of US stocks, real estate and international/emerging market stocks is unlikely to deliver the same results in the past and so the withdrawal rate figure is wrong. 2%-2.5% is much more likely making the FIRE multiple 40-50x FIRE budget and not 25x), the target is whatever multiple you are aiming for based on what you assess your asset allocation will deliver long term. Current gross salary is only a means to make that happen.

The reason a dummys book uses the more obvious methodology of gross salary is because it is easy to calculate and most people have that information. But you need to work out what your investments deliver and see what multiple of annual budget you need. Once you have that, you then know what your goal is. Not before. It is a bit like how Dave Ramsey, the radio host & author, forever quotes how a growth stock mutual fund makes 12% and if you invested x over x number of years you'd have enough to live off. His assumption of 12% annualised return is far too high, 6-8% is what is used today. He discounted any taxes (not all investments are held in tax-protected accounts) and he ignores the considerable effects of sales load & yearly management fees on mutual fund investments, as well as the little matter of inflation. Combined this drops the likely 6.5% return down to 4.5%-5% after investment costs and before taxes & inflation. Ignoring taxes, real growth may be 2.5% upwards per year. That is conservative and could be a couple of points highter if you're invested with low-cost Vanguard but it is nowhere near his quoted 12% which he uses on the radio to say when someone will be a millionaire saving at their present rate. Many financial examples are unfortunately kept intentionally basic so as not to confuse readers/listeners but in the process can be dangerously inaccurate!


Hmmm, this gives me something to think about. I guess right now, our FIRE mulitple is about 12X. We still have a ways to go, but this is an interesting way to measure it.

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