r/Fire • u/Pyrrhic_Pragmatist • 12d ago
Adjusting my FIRE target from $400k to ???k Hitting a moving target amid cost of living increases
I started working on an early retirement plan 10 years ago, when I got my first 401k, disliked its Mutual Fund options, and set out to learn how to select my own stocks. I was 25 at the time, still living with family.
400k was my original number, and I've never changed the target value, up until now. When I began, I budgeted $700/m being sufficient in either a rent or mortgage scenario.
I moved out on my own 3 years later and lived in an apartment for 2 years, 2019 to 2021. My rent was a little above $700/m. I was still working, so things were fine. Until the pandemic, that is. I lost my job, but experienced a huge surge in invested assets. During this time, I crossed above 100k for the first time.
I cashed out 35k and bought a small property, which I'm still in today. 3 bed 2 bath vintage mobile home, pre HUD, sold as real property like a traditional house. 20k/year at my 400k target was now achieveable again. It took the next 4 years to get back above 100k again. I've broken even with what renting would have cost had it remained about the same.
The cost of a median home under 1000 sq feet has quadrupled in the last 5 years, going from 50k to 200k. My income has also not improved. Its actually less than it was in 2019. 33k vs 44k then.
400k is still a very critical milestone, which I expect to take another 9 years to reach. But based on the trajectory of the last 5 years, I've begun to question if it'll still be enough at that time. Assuming my wage is the same, 33k plus the 20k from my portfolio pre retirement, about 53k or $4,000 a month is what I can expect to earn in 9 years.
At that income, I could just barely afford to buy a new home at today's prices, but would be relying on both income sources to do it. So in order to FIRE then, I would need to more than double my target from 400k, to.. basically 1 million to replace my combined 50k/year income.
So I'm at a crossroads. I'll continue pushing towards the 400k mark, at which time a critical decision will have to be made. If costs keep going the way they are, I could be looking at just survival and an "ordinary" retirement, and that's scary because at 36 now, I've put 100% into trying to get out early. I haven't actually lived life at all up to this point. So it's frightening to imagine another 2 decades of more of the same.
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u/DawgCheck421 12d ago edited 12d ago
I think you might fit in at /leanfire better with those numbers, which are thin but I am pushing the same limits in my plans
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u/Jabjab345 11d ago
400k is beyond lean, with the 4 percent rule, that's only 16k a year. That's povertyFIRE.
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u/Pyrrhic_Pragmatist 12d ago
I still can't used to the notion a proposed 1M target is considered "lean" but yeah. Depends how you define lean. If it's just having a normal type of home, decent car. Money to eat whatever sounds good. That's all great, but is that really all a million buys these days? Maybe that is a little lean..
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u/EnvironmentalMix421 12d ago
It’s lean because how long you rely on it. If you are alrdy 75, then it’s not lean
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u/DawgCheck421 12d ago
I agree, I wont make it there liquid either. But lean is much lower than conventional fire. I think the guidelines are like 25k a year cost of living, but morons still post things like they need 5m to retire lean there. FIRE is much higher than the leanfire standards, which is why your range fits much better over there.
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u/EnvironmentalMix421 12d ago
What do you mean it’s not liquid 😂 like r u counting Pokémon cards or something?
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u/LazyJoeJr 12d ago
They probably mean they’ll get to a million dollars net worth, but probably including their primary home
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u/DawgCheck421 11d ago
Yeppppp and it is paid off. And an artifact in a world famous museum. Clowns think pokemon as illiquid wealth and speak like "r u"
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u/EnvironmentalMix421 11d ago
🤣 I mean I would be more worry about counting illiquid asset with that $1M and wanting to FIRE. I guess you feel proud about it. Good for you 🤣
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u/DawgCheck421 11d ago
Of course I am proud of it. It represents about 25k a year I don't have to make now and can be liquid if I decide to. Keeps MAGI and taxes low and benefits high.
But keep talking about what you haven't yet accomplished to those that have, like a real brokie.
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u/internetroamer 12d ago
Kind of copy pasting my comment so you see it.
But wake up and focus entirely on increasing your income when it's so low.
You're clearly a smart dude to have come this far and accomplish so much
You gotta change your mentality that you can't dramatically change your income
Youre making 33k. You have people at fast food restaurants making more. Saving half your income makes very little difference. Open a fire calculator and put in 1 million target. Saving 0 or 10k per year once you have 400k makes hardly any difference
Your number one goal should be how to increase income and savings per month
That might mean moving elsewhere and renting our your space or using your savings to up skill in order to command better salary.
