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Old 12-19-2018, 06:35 PM
nonactuarialactuary nonactuarialactuary is offline
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Originally Posted by C8 Guy View Post
Good, cause I'm planning on something closer to $120k/year than $20k as well.
The $20K/year people often use the term “lean FIRE” to describe early retirement achievable with a low balance thanks to cutting expenses to the bare minimum. A lot of those people don’t budget a sufficient margin of safety into their calculations though, and in my opinion, they’re the most likely to fail. Someone that budgets $120K/year in spending can probably cut expenses if times get tough without really sacrificing anything (e.g., eating at home more often, vacationing at the local beach rather than the beach in Europe, etc.). Someone that budgets $20K has already cut all the fat out of their budget, so if times get tough, they have nothing to cut and must return to work at a time when few are hiring.

That said, lean FIRE people are just a subset of the broader FIRE community. A budget of $120K/year isn’t unreasonable for FIRE, but it all depends on how much you’re hoping to spend in retirement, with a risk margin on top. If you’re only planning to spend $40K/year in retirement (call it $60K with a risk margin), saving up to the $120K/year level means spending a lot of unnecessary time at work. That’s not the end of the world if you like your job, but I’d much prefer riding my bike on a random Tuesday morning over sitting in some windowless conference room listening to Gary give his status update. If you hope to have a fairly lavish retirement spending around $100K/year, the $120K budget should cover you with a pretty decent risk margin on top.
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