[lokjhfvvv]

I did this / am doing this. It is indeed nice. However, depending on where you want to live and of course how you want to live, “several million post-tax” after buying 2 homes doesn’t necessarily cut it. I think this is what leads to the “dragon” mindset described.

Maths: - 7MM post tax (let’s say) - Less 2MM for 2 houses (rates being what they are you’ll likely not mortgage both properties, or even one; if you do your monthly burn is so much higher it comes out in the wash). - 4% because you read about FIRE - 200k pre-tax (you tax burden should be low, maybe 15%) - 170k post tax for your family. If you live anywhere higher than average COL you might find yourself feeling a bit like a large reptile at times.

[germinalphrase]

Living mortgage free, 170k post-tax is pretty lavish annual spending almost anywhere in the world.

[lokjhfvvv]

Yeah it’s nice but it’s way less than DINKs in NYC or SF might spend. Like I said it’s more about how and where you want to live. Also I would not want to live on the “edge” of affordable myself.

[adam_arthur]

Can get 8% plus easy in yield on a diversified set of relatively safe REITs and corporate bonds nowadays.

Absolutely would not recommend putting funds in large cap indices if you're planning to retire off portfolio cashflow.

You get close to 4.5% cashflow (interest plus imputed income) on 20y treasury bonds alone, for example.

Why take pricing risk to your income when you can get it directly in dividends/distributions that are very secure?

[lokjhfvvv]

You’d never put your whole nut into treasuries unless you wanted to get killed by inflation. You’re looking at a 50 year retirement if you’re in your 30s.

“4%” (Trinity study style I mean) is the pop culture number that accommodates down markets and inflation over 50 years, to a first approximation.

[adam_arthur]

Definitely not, though I was just demonstrating the kind of cashflow you can get from a (default) risk free bond.

The days of buying an index and selling 4%/year being your best strategy are past. At least until/when yields decline again.

If you're strategic and barbell your portfolio somewhat, you can generate around 10% with moderate risk (and this is 10% distributions/dividends, not including any capital gains).

The best outcome for retirees is to build a solid income portfolio and then hope that inflation really does subside and valuation multiples compress again, which would leave you with significant capital gains while portfolio income is preserved.

If inflation resurges or remains moderately high, capital gains will be more limited.

[lokjhfvvv]

Agreed, this is certainly reasonable. 4% isn’t and shouldn’t be taken as particularly good, it just works and it’s what a lucky retiree might know about.