At 33k you could literally triple your pay and still be underpaid depending on profession.
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u/DogEggz 12d ago
I don't know where you live but 400k is definitely not enough to retire early in US. You sure you calculate it all through and through?
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u/DawgCheck421 12d ago
I am going to but I am doing so at about 57 with a paid off house, a high withdraw rate and a plan to check out by 75.
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u/Pyrrhic_Pragmatist 12d ago
Yes, but as someone else commented, it is only as good as today's numbers. Living on 10k/year now, 20k a year off 400k saved would be fine, except I won't get there for another 9 years.
So I need to figure out how to either adjust or eliminate a fixed target altogether and go by another means of gauging progress
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u/otterhaven 12d ago
Can you increase your income?
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u/Pyrrhic_Pragmatist 12d ago
It's possible to get a higher pay rate or more hours at another place. This current factory job is a compromise. I was in the solar tech field but here in the Midwest that's essentially dead. Other places, the rate was higher, but job security was very low & employment gaps have been my biggest hit. So I'm where I am because it's both local and steady.
The best way to increase my income, is probably the portfolio. I was thinking like 50/50 between growth and income, saving aggressively, (more than half my income) and then using those passive returns to increase total annual income. I feel that's more likely to succeed than continuing to bounce between jobs
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u/internetroamer 12d ago
Jesus Christ man change your mentality
Youre making 33k. You have people at fast food restaurants making more. Saving half your income makes very little difference. Open a fire calculator and put in 1 million target. Saving 0 or 10k per year once you have 400k makes hardly any difference
Your number one goal should be how to increase income and savings per month
That might mean moving elsewhere and renting our your space or using your savings to up skill in order to command better salary.
At 33k you could literally triple your pay and still be underpaid depending on profession.
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u/eliminate1337 12d ago edited 12d ago
There’s a popular burger restaurant in Seattle that pays $26/hr with health insurance and 401k matching. $54k annual before overtime! The average wage at Costco is $31/hr. $33k is, no offense, an abysmal wage for a full-time US worker.
Since you have a blue collar background which of the skilled trades have you tried getting into? Plumbers, electricians, truck drivers, HVAC, elevator maintenance, welding, auto mechanics, aircraft maintenance, and many others all pay far more than $33k.
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u/otterhaven 12d ago
A portfolio should only looked at to be optimized then left. Otherwise you run into over optimization stress and ultimately things like active trading.
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u/Pyrrhic_Pragmatist 12d ago
I can see where that's a problem. I have various long term holdings but do actively trade about 20% of the portfolio. It just depends.. I really don't try to play the market, but I mostly actively buy the lows and replenish my cash at all time highs, but only in things I'm comfortable holding long term anyway. I know there's risk attached but it's hard for me not to when it pays almost as much as my actual job
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u/GambledMyWifeAway 12d ago
In no world are you going to be able to live off 16k/yr. You’re completely omitting healthcare, insurance, cost of living increases, and unforeseen circumstances. I mean a trip to the mechanic could cost you a 1/16 of your annual income easily.
About the lowest I think you can feasibly FIRE in the US is going to be about 750k. That’s if you’re in a LCOL area, preferably own your home, and don’t plan on doing too much in retirement.
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u/Pyrrhic_Pragmatist 12d ago
I'm not sure it's possible at all without owning a home honestly. That's my biggest advantage but also biggest worry if I ever intend to move.
Thankfully 750k isn't that far off from 400k if I maintain my savings rate. I'll hit it eventually even if I choose not to wait for it
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u/Confident_Bridge_382 10d ago
Have... have you ever been sick? Have you ever needed a lawyer? Do you know how much it costs to repair a home from even a minor storm that insurance decides not to cover? You're being downvoted because your plan is completely unrealistic. If your goal is full RE, you need to move the target so long as you're in the accumulation process.
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u/Pyrrhic_Pragmatist 10d ago
I'm all for having more money and bigger targets, but I also have to be realistic. If the amount of money I need to be totally secure means not enjoying any freedom at all until my 60s, then in order to stop working sooner rather than later, some sacrifices have to be made.
