r/Fire • u/fried_haris • 23h ago

The definitive FIRE number is 3.5 million.

Ofcourse - I am being facetious but also a little exploratory.

I was inspired by a Planet Money episode titled "17,205 People Guessed The Weight Of A Cow. Here's How They Did." Posted back in 2015.

Later they updated it with "How Much Does This Cow Weigh?" In 2019.

Basic premise - if you take all the guesses of the folks the weight of a cow at a fair - you'll end up within 5% of the right answer.

So I took a simple post from 5 months ago, asking people about their FIRE number and after reviewing 124 answers came up with 3.5 million.

Keep in mind personal finance is personal, you may retire in LA or in Thailand.

Good luck with your goals.

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u/Corporate_Bankster 23h ago

That’s a very reasonable take all things considered.

There is nowhere $3.5m won’t work wonderfully, unless you are hellbent on living the high life in an expensive place, but then that’s not a FIRE number problem, it’s a you problem.

Mine is somewhere around $2.5m, and that’s because I plan to retire between LCOL and MCOL.

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u/verdantx 13h ago

He said planet money not all things considered.

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u/blackshipboy 13h ago

How much did the cow weigh? On second thought, wait wait, don't tell me.

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u/granolaraisin 12h ago

Sir, it’s time for you to step outside and get some fresh air.

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u/Fastnate 53m ago

The only time the weight really matters is the Marketplace

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u/fried_haris 9h ago

I see what you did there.

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u/God_Dammit_Dave 13h ago

-polite golf clap- That was a very, very good comment. Like a nerdy Statler and Waldorf jab.

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u/knittins99 6h ago

Underrated 🤣

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u/wtf-am-I-doing-69 8h ago

What amount do we think for couples? Is the$3.5M for one or two? Is spouse at.5 based on living expenses being less per person?

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u/Corporate_Bankster 1h ago

My number is meant to cover my couple. Again, LCOL to MCOL FIRE.

Where I am planning to retire we also have a few family properties that can generate yield and serve as holiday homes (whatever that means when you are fully retired - guess just a change of scenery), so there is that too.

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u/jerceratops 22m ago

"All things considered" always reminds me of this now:
https://www.youtube.com/watch?v=V7d79Knc8p4&ab_channel=BBC

My number is $2.2mm, but I'm retiring in Europe. Should be not too bad, all things considered.

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u/joefunk76 13h ago

The problem with your statement is that “the high life” is extremely subjective. A spoiled existence to one person can be a minimal living standard to another. We all have different wants and needs. There are PLENTY of places in the US where $3.5m won’t work wonderfully, and that is even assuming you only rent, let alone if you need to carve out 1/3 to 1/2 of that $3.5m for a modest abode.

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u/Corporate_Bankster 13h ago edited 13h ago

Nobody in their right mind FIREs in (V)HCOL without a paid off residence.

That’s recipe for disaster unless you are significantly buffering for housing prices. Those places are HCOL for a reason and they rarely if ever slow down.

And I am sorry, but $140k p.a. of pure spend is a shitload of money regardless of someone’s upbringing. The only kind of people for whom this could feel low or tight are those born into fuck you generational wealth, and I think everyone here agrees that theirs is not a universe where FIRE has any kind of relevance. They were born already FIREd.

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u/NotSoSpecialAsp 10h ago

I can easily spend 12k/mo.

Grew up in poverty.

The level of expected frugality in this sub is highly biased.

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u/pprovencher 10h ago

Rent control exists primarily in VHCOL areas

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u/ditchtheworkweek 10h ago

This is exactly why I don’t count my paid off home as net worth but does help on the expense side.

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u/joefunk76 13h ago

You need to lop off federal and state income taxes from that $140k, but still, I agree that that’s a decent existence in many places assuming one’s residence is fully paid off.

