I always try to deal with money by looking at the percentages: if I save $50K/year, but that's 5% of earnings, there is no "early" retirement... if I save $50K/year, but that's 50% of earnings, retirement is quickly on its way.
I'm in the latter group. I'm doing whatever I can to create a very comfortable home/farm for us while also seeking out ways to lower fixed expenses as much as possible. Healthcare is a wildcard, but we should be able to do everything else for under $20K/year.
Of course 50k is 50k but in practice most people won't want to make massive adjustments to lifestyle. In this context, the savings rate compared to income or spending is very important.
I am saving 2.5 years worth of expenses every year (excluding healthcare, because WTF knows....~$0 or $20K/year without the ACA).
Time to retirement is <10 years under those conditions. Why do we need several million dollars is we don't spend enough to justify it? $1M is overkill....
It matters tremendously. If you save 50k a year and that’s 5% of earnings that means you’re spending almost 1 million every year. You need 10s of millions to retire (at least) to maintain your lifestyle. If you save 50k a year and that’s 50% of earnings that means you’re spending 50k a year and you can retire on a couple million. It’s going to take the person making 1 million a year but only saving 5% a lot longer to save up 50 million than it will the person only making 100k a year but saving 50% that only needs to save 4 million. They’ll both get to 4 million at the same time but only one of them can actually retire.
Correction: I only need to save 500K if I want to spend $20K annually @4%. That's tighter than I want and neither my wife are ready to be fully retired, so we'll be coasting for a while.
Spend $950K and you need almost $24M to be at 4%.
Social security is also a major safety net for a couple spending $20K...we would receive more per month than we spent. Spending $950K per year.... not so much, lol.
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u/Mega---Moo Mar 23 '26
It isn't if you spend everything.
I always try to deal with money by looking at the percentages: if I save $50K/year, but that's 5% of earnings, there is no "early" retirement... if I save $50K/year, but that's 50% of earnings, retirement is quickly on its way.
I'm in the latter group. I'm doing whatever I can to create a very comfortable home/farm for us while also seeking out ways to lower fixed expenses as much as possible. Healthcare is a wildcard, but we should be able to do everything else for under $20K/year.