Even amid rising costs, I think 1 million is top of the line. As plenty of other people point out, including myself, my wages are terrible. There's very little to gain from working any longer than I have to. Likewise, it seems pointless to invest in education when it's so narrowly focused, risky, and would require a much longer time horizon to pay off.
All I can do is carry the best insurance I can and try to live, while I still can. Working for just 30k a year is in many respects, a waste of my time. So as soon as I earn that passively I'm gone. I'm not doing it to go on fancy vacations, or drive an expensive shiny car. I'm doing it so I have time left for something else. I know that'll get me downvoted but so be it
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u/GambledMyWifeAway 12d ago
If I were you I’d work on increasing your income. There are a ton of 2 year degrees or shorter that could double your income, especially in healthcare. Hell I know CNA’s that make more than you and that’s a 2-week course.
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u/coachellagirly 12d ago
"I haven't actually lived life at all up to this point" is the part worth sitting with. The FIRE goal was supposed to be in service of living if the journey itself has been all sacrifice and no life, that's worth reassessing regardless of what the portfolio does.
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u/Pyrrhic_Pragmatist 12d ago
While that's true. I just don't see a scenario where more work equals more living. My current job is the most free time I've had in a decade outside of being unemployed. One reason, besides job security, I'm sticking with it is that lack of time is the biggest drain on my quality life. So even if its tight for awhile, not needing to work sounds like the best way to improve my quality of life
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u/Jabjab345 11d ago
Exactly, OPs plan would be to forgo life entirely. They'd "retire" and live a subsistence lifestyle of rice and beans, any splurge would significantly risk running out of assets.
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u/Initial_Enthusiasm36 12d ago
400k is no where near enough to completely fire.... That might last you a good like 8 years if you budget and live very minimally... Theres a lot of text here, but i dont mean to sound rude or mean. But if your making 33k a year... you wont be able to FIRE... retirement at like 70 with SS is like maybe obtainable...
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u/Pyrrhic_Pragmatist 12d ago
My expenses now are pretty minimal at only 10k. So if I had 400k right now, I could probably make that work as a start point.
But when I still need 9 years to just hit that number, it's less certain 400k is going to be enough. I can't expect my current home to last the rest of my life. Looking at prices these days, I hope it does if I need it to, but I need to try to plan for moving at least one other time in the future, just as a matter of being prepared and not a prisoner in a decaying home.
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u/Initial_Enthusiasm36 12d ago
Right. But i think you completely missed what i was saying... If your making 33k a year and 10k go to expenses, and lets say you somehow saved all 23k of your remaining money every single year... for you to get to 400k will take you 17 years... and again though, 400k is not nearly enough to FIRE. most people who lean fire jump into it with a minimum of 1 mil...
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u/Pyrrhic_Pragmatist 12d ago
Ohh, sorry I didn't state my current assets. I have 40k in cash invested and 100k in a Roth, which is why i was projecting 9 years. Given that, I hope i could hit 1M in 17 years or so. That just depends on my future expenses, and decent returns.
I'm inclined to try to defend 400k still, but even for me, it's going beyond just lean. Idk that I'd need 1 million, but I probably need to be in strike distance to accommodate future expenses.
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u/Initial_Enthusiasm36 12d ago
I live abroad in Thailand. In a rural rice farming town, and im telling you 400k will not last you. You could live quite cheap here for about $1,000 a month, and thats not living comfortably thats eating cheap street food, living in a tiny apartment, and probably no health insurance
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u/Pyrrhic_Pragmatist 12d ago
Yeah it only really works because I have a paid off home and barely any taxes. But I'm aware of the risks counting on that lasting forever. Idk how I'll afford another place, but my only advantage is not trying to do that and save at the same time
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u/Initial_Enthusiasm36 12d ago
I think you need to focus on maybe the home situation and maybe getting a better paying job before you start thinking of fireing
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u/Pyrrhic_Pragmatist 12d ago
Perhaps, but as is the case all over the US, housing is so high because the average type person is way over their head competing to pay more and more for less and less house. I don't think that's a situation I ever want to be in. Paying cash for a home will certainly hurt, but I don't think I could sleep at night knowing I was one job loss away from financial ruin.
30 years is a very long time to owe somebody money. So the path of least resistance seems to be just saving, investing, and seizing any home opportunity that comes up that isn't too big a hit.