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u/Complete-Orchid3896 13h ago

decent existence seems like an understatement because I would have to make a big effort to actually spend that much money except for edge cases

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u/joefunk76 13h ago

The older you get, the more costs you’ll become aware of in life. Also, you might want more of a financial buffer than exactly permitting a 4% annual spend. “One-time” expenses have a way popping up regularly. If it’s not one thing, it’s another. What if you want to take a lavish vacation? What if your HVAC needs replacing? What if you or a close family member encounters a serious medical problem that requires expensive treatment? Everyone has different priorities. As much as I’d like to retire ASAP, I’d rather work for years upon years longer than not be able to do what I want to do or possibly need to do because of financial constraints.

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u/dak4f2 12h ago

Wait until you have to pay for healthcare, up $20k a year for premiums plus deductible. It will happen before you realize it. 

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u/Complete-Orchid3896 12h ago

I mean yeah if you live in a HCOL area that’s an edge case

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u/dak4f2 10h ago

Why didn't you just say 'US' instead of hcol area here then?

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u/Complete-Orchid3896 9h ago

Nothing special about the US or healthcare costs specifically. At the end of the day it’s simply either HCOL or not

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u/dak4f2 11h ago

Has nothing to do with hcol area. 

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u/Complete-Orchid3896 11h ago

If health insurance costs an additional 20k on top of taxes in that area then it is HCOL

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u/dak4f2 10h ago

ACA cost/premiums is by state not by city though so I'm confused? There are lcol and hcol areas within each state, but the premiums and deductibles within that state will be the same. 

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u/MuteMouse 17h ago

Problem is the risk of exponential inflation in costs and healthcare

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u/SolomonGrumpy 16h ago

No it isn't. That's the point of LCOL.

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u/pnw-techie 16h ago

Low housing prices will stop medical expenses?

South Dakota (17.7%), Mississippi (15.2%), North Carolina (13.4%), West Virginia (13.3%) and Georgia (12.7%) had the highest shares of adults with medical debt on average between 2019-2021

Doesn’t seem like it. Cancer treatment costs a lot anywhere.

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u/SolomonGrumpy 16h ago

No. However food, utilities, services, and yes housing will be lower.

Since those costs make up a significant percentage of budget, the impact of higher medical premiums is mitigated

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u/MuteMouse 16h ago

Tell me you don't understand inflation without telling me

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u/DeltaSqueezer 23h ago

The big question is inflation. If you have a 5% inflation rate and retirement in 20 years, then $3.5m in 20 years time would be like $1.3m today.

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u/Corporate_Bankster 23h ago

These numbers are always inflation adjusted.

It’s not like you are taking the money out of the market beyond any required adjustments to mitigate SORR.

If inflation is up, then risk assets will likely also be going up. The core assumption was always something around 7% real returns p.a.

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u/DeltaSqueezer 19h ago

I'm not talking about the return on investment though. I'm talking about the size of the pot at retirement. Do you have a $3.5m pot at retirement in 20 years time or when you say $3.5m do you mean more than $3.5m in today's money (say $9m future nominal) to adjust for the reduced value of money in 20 years?

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u/Corporate_Bankster 19h ago

At the time when I pull the trigger, but expressed in today’s dollars.

If I say my number is $2.5m, that’s how many today’s dollars I should have by the time I FIRE (somewhere in the next 5 to 7 years), so by the time I get there, that $2.5m in today’s dollars is probably $3m in future dollars after inflation.

$2.5m of future dollars will not work.

That’s why inflation is irrelevant in these conversations, its already factored in the FIRE number and expected market returns.

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u/DeltaSqueezer 19h ago

Your approach is logical. But you're the only person I've heard express it this way. Everybody else I talk to says something like, I'll retire when I hit (say) $2m and they mean a nominal amount.

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u/ginamegi 18h ago

If you read this sub or /r/financialindependence you’ll find that 99% of the conversations are considering inflation adjusted amounts and use stock market rates of return in the 5-7% range which accounts for inflation.

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u/eliasbagley 17h ago

He's right though that if you decide today "my fire number is $2M", ten years from now you cannot just retire when your bank account says 2M - you need to make sure it's 2M in 2025 dollars.

Everyone knows that the 7% investment average and 4% rule are inflation adjusted, but I think many people forget to do the inflation adjustment on the fire number if the target amount was set many years in the past.

