The 4% rule for FIRE is enough no matter what one says ...

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1 year ago
Topics: Tech, Analysis, Strategy, Future, Money, ...

I am a huge proponent of the FIRE movement and would like for people to not be corporate slaves and live a happy and fulfilling life rather than slog all your life behind a desk. So naturally i'm interested in things like financial freedom and how much does it take to retire early. In the process of going through this research, I have seen many people say that the 4% rule is the gold standard for early retirement. But more recently many people have been bringing up the inflation argument and saying that if inflation continues the way it is right now, 4% is not going to be enough at all. They advise that you only take out 3.5% or even 3% from your corpus to factor in these new things like inflation.

I do agree with most of what they're saying and their main reason for saying this is, what is your end up living till 90 or 100 years or even more? You will run out of money at that point. While I do see the angle they are coming from, I do think they miss out on a very important aspect which is compounding!

As we all know, compounding is the eighth wonder of the world and given enough time, your money will multiply like crazy as long as it is invested and that it is invested in some reasonably good funds which is not too crazily volatile like crypto currencies. So, even if you had say $10,000 invested in your 40s and provided you didn't touch it and let it grow with the market, do you have any idea how much it would become when you're about 90 or 100 or even 80 for that matter?

So my main point out of all this is, if you're got your FIRE numbers down till a rough time span of about 75-80 years and even if you seem like you'll run out, don't worry, compounding will do it's magic for you and keep you above water.

Let me know what you think about this. Do you agree?

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1 year ago
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Comments

80-90 years old is too late to have high amounts, my goal is 50s and early retirement, then double retirement!

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1 year ago

Same here but I am talking about your retirement nest egg lasting that long and the possibility of it is really high if you're invested in the markets.

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1 year ago

Interesting, I do have a plan. Still on planning stage, hope to move a step before the year ends.

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1 year ago