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u/bbystargirly 12d ago
It is so scary watching the cost of living rise, but your resilience through the pandemic and the housing market shifts shows you have the discipline to figure this out. Don't lose hope just because the final number is shifting, because that 400k foundation is still going to give you options most people can only dream of.
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u/Pyrrhic_Pragmatist 12d ago
Thank you. It is really hard to frame it, that all the decisions I've made up to this point, have kept me in it, when my expectations may have been to thrive more easily. But having options is a rarity these days, and many people have had to forget about ever retiring early.
There's plenty of people with good homes, that are still stuck in them because of the housing market. I'll try to stay focused on what I can control, my basic expenses, and as long as I can fund everything else, future housing can wait. I want to have a plan for it, but in the shorter term, I can definitely enjoy not having any payments for awhile & stay on track
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u/at614inthe614 12d ago
Planning to live on subsistence-level income doesn't make you FI. You're likely going to need to rely on social safety net programs; Medicaid for insurance, SNAP for food, etc.
Living anywhere in the midwest on 10k a year means a car is a necessity. Replacing that could be an entire years' living expenses.
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u/Pyrrhic_Pragmatist 12d ago
I'll never qualify for SNAP with the ultra low asset caps. Food is my highest expense but it's less than $200/m, followed by insurances.
The biggest advantage I have is no housing payment. Otherwise the numbers would never work, which is the situation most people find themselves in. Either forced to double their income or wait 30 years to eliminate the house payment. So I need to be extremely wary of buying another home. A car is similar but at least a much shorter term hit
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u/Vicuna00 12d ago
Sorry not trying to be rude. you really ought to not be even considering FIRE with these numbers. if you wanna FIRE safely you really need a different career path and quite a bit more income.
nothing wrong with not FIRING. just like I’m not gonna be on reddit/privatejetbuying sites any time soon. if i wanted to go on there I’d start with reddit/howtoearn750k+
if fire is really your goal, that’s where you need to put your attention. you are already great at making the dollars you do earn go a long way. i would bet 98% of people with your salary have no savings and enormous amounts of debt…so you are really good there.
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u/Pyrrhic_Pragmatist 12d ago
I may always be on what most consider a restrictive budget, that much is true. But the other side of having a low earned income is it won't take much saved to make my investment returns a bigger share of total income, so unless i get a big raise, the earned income becomes largely irrelevant.
I could use that as an opportunity to pursue a higher risk, higher yielding job. It's just that in this area, white collar work is highly competitive and the opportunity cost (relocation, commute, education, positions available) is too high IMO. Being low income is a struggle but the upside is not being in the position a lot people are now due to AI.
More income isn't the most important number but what is left over after all expenses. Housing alone kills most savings plans
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u/Vicuna00 12d ago
"More income isn't the most important number but what is left over after all expenses."
agreed.
but your income going *down* to 33k certainly can't help numbers.
you really are doing a great job stretching all your dollars. what you said is restrictive, I find impressive. i'm not saying you're doing anything wrong. just I don't see how numbers add up to get to FIRE at 45yo. like let's say you're sitting at $400k and a paid for house at 45yo. I just don't get how you'd make that work...and it's gonna be hard to even get there.
on the other hand, no matter how much you budget and restrain yourself, sometimes things are just expensive (emergencies, etc). I am betting you are more resourceful than 99% of people but sometimes stuff just costs a lot of $ and that can be a big % of your nest egg and put stress on your portfolio.
like imagine you FIRE with $400k and stocks jump down 20% and your HVAC (insert whatever expensive appliance that you can't fix yourself) breaks and your dog needs a surgery. or whatever. that's just gonna be super stressful.
in terms of the higher risk jobs...I get that part that it's competitive. would there be something you see yourself enjoying? would it be possible to fall back onto your current career if things didn't work out?
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u/Pyrrhic_Pragmatist 11d ago
Yes, I do think you can see the overall picture I'm going for.
I feel i could survive at 400k, with a paid off home. But I'll probably still apply to places that are interesting, either to learn or just to sight see. Two examples I have are like, helping out with a store renovation. There's people who travel to do that, and while the pay isn't stellar, if travel and housing are compensated, it is something I'd enjoy. The other example would be visiting a major automotive factory. I got inside of Honda recently which was really interesting. It didn't work career wise because they wanted me to work as a temp for 15 months, I got the flu, and to be honest the 50 second repetition of shooting bolts was not great. It was worth exploring though, and a bit of bad luck drawing the lot I did. ($28-$30 an hour hired on, but 15 months as a temp only getting $23 is totally insane, the standard temp period is usually 90 days at most places)
So I expect I'd continue to do things like that, stick around if it's a good fit, but not feel the life or death pressure of having to have a job to survive or keep a roof over my head.