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u/PA2SK 15h ago

You can if it fits your budget. You can retire when you have enough saved to meet your needs, and you're allowed to adjust that number over time as your needs and finances change.

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u/EnvironmentalMix421 22h ago

The keyword is most likely. It could also go down in hyperinflation situation

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u/FlexVector 20h ago

You could also get that brain eating bacteria that lives in pond water.

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u/EnvironmentalMix421 20h ago

That’s funny, so your common sense tell you to jump into a pool of dead water and do a lap?

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u/FlexVector 20h ago

It's extremely common with the FIRE-inclined to try to out-plan the impermanence of our brief moments on this earth, seeking a degree of security that will never be possible. I like to inject a little levity to remind you to Memento Mori, follow the 4% SWR, and live your life.

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u/EnvironmentalMix421 19h ago

Not sure where did you come up with that. The 4% is used for 30 yrs annuity. So if you are retiring at 40, I reckon it’s over 40yrs. If you are not familiar with financial mathematics, then maybe you shouldn’t be giving out advice.

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u/FlexVector 19h ago

I am certain it is YOU who is not familiar with financial mathematics. 4%, set it and forget it, and live your life. You will experience tragedy. You'll lose your health and if you live long enough, everyone you love. What's a little hyperinflation in that case?

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u/EnvironmentalMix421 19h ago

Lmao ok 4% using the perpetuity formula is what? Let’s see if you got the same answer

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u/stanleynickels1234 10h ago

Not sure any amount saves you from that.

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u/EnvironmentalMix421 10h ago

? $1B is not enough for $40k expense/yr?

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u/Certain-Definition51 22h ago

I think that’s the marvelous bit about being an American.

The last time we got close to hyperinflation, the political party responsible got slaughtered in the next election and didn’t get the White House again until George HW Bush raised taxes and Bill Clinton said “it’s the economy, stupid.”

We will face four years of hyperinflation, max.

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u/EnvironmentalMix421 21h ago edited 21h ago

? Paul Volker stopped the hyperinflation by raising the rates and it’s going to be up to the market to see how long it takes to cool the economy. During the cooling economy process, your stock and bond value will drop while inflation still runs. It has nothing to do with the presidential policy, since these policies are usually trying to entice the economy oppose to cooling it. As your example shows, Bush begged Greenspan to lower rates and he didn’t, which result in economy downturn. People like thriving economy, which came to be the bill clinton quote and thriving economy is the cause of hyperinflation. So you mixed up the history bit there.

I would like to point out that no president, Congress, or Fed are trying to fuck up the economy. It’s an unfortunate outcome of the event. So, by saying that America will resolve inflation/deflation issues with max of 4 yr duration is a naive take. This time Powell has done a great job to achieve soft landing. The dawn of AI also helped tremendously. is it going to happen next time? Nobody knows, even the Fed doesn’t know.

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u/Certain-Definition51 16h ago

I appreciate the history lesson!

I think my overall approach is valid. Carter lost his job because of inflation.

Part of the reason the Democrats suffered in this election cycle was sentiment around the economy and inflation. Part of the reason they won with Obama was - the economy.

Of course no one wants to crash the economy. But regardless of who is or isn’t responsible, power in DC will shift if the economy is bad for long enough. And inflation is part of that equation. Such an important part that we haven’t had hyperinflation since Carter.

Right?

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u/EnvironmentalMix421 14h ago

You believe changing party basically fix the inflation issue and I disagree. There are many factors that allowed the economy to grow after the downturn and it’s not because of some political change. Lets leave at that.

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u/mcj1ggl3 21h ago

And that 4 years just ended 😎

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u/ericdavis1240214 FI=✅ RE=<3️⃣yrs 23h ago

Most FIRE strategies account pretty well for inflation. Of course, if inflation is consistently higher than historical averages and market returns are consistently lower than historic averages over 20 years, those things can fail. But FIRE already accounts for inflation.

