Retirement Planning With The 'Tism - Part 2: The 4% Rule & Retirement Targets
Retirement Dollar Target & MisFIRE with the 4% Rule
Welcome back for Part 2 of Retirement Planning with the ‘Tism. The series where we go through and actually show some of these retirement heuristics and how they perform.
You know…instead of just repeating them ad nauseum on the twitter convincing everyone they work…
In Part 1 we looked at 2 common savings rules, the 10% rule and the 50/30/20 rule. We looked at how these savings levels perform under different scenarios and what kind of nest egg you could expect. F’er also proposed his 50/25/25 as the better option.
Continuing on the trend, Part 2 we are going to tackle the retirement target from a different angle.
One way to figure out a nest egg is to assume you save X% of every check and grow that to your retirement age. The other way is to figure out how much you want to withdraw in retirement and work backwards to see what nest egg you need to accumulate to do it.
The most common heuristic for this is the 4% rule. The entire FIRE movement is built around hitting thier 4% ‘number’ as fast as possible and retiring because you “won’t ever run out of money”.