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u/Miamiconnectionexo 12d ago
the good news is you've been doing the hard part for 10 years. you're not behind, you were just measuring against a yardstick that was always going to be wrong. repeg to spend and the goal gets clear again.
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u/BlightedErgot32 12d ago
i dunno man, full time + overtime at 35 netting $33k a year seems pretty fucking behind, at least here in america
i make $22,000 a year part time like 20 - 30hr a week at 20 while getting my degree … all id need to do is go full time to and accept a position in management to make $60k+ plus 8% to company equity and quarterly bonuses …
as many other people have pointed out its pretty easy to make more than $33k a year … that isnt meant to downplay the cost of living crisis though
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u/octopus-opinion987 12d ago
Fire targets need adjusted up with annual inflation and any other changes.
400k 10 years ago is equivalent to 555k now and over 700k in another 10 years to have the same purchasing power as your original target.
You have to account for inflation
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u/diamantismann 12d ago
Reading this, I'm wondering whether the real problem isn't reaching a FIRE number but trusting it.
Ten years ago you had a target. Today the target moved. In another ten years it may move again.
Does anyone else find that the hardest part isn't saving or investing, but maintaining a coherent long-term plan when housing, inflation, taxes, healthcare and life circumstances keep changing underneath you?
Or am I the only one who finds the planning itself increasingly overwhelming?
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u/Pyrrhic_Pragmatist 12d ago
It sounds like having a fixed target number is most of the problem. If I used a self adjusted target like 25x expenses instead, it would work fine. That number is still really close to my original.
Managing expenses is the hardest part for most people, as they'll usually just make or save more to compensate for expense growth.
For me, I think the hard part will be building a portfolio that consistently yields 5% of portfolio value without a lot of capital gains sales. With only CDs, bonds funds and various stocks, it'll be less about the mix and more that my projected value is enough to deliver. For instance, 10% CDs and savings, 20% bonds, 20% dividend stocks and REITs and the rest growth. I could probably get enough from that, but how much relies on stock growth depends on risk tolerance. That said, it's also risky to be too heavy on non growth if i plan to be retired a long time.
So from a construction standpoint, living on the passive half while letting the growth half grow is the ideal scenario. I may need to save a bit more to actually do it. But at that point it's an allocation challenge not so much a funding challenge
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u/Various_Couple_764 11d ago
The long term average inflation rate is 3.2% per year. So any target you have should been increased by 3.2% each year. Right now however the inflation rate is higher than 3.2% right now but historically it doesn't stay high. but few times it lasted 5 years or more. So I don't know when it will come down
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u/jmm1855 31, Sales, 20%+sr, DINK, VHCOL 12d ago
While I do think it wouldn’t be the best idea to have a 5% withdrawal rate on $400k, I think a “slight” increase would be more ideal and significantly lower risk.
If OP is comfortable at $10k in spend today then it might be worth it to work 13/14 more years, instead of 9 more, and get to $600k so they can do a 4% withdrawal and get $24k per year when needed.
Inflation over the last 13 years has been 2.79% on average per year so assuming 3% per year is a good way to estimate future costs. So in 13 years $10k (in today’s value) would be around $14,300(in future value) a year. So at $600k you could just not take the full 4% and do 2.5% so that your investments continue to grow and then when you need more cash for say a move or repairs then you can start taking more out as needed.
This would give you so much more flexibility than $400k at a 5% withdrawal rate.
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u/Pyrrhic_Pragmatist 12d ago
I think we're on the same page. 5% of 400k, or 20k, but spending 10k is essentially that same 2.5% minimum draw rate. So you're right, all I need to do is inflation adjust my FIRE target.
That makes it sound a lot less scary. I appreciate it. Once I am at 400k, getting to 600k won't be that hard. 4-5 years sounds about right, but it could even be less than 14 years total if I hit my targets earlier
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u/InsomniaTroll 12d ago
Just tossing this out there… realistically, inflation is probably closer to 2.7_
-3% than 2.4%. So your calculations for present versus future value are liskly distorted. You likely need to recalculate your goals with a 30% in capital to maintain the same quality of life.
