FIRE (Financially Independent, Retired Early): What’s your retirement number?

Hey FIRE community – for many of us, retirement is a goal… but how early can you retire?  And at what level.  The FATTER you want to retire (with higher passive income), the longer it may take to accumulate the nest egg that will produce the income that you want or need.

As a long-time frugalista, my goal has always been to maximize savings, and then invest in normal, time-tested assets like mutual funds and real estate. This worked very well when we were single, newly weds, young parents and homeschooling parents… there were no Joneses to keep up with in those circles, for us.  COVID was great for the budget, too – nowhere to go, nothing to do!

Now that our kids are older, we want to give them a few gifts of time and money – we want to travel, we want them to have some nice clothes, and we invest heavily in their education and extracurricular activities. 

We actually have a goal of spending MORE on our family and put less into our earnings, savings and investment because we want to create some amazing experiences with our family.  

We can always double-down with work when the kids are gone at college.  It will give us a break from crying and feeling bereft after they are gone.  (I am actually horrified of this transition, but I’m trying to be cool…).

Because my husband and I enjoy our work and the challenge, structure and income it provides (while still being somewhat flexible) we will probably continue to work into our 50’s. 

But what’s the walk away number? 

Vanguard is saying the 4% rule is for older people, but not a great metric for early retirees.  They suggest more of a variable 2% rule, which doubles the amount of savings you would need to have to retire early.

The nice thing about keeping your lifestyle frugal and your expenses low is that you can live off less income, which means you can retire earlier. But sometimes it makes sense to SAVE a little less, in order to LIVE a little more – this could include spending for a special trip, sending your kids to college, or even investing in additional training for yourself.

The key is to try to keep your life on a path of perpetual improvement – where each year is better than the last – which might not include spending more every year…

So, if you can live on $100K/year – and think you would be happy with that in your “retirement” lifestyle – then a VERY CONSERVATIVE/SAFE number to retire early with, would be to retire with would be $5 Million. (Using the 2% Rule).  If you don’t think you can make it to that figure, the 4% Rule will give you the green light at $2.5 Million – if you can be flexible with your spending, based on the performance of the stock market (e.g. withdrawing less for trips, cars, home repairs in years the market performs poorly).

Another solution some people come up with is taking on “odd jobs” or “contract work” to supplement their income if needed, in a low-stress, low stakes environment.

Finally, if these numbers seem out of reach, consider a sabbatical or “gap year” to take some time off and spend some money to enjoy while you can – maybe while your kids are still with you, or you still have your health. 

I have come to realize life is much more about the joy we put into each day, than chasing a number at the end of the rainbow and saying, “I’ll be happy, when…”

What “retirement number” do you think is realistic for you?

Emily Cressey

Emily Cressey is a real estate broker residing in Lake Forest Park, WA who services the Greater Seattle area including Shoreline, Mountlake Terrace, Brier, Lynnwood, Kenmore, Bothell and Edmonds, WA.

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