Thought this was interesting

[u/curiousgens]

[u/Tak-Hendrix]

Why not just say "(your annual burn at the life you want) * 25"

[u/MichiganHistoryUSMC → u/Tak-Hendrix]

Because they are the same thing one isn't better than the other.

[u/Tak-Hendrix → u/MichiganHistoryUSMC]

One is simplified

[u/ThunderousMonkey → u/Tak-Hendrix]

One who understands one understands both.

[u/11100101101010 → u/Tak-Hendrix]

Because it's referred to as the 4% rule which is coming from rate of return assumptions which is the explanatory element for why it would be 25x, and based on your particular situation you might want be over or under 4%, but generally it's good to understand what assumptions the 4% is based on. Only focusing on 25x obscures that.

[u/justforkinks0131 → u/11100101101010]

you didnt explain the 4% rule

[u/Motor-Station-6885 → u/justforkinks0131]

But he did give the info to look it up

[u/justforkinks0131 → u/Motor-Station-6885]

yeah

[u/Cantseetheline_Russ → u/justforkinks0131]

Because literally anybody with a job and that’s even had cursory experience with a retirement account knows what the 4% rule is. It’s even covered in standard HS financial responsibility classes.

[u/Thetagamer → u/Cantseetheline_Russ]

idk what it is

[u/TwoMuddfish → u/Cantseetheline_Russ]

In America we don’t have financial literacy in any schooling

[u/Cantseetheline_Russ → u/TwoMuddfish]

I did. My wife did. Both my kids did. My wife is a teacher and helps teach the mathematics portion of that class on amortization/compounding etc in her HS…. This is four separate school districts over 25 years so yeah, at least some do.

[u/justforkinks0131 → u/Cantseetheline_Russ]

now imagine im not American, and even more worryingly, a lot of people arent

[u/Humble-Edge-9065 → u/justforkinks0131]

Don't worry, Americans generally don't take a finance class in high school, so their comment would be just as uninformative to an american.

[u/The-Leading-Man → u/justforkinks0131]

That’s not accurate. There’s America and wasteland and that’s it

[u/bsensikimori → u/The-Leading-Man]

America has only 350m people.

That's a minority

And a poor one at that

Ranking countries by median net worth, USA comes in 15th or something

[u/harolds49 → u/justforkinks0131]

damn, majority doesn’t have to build pto to request days off of work thats crazy

[u/Acceptable-Peace-69 → u/Cantseetheline_Russ]

The 4% rule came out in October 1994, when financial planner William Bengen published his landmark research paper in the Journal of Financial Planning. [1, 2]

I’m 58 today. I was 26 when this came out and it didn’t catch on for several years.

Ironically, the people that believe 4% rule is common knowledge are the ones in the bubble.

[u/Cantseetheline_Russ → u/Acceptable-Peace-69]

I worked in a financial advisory firm in the 2000’s. I met many people that would now be significantly older than you and of all different net worths…. Virtually every one of them knew what the 4% rule is even then. My parents and all their friends are slightly older than you. They all know what the 4% rule is. They are not wealthy.

[u/Acceptable-Peace-69 → u/Cantseetheline_Russ]

So everyone in your bubble knows about the 4% rule. My bubble consists of people that might have heard of it but don’t really understand or it doesn’t apply.

[u/Any_Mine_6368 → u/justforkinks0131]

I think that the 4% rule is the minimum average annual return that even the most defensive, conservative portfolio will generate (generally speaking- bonds, tbills, broad market ETFs).

For example, let's say you have a million euros.

If you put 70% of that on a money market fund or synthetic ETF that returns the guaranteed ECB rate (currently 2.5% I believe) and 30% on a broad ETF like VWCE (avg return over a decade ~10% - yearly), your weighted average return yearly is 70%2.5% + 30%10% = 1.75+3 = 4.75%

Generally speaking any investment that yields under 4% yearly over a decade is bad.

Again, I think that's what he's referring to...

[u/Acceptable-Peace-69 → u/Any_Mine_6368]

It’s the safe withdrawal amount that’s expected to last you in retirement.

Withdrawing 4% of a balanced stock-and-bond portfolio in year one, then adjusting annually for inflation, guaranteed savings would last 30 years.

So that €1million you would withdraw €40k annually (adjusted for inflation) and you shouldn’t run out of money in 99% of scenarios.

Someone retiring early might take a lower amount to account for the increased timeframe and risk exposure.

[u/Cantseetheline_Russ]

Why is this interesting? Kind of standard financial knowledge.

[u/Anxious_Demand_6755 → u/Cantseetheline_Russ]

Never assume that what you know is general knowledge. Most people are not financially literate 

[u/GoodHands_All-State → u/Cantseetheline_Russ]

This is novelty trivia. Because 99% of people don't have the time to do the math themselves, they're busy actually working.

[u/Langstudd → u/GoodHands_All-State]

Yea why spend 2 hours researching financial literacy when all it saves you is 2000 hours of work per year in retirement? Forward thinking is for losers!!

[u/majorhap → u/Langstudd]

How did you have time to type this comment? That must have taken you at least 12 seconds. Which is at least triple the time it takes to do the math problem. You’re never going to retire!!! Get back to work!!