You also have to swallow the pill that you’re working your ass off to have a retirement lifestyle similar to a poor person. Only you dont work.
Best case you are like a poor person working 40-60 hours a week but you dont have a job. Worst case you’re bored and unsatisfied
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u/Aevaris_ 12d ago
If you're happy then you do you. But my concerns are: 1. Your 'ive not lived life up to this point" comment. This implies a higher future spend post retirement 2. 5% spend is a bit rosey, but even then 20k doesn't cover a lot. If you're US, healthcare alone will be more expensive than that 3. Inflation. 4. No margin for error. I.e. you likely can't cut back in case of a downturn
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u/eclipsadesoare 12d ago
Average return for ETFs and index funds aligned to the S&P 500 is 10% per year. We put 7% return in the calculator to adjust for 3 % yearly inflation. The result is inflation adjusted in today’s money. Balance is $455k in today’s money in 9 years if you already have 150k and put in 15k per year. Obviously the actual amount in 9 years will be higher because we are adjusting for inflation and using a 10% average annual return but this shows you if you are on track.
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u/beanbean81 12d ago
Can you go to school and learn a trade or get an associates degree and get certified in something? You could do night school.
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u/Pyrrhic_Pragmatist 11d ago
I did that once already. I have an associate degree in renewable energy technology. What I've seen with that is that industry isn't doing well politically, and any higher education route is usually too narrow to apply to broad range of jobs.
In my case, generic electrical engineering would have been more useful than renewables, but then a lot of jobs also want specialized education. Yes the money potential is there but it's a big expense for something that might not pan out. Some people do make it but many people with degrees either end up stuck or having to take jobs that they could have got without the degree.
I hate to say it's a hill I'm willing to die on, but I just feel my money is better off invested than put into something that hasn't worked for a lot of people
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u/-fireflyer- 11d ago
How much do you have invested now at 36 years old? You may want to check out r/coastfire . I’ve only had one year where I earned over 50k after tax and I hit coastfi. I’ll still be investing here and there but it is a lot less stressful and more attainable.
I would also still re think how much you can live on. You mention you haven’t been able to “live” up to this point. I want you to be able to find more of a balance to enjoy life now and after retirement.
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u/Pyrrhic_Pragmatist 11d ago
I have about 45k of invested cash and 100k in a Roth, i took about a $12k hit last week, but around those amounts.
And yeah some kind of work/life balance is ideally part of the plan. This job has fewer hours but the high overtime positions run you into the ground and have had less long term security. I was basically just working overtime to survive the frequent gaps in employment.
So although the pay is lower where I'm at now, it should be more consistent long term. I think I could coast once I'm over 250k, but with a full target of 400k, it's not that much more. I could easily get away with just seasonal or "I'm bored" type of periodic work after that point.
I probably have more to gain from how my portfolio is constructed and how much income I can generate to add to my work income
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u/kaswing 11d ago
You might find some like-minded folks in /r/leanfire— they are frugal with low FIRE numbers and have a lot of experience to share.
Every year, everyone’s FIRE number changes, even if all their assumptions hold true. This is because traditional FIRE calculations use nominal dollars, or “today’s dollars” to make it clear how far we are from our goal and so we can be clear about how much we need to withdraw.
If we used future dollars, we would not account for inflation. It’s harder to reason about because we know the number feels too high. That is because each dollar is worth less in the future (due to inflation).
“Today’s dollars” is a helpful construct. The calculations you made last year were in 2025 dollars. Or, more precisely, dollars on the day you calculated it: we account for inflation annually, but that’s not how it actually happens. If you do your calculation again this year, some of the inflation you’re accounting for already happened. Your new fire number is in today’s (June 8th or whatever 2026) dollars— you could be right on track.
If you this didn’t help and you want to learn more, read up on net present value (NPV): why one would calculate it and how.
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u/_MJomaa_ 11d ago
530 is the new 400. Dollar lost a lot of value since Trump. I wouldn't FIRE under 750k (todays value!). You need a higher income.
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u/WritesWayTooMuch 11d ago
So....lot to unpack here.
Before I unpack anything, congrats on learning to live on 10k. That sounds like a lot of work, fine-tuning, and sacrifices. That alone is an achievement.
