![]() ![]() – Remember I live in an expensive area in an expensive house with an expensive wife, a kid, two kats, two cars and 6 chickens…). I have an above average paycheck, so for me it would certainly be realistic (my current savings rate is somewhere in the 15-25% range though. How realistic is it, for a regular person to live a normal/half decent life with a 50% savings rate? When i first realized this fact it absolutely blew my mind! 17 years?! So from the table above, we can see that IF we somehow manage to live our lives for 17 years with a 50% savings rate netting 5% interest on our investments, then we’re home free! Shocking indeed, no?! □ Just think of this assumption as a nice generous Safety Margin. You want your ‘Stash to last forever, you’ll only be touching the gains, since this income may be sustaining you for seventy years or so.You’ll live off of the “ 4% safe withdrawal rate” after retirement, with some flexibility in your spending during recessions.You can earn 5% investment returns after inflation during your saving years.Money Mustache presents this table (I’ve altered it to be horizontal for aesthetic reasons – bear with me) to visualize at what point you can expect to retire, when you start with a cash stash of zero: Needless to say, the higher the savings rate the shorter the journey.īut as the saying goes: There are many ways to skin a cat (it’s a metaphor, grow up!). The last variable you need in order to calculate how many years it would take you to reach FI is then your savings rate. His calculations are based on an average return (after tax and inflation) of 5% and a Safe Withdrawal Rate (SWR) of 4%. Money Mustache entitled “The Shockingly Simple Math Behind Early Retirement”. ![]() If you’re new to this whole idea of early retirement and are eager to learn “how it works”, I’d urge you to take a gander at the great article from the one and only Mr. ![]()
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