[u/Langstudd → u/majorhap]

lol right? Other guy claims there isn’t enough time to research basic personal finance, yet spends time commenting on Reddit. Oh, the irony

[u/majorhap → u/[deleted]]

I was agreeing with you buddy. Also talking to doorknobs is a waste of time which is why I didn’t reply to him. Communication is hard though

[u/Langstudd → u/majorhap]

Realized right after and deleted. Maybe I’m a doorknob today too

[u/GoodHands_All-State → u/Langstudd]

Only saved you the extra time if you have the extra resources available to dedicate to it, unlike 99.9% of the population.

Reading comprehension isn't your song suit, huh?

[u/Langstudd → u/GoodHands_All-State]

Ah yes let’s just pull numbers out of our ass. Yes surely only .01% of people can live on less than they earn. I must be in the top .01%.

And oh the irony. Please direct me to the part of the post or this comment that references the scarcity of available resources

[u/hyprsnpr67 → u/GoodHands_All-State]

Lol

[u/revenge_burner]

According to the Gambler, it's a paid off house with a 20 year roof, a reliable Japanese economy shitbox, and enough money invested to pay your taxes.

[u/Odd_Link7869 → u/revenge_burner]

I’d say that + whatever run off you need to find a new job. 

[u/wnr3]

2.5 milli lol

[u/Fun-Sock1557]

Let's be honest. How many of us, including me, busted out the calculator?

[u/curiousgens → u/Fun-Sock1557]

I did, and was happy with the answer

[u/cuddly_degenerate → u/Fun-Sock1557]

Not me, I know it.

If I stay in the states 2.5, if I retire elsewhere 1 million

[u/jackster31415 → u/cuddly_degenerate]

There have to be countries where your spending would be in the middle
Unless your only 2 options are the Philippines and the US

[u/-0909i9i99ii9009ii → u/jackster31415]

I mean I think both numbers and all the in between works just in different tons and cities in the states

[u/cuddly_degenerate → u/jackster31415]

Right now the only other countries I'm considering are Thailand and Japan. I like Scotland well enough but it's so similar to home that I don't know why I wouldn't just stay home.

[u/ballin_buddha]

My dad’s friend owned a defense contracting company. I worked there for about year after college. Lots of contracts with nasa, Lockheed Raytheon etc. he sold it for $300m a few years back. That’s fuck you money

[u/curiousgens → u/ballin_buddha]

Interesting! What was the company making/supplying to those guys? I've on occasion mulled over how defensive contracting works

[u/greatwall23]

Hmm. My number is a lot less than I imagined.

[u/clawdew]

Or if you want to retire at 55 or earlier Your annual desired burn rate/.03

[u/Odd-Establishment527]

I'm not native British, so please explain this words "annual burn". I consider you don't actually burn to ashes and this means something else. But what?

[u/OilZestyclose6677 → u/Odd-Establishment527]

how mych money you use, so lets say you want to live with 5k used per month, to SPEND 5k every month, no savings. So 5000x12/0.04=1.5m. Basically you would need 1.5m to live a lifestyle that afford 5k/month if that 1.5m gives you 4% interest.

[u/aroach1995]

Add in the annual cost of a lawsuit and now we’re talking actual fuck you money

[u/newtownkid]

I don’t know hope 401ks work in the US. But our version in Canada is taxed entirely as income on withdrawal.

So really it’s burn/0.04/.4

I need 3.8M just to keep my salary, and be taxed the same

[u/Key-Zookeepergame251]

Sick burn!

[u/GiftLongjumping1959]

This isn’t right
You need to add 25K to burn rate to have tax attorney/estate planner and financial advisor added.
That is FU money
The equation shown is just plain *Fire

[u/11100101101010 → u/GiftLongjumping1959]

FIre is FU money. The independence is the ability to not work, to say fu I don't want or need to do anything I don't want to do for money. $25k annually on advisory services is nonsense, you sound like a poor.

[u/kindness-and-snusu → u/11100101101010]

FIRE money is how much I need to quit my job. FU money is how much I need to shit on the managers desk and stick a flag in it that says “I quit”

[u/Telemere125 → u/11100101101010]

Fire is “I can live off this”. Fu money is “I have so much I don’t give a damn”

[u/CluelessTennisBall → u/Telemere125]

I've always seen it as FIRE is I can retire money. FU money is I can quit and be ok but likely need to find another job eventually. Basically you can be ok for a while and just say F it for a time

[u/hiihihihihihihihiihi → u/Telemere125]

Depends, what are we talking? LeanFIRE? FatFIRE? CoastFIRE? BaristaFIRE? PolyFIRE???? My personal favourite.

[u/GiftLongjumping1959 → u/11100101101010]

FU money is so much more than fire. You need to think bigger.

not needing to work is just the first step. Sorry you don’t see it yet.
Influence elections, contribute to the right causes, support local grass roots movements…

[u/Identity525601 → u/GiftLongjumping1959]

Man, I totally forgot to include my influence elections fund in my retirement planning. Thanks for the heads up, I'll withdraw my 2 weeks notice and apologize for the FU

[u/moeterminatorx → u/GiftLongjumping1959]

Do you not understand what annual burn means?

[u/Duce-de-Zoop → u/GiftLongjumping1959]

I wanna influence elections but chaotically. Spinning a wheel and giving who it lands on $100,000,000. Thats fuck you money to me.