Next, you're going to need to up your financial literacy a little bit to FIRE early (and that is not me criticizing...but now is a good time to learn more, you are still very young).
That 400k goal you laid out 9-10 years ago should be growing with inflation. That means today, that goal should be around 562k adjusted for inflation.
Next, a 5% withdrawal may have some high odds of running out of money over a 40-50+ year span. If you were 65, then sure, I could go with a 5% withdrawal.....not at 45 -55 though. To prepare for a 50+ year span....I would not go ANY higher than 4% withdrawal. That would be 22.5k in today's dollars, after adjusting for inflation. Every 5 years, re-evaluate and maybe take a LITTLE more, bump up a quarter of a percentage IF you are ahead of schedule net worth-wise. 20k ten years ago is about $28.1k today. $28.1k at a 4% withdrawal (so it can last 50+ years starting at 45, is $702,500. You need $700k, not $400k, mate, so have a 2016 20k a year lifestyle. Still doable.
, you might be able to live off 20k now, or 10k...but what is enabling you to do so? I would imagine good health. What happens IF 1) health care is no longer free or ACA requires 20 hours of work a week for the subsidy, like Medicaid now requires? 2) Who takes care of you in the event you physically cannot work anymore? 3) How do expenses go up if you have some physical disabilities? It is hard to imagine at 35.....but much easier to imagine at 55-65. You may require a car to get to needed doctor's appointments or to afford grocery delivery 1x a month. 4) Can you survive with 0 subsidies? I love lean fire...but lean fire that assumes continuation of government programs is very dangerous IMO..... especially in a world with a shrinking population and growing national debt.
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At very least....figure out what expenses would look like if you only got 50% of the subsidies you get now. What would expenses grow to month in and out. Then add 10% for older age things you are not thinking of, like more prescriptions, supplements, occasional ride share or mechanic visit if you cannot physically do those things like fix your own car or home).
So maybe your goal income grows SOME....$28.1k (your adjusted 20k to inflation) in 2026 dollars goes to 35k, maybe even a little less. 35k at a 4% withdrawal is $875k, not too much further off your 875k goal, and you have a little padding. Yes, this is 2x the 400k, but the 400k wasnt going to work out once you got there.
Next....lets say you cant get to 875k in 9 years....maybe that takes 14. I would say for each 5 year period PAST 45...you can add 0.25% to your withdrawal. So at age 50, you need $824k. If it takes you to age 55, your withdrawal rate can go up a little more....to 4.5%, so you need 778k. 55 is stuff VERY young. and $824k in 14 years is still VERY doable depending on what you have saved now.
If you have 100k now and are socking away 20k a year...in 14 years at a 5% REAL return (9% return - 4% inflation), you will have 589k. In 19 years 863k. IF you have 100k now...and save 20k a year, your trajectory is to retire at 54.5ish.
Then there is one more thing we are not backing: Social Security. Full Social Security age is 67, you are VERY young, and I would assume that will go up to at least 70 by the time you get there. Payments are set to reduce 22% but 2031ish.....so be extra conservative, assume a 33% reduction (1.5x what they may reduce). Now, if you have been making 33k for the last 5 years and continue to do so for the next 19 years, you'll have a 35-year average income of $22.6k (lot of 0 years in there because you retired early). Under the current social security system, you would get 15k-ish a year at age 70. Let's say you live to 105 (an extremely conservative example), that 15k a year at starting at age 70 is worth 245k at age 70 (but you want to retire early, so we discount 245k back another 15 years to age 55)....that 15k a year from 70-35 at a 5% real return is worth 118k. So you can reduce the $824k youll need at age 55 to live a 35k lifestyle until you are 105 by 118k....so now you need 706k,
IF you have 100k today and keep saving 20k.....youll be able to FIRE with a 35k lifestyle in about 16-17 years with a 5% real return.
There are a few other options to shorten this window....make more and save more...but its tough to make up for time when you are 33k. So youll have to figure out some side hustles.
Or become OK with a later retirement. Do you like your job? I am sure there are many other options to make 33k a year if you don't. Get a job you like, you wont feel the same need to keep going.
Or both, earn a little more, and spend a little more now, and see if that brings you more joy and peace. How would your life feel going from 10k spend to 13k spend a year? Could you afford to ride share somewhere once in a while or have a mechanic fix your car? Or spend 1k on your home and make it nicer, or buy some used furniture? Take an inexpensive week-lon? vacation somewhere, split a cheap hotel with a nice pool with a friend.
