[quickthrowman]

If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year.

How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance.

Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.

[daemonologist]

3.5% historically holds up over longer retirements (I ran a rough model and got ~98% success for 50 years). $21k is quite lean - you'd have to pick and choose luxuries like a car, no roommates, travel, etc. - but for a single person in many parts of the country it's doable. The big gamble is that Medicaid might get cut further, which would definitely force you back to work.

[quickthrowman]

Yes, it’s doable if you rent a $500/month apartment/bedroom in a rural area or split a shitty $1000/month apartment in a mid tier city and don’t have a car, never travel, and don’t use medical care. My employer paid health insurance premiums are ~$15,000/yr.

That sounds like my personal idea of Hell, I’d like to be able to get treatment if I got cancer instead of being given a prescription for painkillers and a look of sorrow from a doctor that can’t treat me.

FWIW, I currently live in a shitty $1000/month apartment in a mid-tier city, not casting any aspersions on the living situation. But, I’ve lived in this same city without a car and it’s miserable.

[ghaff]

Presumably, it would be cheaper if I had a fairly modern urban condo but my exurban property is a good $15K+ per year. Heck, I just had a kitchen fire and, even with good insurance, I'll probably be $50K out of pocket when all is said and done. I could probably have done things more on the cheap but didn't really make sense.

[hervature]

You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.

[loeg]

You can't actually draw down 6.5%/yr, though, because of sequence of returns risk. The number that is actually safe (historically) is something like 3.5%.

[quickthrowman]

Keep in mind that almost all of the FIRE advice available online has been written in a bull stock market that is almost 2 decades long (COVID drawdown is a blip on the 2008-2025 chart).

Past performance is not indicative of future returns. Do you know anyone still running a risk parity 60% UPRO/40% TMF (3x long S&P 500, 3x long 20-year Treasury Bonds) portfolio? That portfolio composition had massive returns, until the Fed started hiking rates.

The annual implied volatility of SPX is around 15-20%, if you want to withdraw 6.5% a year at 40 and have to restart your career at 55, be my guest.

A 40% drawdown on 600k is -240k which puts you at 360k, 6.5% of which is $23,400. Starts getting pretty tight if you need to sell assets for cash which reduces your future returns.

[deanmoriarty]

> Keep in mind that almost all of the FIRE advice available online has been written in a secular bull market that is almost 2 decades long

Most of the reasonable FIRE advice (e.g. https://earlyretirementnow.com/ quality) suggests a ~3-3.5% withdrawal rate, which has been measured using historical data way before the current secular market.

Is your take that even such withdrawal rate wouldn't work anymore, moving forward?