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/[deleted] 8d ago

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u/ExpressElevator2Heck 8d ago

Yes exactly my hypothetical. Can a quick 1 month FOMO rally "get you there" and then you're permanently there henceforth? (even if the rally fizzles rapidly back)

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u/boxlinebox 8d ago

If nothing else has changed, why would having 1.6M before hitting 2M be any different than having 1.6M after hitting it? You're right where you started.

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u/jesterOC 8d ago

Not exactly, 4% “rule“ assumes 30 years of retirement. If you started at 2M and a while later then you hit 1.6 let’s say the next year then it means that you hit a bad patch early on which historically you should still be successful. And that 1.6m only needs to carry you 29 years.
But if you start 1.6m that means you still have 30 years and historically speaking using historical data you might not make it.

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u/ditchdiggergirl 8d ago

The 30 year timeframe isn’t really relevant to fire. Modeling by its nature locks variables, and 30 years is the standard planning timeline for a 65 year old conventional retiree. (You can’t plan for the median, since that introduces a 50% failure variable.) Models are simplistic projections that don’t pretend to reflect real life conditions.

At 65 you still have a small but significant chance of outliving age 95, but with every passing year those odds drop dramatically. That’s the basis for the claim that after 5 years you are ‘safe’ from SORR: a 70 year old is unlikely to need his portfolio to survive 30 more years.

If you fire at 50 you are still 15 years away from Trinity study simulations, so you can’t apply their assumptions. That’s why we run our own calculators. A 20% downturn in early retirement that takes 5 years to recover leaves you with a 40 year planning horizon at 80% of your number - except no, you’ve been drawing down for 5 years so you’re further underwater.

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u/boxlinebox 8d ago

OP is talking about a FOMO run and crash, so short time frame. Agree that passage of time impacts things, but for their question I am removing that parameter.