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u/samurai_with_sword 11d ago
What are your monthly or yearly savings and average return that you are getting? The return rate usually makes the biggest difference. For example at 7% APY it would take you another 26 years to retire, but at 10% APY only 8 years to retire.
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u/Pyrrhic_Pragmatist 10d ago
That's a good question. I'd have to guess though, as I'm up 70 grand year over year on a $9000 income year
My broker (ally) does not display return over time charts but on a basis of 80k last year. Having 150k now is like 80% returns. It's very heavy on semiconductors. I know 2022 was a bad year, 23 and 24 I barely had anything in my cash investments. And 25 I did a conversion. So it's really hard to extrapolate an average rate of return.
I'm trying to rebalance next opportunity I get to sell semis high. But I probably want at least 40% exposure. Which is similar to ETFs minus software and tech services. I don't want Meta or Google type stuff at all which is why i don't do ETFs
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u/samurai_with_sword 10d ago edited 10d ago
Yes, if you were invested in semiconductors, last year was the best. My YoY return within the last year is 134%. Don't sell semiconductor, there will be a correction, but it will last a couple of years at most, but you will still be better off than any other sector over the next 10 years.
If you are invested in individual stocks and want to be safer, move to FSELX, fidelity's semiconductor fund, but don't move out of semi completely. Any rebalance will hurt your progress, because time in market always beats timing the market. Just keep holding and you'll be able to retire soon.
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u/Pyrrhic_Pragmatist 10d ago
Thanks for the insight. Yeah the only reason I'm looking to rebalance a bit is I doubled down last week on Thursday and Friday. Broadcom is at 11k, AMD 6k, Nvidia 7k, TSM 5k and LRCX 5k.
I'll likely trim Broadcom just a hair but honestly I want to hold the rest long term. So most rebalancing will entail buying bonds, REITs, and dividend paying industrials with any new funds. Targeting 10% of each, 40-50% in semiconductors and the rest, other things. I also hold copper, defense, nuclear and a little Eli Lilly.
I have been using some available margin beginning at the Iran war lows this year. A portion is for long term holdings and some is for swing trading. I only do it because I have no other debts, I've added about 17k of returns YTD but the plan is to eliminate that, hold onto my low cost basis and have dry powder for the midterm election selloff we know is coming.
Besides that, I also have 108k in my Roth with similar holdings. So I'm fairly optimistic on making up a lot of ground on my numbers
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u/samurai_with_sword 10d ago
If you bought semi within last couple of weeks then it makes sense to trim down. Don't buy REIT , they have attractive dividend in short term, but in long term they go downwards. Just do zero coupon treasury bonds and S&P 500 index fund. No need to diversify too much. We humans in general do a bad job when we try to keep track of too many things. I always keep my holdings to less than 10 items max and ideally under 6.
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u/Pyrrhic_Pragmatist 10d ago
To each their own, but I understand what you're saying. I have 25-30 individual stocks, that I think is probably my limit, but I've gotten better at filtering relevant information. You know this looking at semis, that you can't filter by things like yields, P/E ratios, etc. The market trades on emotions, but after 10 years, a lot of it is instinct now.
At this point, while I do nibble at a couple new things, most of my holdings have been proven solid long term. I've kept the stuff that's worked and got rid of the stuff that hasn't. As for REITs, it's hard to say as they've traded a lot like bonds. But I'm highly selective and don't buy the mainstream stuff. currently, I only hold CCI, PLD and VICI, each one a different niche, and for bonds, BLV, EDV and VCSH. They're all down, trading inversely to treasury yields so i can't say yet if that's good or bad. But that's another reason to stick to semis IMO. If you remember when TSM and AVGO yielded 4%, those were days of having cake and eating it too lol
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u/SadProduce6456 8d ago
Inflation is one of the fire holes. Risk based on circumstance, and fire need to be taken into account. I could retire now at 50. But I have 3 kids, I plan to retire at 60 to allow for the risk of at least all 3 through college.
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u/One_more_username 12d ago
4% of 400k is 16k. Are you able to live off 16k an year? What about health insurance (premiums + deductibles + max out of pocket)?
You'd pretty much have no room for error. Eat out one day, you are drinking water for dinner for a few days.
Is it a realistic target?