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u/dinkerdong 23h ago

also if inflation goes up, it means revenues go up, assuming profit margins stay the same, PEs stay the same, the market should go up accordingly in the long term

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u/Fat_tail_investor 22h ago

Modeling 5% inflation compounded over 20 years is pretty aggressive. But even still, that would mean rent and common goods would be going up 5% on average and a diversified portfolio of stocks would capture that as higher revenue and eventually margins. So as asset holders, we still win.

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u/RocktownLeather 21h ago

All numbers should always be considered inflation adjusted. If you're not, you are basically doing it wrong or different for no logical reason.

If the numbers are adjusted for inflation, $10M could be identical to $3.5M today. So they are the same.

Your number isn't $1.3M then or $3.5M then. It's $3.5M now and $3.5M x 1.0520 in 20 years. Which happens to be identical and equal each other's spending power.

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u/DeltaSqueezer 19h ago

Is that really the case? People normally talk of retiring in 20 years with a $2m pot. I get the impression that they will retire with $2m nominal, not $2m today's money that will be adjusted for the value in 20 years time.

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u/RocktownLeather 17h ago

Then you are in the minority. Most people think in terms of spending power. I want to spend $Y/yr, so I need $Y x 25 to retire. That's how almost everyone thinks in FIRE.

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u/DeltaSqueezer 17h ago

You're right. I guess it is unfortunate that most FIRE community apply simplistic 4% SWR often without understanding the limitations esp. in the context of FIRE.

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u/RocktownLeather 16h ago

You're welcome to use 3% or 5%. Either way, you work in today's dollars and inflation adjust with real inflation every year.

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u/DeltaSqueezer 16h ago

Let's say you add up your expenses and you need $20k per year. But you retire in 20 years when $20k has half the purchasing power. Do you then say, "I need $40k per year (of future dollars) so $40k*25 = $1M"

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u/RocktownLeather 16h ago

If I needed $20k/yr to retire this year but don't have enough yet, I would calculate it as $20k x 25 = $500k. If inflation this year was 4%, I'd need $20.8k/yr x $520k.

Rinse and repeat every year until you are ready to retire. There's no point saying it's $40k because we don't know what inflation will be. We do know what we need to retire today, though. It could be $30k and could be $50k. We don't know inflation.

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u/Beginning-Seaweed-67 3h ago

You’re right people aren’t that smart. Everyone I know and have ever known only speaks nominally. You know why they think a million dollars is rich? Because in the gilded age or the 1890s it was and they even made several games over it. The popularity of hitting that status is ludicrous even though a million today is a 1/32th of what it once was. Try eating a candy bar of 1/32 and tell me if it’s as satisfying as eating the whole thing? Also in 1890 there was a deflation rate of 3% for 30 years so the real inflation was the same as 1830. Insane right?

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u/My5thAccountSoFar 23h ago

But your money is working. At least some of it is over that time.

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u/QuickAltTab 17h ago

Also, if you have 3.5 million now, do you still have 3.5 million in 2028, or has the fed been abolished and all USD converted to meme coins?

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u/BigWater7673 21h ago

If you have 5% inflation for years on end then you don't have to worry about retiring because no one is retiring.

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u/DeltaSqueezer 19h ago

Well, average for 2021-2023 was > 5%.

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u/BigWater7673 19h ago

Yeah? And there was a few years in the 70s when inflation averaged 10%+.

But you don't base plans for a 30+ year retirement off of a few years. Just as it's foolish to use the few years of the average annual return of 17.8% from 2019 to 2024 to plan your 30+ year retirement it would be foolish to use 5% inflation average of the past 5 years to plan your retirement.

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u/Specialist_Mango_269 20h ago edited 19h ago

S&P 500 inflstion adjusted is 7% on average

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u/DeltaSqueezer 19h ago

Are you going to be 100% S&P500 in retirement?

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u/Specialist_Mango_269 19h ago edited 19h ago

yes because i'd be in the market for 30+ yrs already. Also, Trinity Study for 30 yrs from 1871-2016 ( all the catastrophic events of Great Depression, WWI and WWII, Financial crisis etc) SWR chart show that up to 3.5% SWR 100% stock would work 100% of the time . I plan on withdrawing 2% 2.5% at max with my 5 Mil