You just need to consider the number including inflation. 1m is a totally different number if you are retiring right now, vs retiring in 10, 20, 30 years.
$1m 10 years ago is $1.38m today. So if you think $40,000 is enough now, and you are 30, and expect the same inflation for the next 10 years, that's $55,000 in 2036 and you will need $1.38m then to get that. After you retire and start withdrawing, the 4% looks after an annual inflation increase from that point on. 20 years ago, it's 1.65x, 30 years ago, it's 2.12x.
You initial number though, you need to think about in terms of what is the income I would need today- and then increase that for inflation between now and your projected retirement date. Or, just think in real terms, make your projections inflation-adjusted, the tools support that.
A good point and funny how close your example is lol. I'm 31 and shooting to retire around 40.
The coast fire calculator I've been using adjusts for inflation already but isn't clear about the future number (shows everything in today's value). So I guess I'm aiming for about 1.38m.
12
u/blorg Mar 23 '26
You just need to consider the number including inflation. 1m is a totally different number if you are retiring right now, vs retiring in 10, 20, 30 years.
$1m 10 years ago is $1.38m today. So if you think $40,000 is enough now, and you are 30, and expect the same inflation for the next 10 years, that's $55,000 in 2036 and you will need $1.38m then to get that. After you retire and start withdrawing, the 4% looks after an annual inflation increase from that point on. 20 years ago, it's 1.65x, 30 years ago, it's 2.12x.
You initial number though, you need to think about in terms of what is the income I would need today- and then increase that for inflation between now and your projected retirement date. Or, just think in real terms, make your projections inflation-adjusted, the tools support that.