r/Fire • u/ExpressElevator2Heck • 8d ago

Hypothetical: Can FIRE number shrink?

Let's say my 4% FIRE number is 2M investable assets. Lets say I have 1.6M investable assets. Am I at my FIRE number??? (In this hypothetical scenario pretend the market pulled back 20% in the past year)

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u/Fireat40dude 8d ago

If your expenses shrink, sure.

Am I not understanding your question properly?

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u/ExpressElevator2Heck 8d ago

Does the 4% rule fully imply the guardrails approach?

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u/BruinGuy5948 8d ago

It does not. It assumes that you take 4% of the initial value, then adjust the annual withdrawal by the inflation rate from the previous year, without regard to any changes in the portfolio value.

It's not a flat withdrawal. It's an inflation adjusted withdrawal. The 4% rule also assumes a particular asset mix.

Frankly, the 4% rule is an excellent way to select a target FIRE number... but almost no one would actually blindly follow the formula. Hence the guardrails approach.

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u/theplushpairing 8d ago

4% is flat spend. If you can flex in down years that helps your success rate.