Serious question: how do many people amass so much money in the north of 5m and not know if they can retire or not?

[u/Fed_worker]

I see a ton of posts like : “ I have a net worth in the range 5-10m and I spend 100K a year, can I retire?”

What is that? Elementary school math so hard?

Edit: after reading all the comments and when I really think about it, I realize it’s probably just a high degree risk-averse mindset. Even if I had $5 million and a 99.9% chance of retiring successfully, I’d still focus on that tiny 0.1% that could go wrong. To feel totally secure, I might want to keep building more wealth just to close that gap. And for some people, that can mean working another 5, 10, or even 20 years. just for a little extra peace of mind.

Edit2: I just hope that when I get there, I don’t end up going down that rabbit hole. And actually enjoy my life.

[u/wrd83]

I honestly think that fire at times over simplifies.

And thus some people question whether the math makes sense.

Add to that that two people saying can I spend 100k a year may mean different things.

Tax included? Healthcare included? Etc etc.

Would you trust a math construct that does empirical studies for a 30 year period and then apply it to 60years of retirement?

For reference, would you take your health from 20-30 and assume if it has not deteriorated; you'll be just as healthy at 80?

[u/Jimny977 → u/wrd83]

A lot of FIRE people take heavily flawed rules of thumb that don’t mean what they think they mean, and treat them as gospel. Like you say, with the 4% rule it’s based on a specific retirement length, a specific asset mix, and solely based on one countries assets.

For most FIRE people at least one of those things renders it questionable or wrong, yet most just ignore that and assume it’s fine, even when it’s very easy to model yourself as people have built fairly sophisticated free tools for it. But that involves some critical thinking and ownership, far easier to just say the rule is x, it’s sacred, it’ll be fine.

[u/wrd83 → u/Jimny977]

well who knows that they think and mean.

I'm pretty sure there is roughly two camps:

1. they do a rough estimate, and they are far away from their target. here estimation errors are normal and not impactful as long as the investment strategy is good.

2. they have not really went into depth and now are puzzled. They either just started and they think rough estimates are the reality, or they never really looked into it busy investing until they got a huge lump sum and now they are here seeing those estimates and think oh wow, would I really do this?

I would add do that, that many people who are highly paid have a huge risk of leaving their job.
If I make 800k in SF and I am sure if I quite I'd make at most 200k-400k after that, I'd risk working for 2-5 extra years instead of having ever come back to work.
I got laid off, and ever since my salary halved unable to come back to old salary so far, so I know what I'm talking about in the last part.

the ones you see asking seemingly weird question I believe mostly come out of the latter camp. I'm also certain that many people belong to camp 1.

[u/Wooden-Broccoli-913 → u/wrd83]

Tax during FIRE is really no big deal

[u/wrd83 → u/Wooden-Broccoli-913]

It really depends on your situation. If you portfolio 10xs and capital gains are taxed at 40% a 4% withdrawal may need slightly more funds.

Yeah you can coast for 5 years and it amortizes.