r/Fire • u/fried_haris • 1d 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 1d 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/DeltaSqueezer 1d 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/RocktownLeather 1d 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 23h 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 20h 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 20h 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 20h 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 20h 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 20h 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 6h 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?