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Hi galagan,

Nice to see you posting.

I think it is important when setting out on the road to FIRE to aim at the right goal and to be motivated in the right way towards that end. That was the reason why I posted originally suggesting what I felt was a better comparison than comparing net worth to gross pay, moving the measurement instead to something of real value to those interested in FIRE like a comparison of net worth to the multiple of your planned FIRE budget.

Whilst clearly the situation may have changed by the time you get closer to FIRE, I think there is merit in exploring to some degree whether a much accepted 25x is wise, especially if people are saving and investing towards that goal. For instance, decisions may be made now about what percentage to put aside for the future when aiming to FIRE at age 50, based upon the 25x idea. You may decide to spend more than you might have otherwise safe in the knowledge that you've taken care of the FIRE issue when in fact you have bad information and you're not putting enough away. Far better I think to set a more accurate goal now than mislead yourself. So I think it does have merit. I agree you need flexibility in your planning to cut back on occasion when FIREd, but this only raises the issue of building in more flexibility on the amount your withdraw in good & bad years, and that flexibility is provided for with a higher multiple of spending stashed away. Sticking your head in the sand and sticking to a 25x approach because you don't think you can manage more just won't cut it and intercst has done a grave disservice with popularizing this idea.

It is also important to understand how far your investments are beyond a reasonable intrinsic value. Many people retired with what seemed like enough money but with stocks that were at twice the historical norm of 14.1x P/E. The stocks then fell back and they were left with half what they needed to live, looking around dazed saying to the papers, " What happened here? " What happened was they didn't pay attention to the fundamentals, the market mean reverts periodically and you need to re-adjust your portfolio value to reflect its true value before making the decision to quit.

I know myself that I could quite likely retire at 65 with 2/3rds of the desired sum and rely on investment returns plus capital sales to live. It would be a far riskier strategy that having more and living off the investment return above inflation (and after investment fees). The latter allows for an unlimited FIRE (medicine is improving sufficiently that it is not necessarily true that a 30 year retirement will be typical, it may well get longer as longevity increases with health advances) and also provides your loved ones with a nice inheritance. Setting the higher goal is the one to go for, the lesser sum the fallback position that carries considerable risk.

Saving and investing is certainly important as the main message, but success also lies in the details with goal setting that is realistic and accurate.


Nice to see another message board fracturing itself over this issue.

This board purports to be for wanna-bes. There are probably a few people here who are far enough along in their FIRE plans that the difference between accumulating 25 times expected expenses and accumulating 50 times expected expenses is relevant right now. For them, it's important. But if you've got less than 10 times expected expenses saved up, then it makes more sense to focus on how you're going to accumulate and grow your wealth than to obsess over what your final target number is going to be.

I've never understood why this issue was so contentious. The idea of an absolutely fixed withdrawal rate is incredibly unrealistic, because I don't know anyone who wouldn't tighten their belt a little when things are tough or feel a little freer with their money when things are going well. Once you introduce these fluctuations, the simple studies don't really apply anymore, unless you make major modifications. Even then, unless you are the type of person to be rigidly mechanical about financial decisions, all the studies in the world won't necessarily tell you how to deal with your own comfort level and needs.

I don't mean to dissuade those of us who are working to understand withdrawal rates better. It's a fascinating intellectual exercise, and the complexities of various hypotheticals make it clear to me that there's a lot of insight beneath the surface. But not everyone will want to get that much into it - they'll be happy with a simple rule even while understanding that it may be flawed. That said, my main objection has been to people who say that no one should look beyond the simple rule because there's no more to be learned by further analysis. That's a ridiculous statement.

The board has gotten through nearly a thousand posts without ripping itself apart. Let's get through this and get back to the quality posts that give us wanna-bes the will to keep walking down the long road toward retirement.

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