[USER]

How do you pick your FIRE number (emphasis on the FI) if you don’t intend on ever retiring? I love working and can see myself working well into my 60s and finding “lighter” work once I need to.

We are frugal by nature so we are putting aside $2k monthly into 401k, Roth and a Brokerage account.

At what point can I stop increasing contributions everywhere and just enjoy our income without worrying about “lifestyle creep”?

[Scott]

Fi. Means you don’t need a paycheck, whether you choose to work or not. So, a starting point is 25x your living expenses.

Life style creep is always something you will have to worry about.

You can stop contributing when you hit 25x your living expenses.

[Andrew]

Simple math – your annual consumption for the rest of your life – hence the consumption projected number is the most important number – once you can fund this forward then you are FI – makes sense to include a risk premium cover of 25 to 30% in case you live longer of the markets tank at the wrong moment – most people can project their longevity based on health and genetics

(generally parents and their siblings are good indicators) no one is leaving here alive and you can not take it with you

[Brenda]

I feel differently than most with your situation. Mine is similar. I plan to run my business for a number of years after leaving my w2 job.

I figured my numbers including my mortgage so basically what I’m spending now.

My thought was medical care/insurance will replace the mortgage.

I did 25x for my retirement savings and figure my business income will fund travel expenses in retirement.

[Laila]

Do you have a detailed budget spreadsheet that shows how much you intend to spend on each category each year, and how much you actually spend?

On that spreadsheet, is where you could consider adding in:
Big intermittent expenses
(Roof, HVAC, newer car, etc)

Big, unexpected medical expenses
Small “wants“
Big “wants”

Keep in mind that the average American couple will end up spending about $360K on medical expenses, from age 65 when they can start Medicare, until they pass away.

And, this $360K, is BEFORE paying for any assisted-living/skilled nursing/memory care.

I believe the average American needs around two years of assisted living/skilled nursing/memory care.

Most people will naturally spend more on Big “wants“ such as traveling, when they are younger, in their 40s, 50s and 60s. Those are usually peoples “go-go years.“

Then, for many people, their 70s start to be more of their “slow go“ years.

And, their 80s and 90s will tend to be their “no go“ years.
it would be a shame to work hard and save and not really enjoy some of your biggest life dreams in your 40s and 50s and 60s… When you have the health and money to do so.

Many of us plan an extra 10k dollars to $20K per year, for the first 10 years, for example, for dream travel, or other dreams.

This is a way of doing variable budgeting that accounts for the “spending smile“… Meaning your go go, slow go, and no go years.

Also, don’t forget to account for the fact that usually at around 70 years old, the higher earner in a couple starts taking Social Security payments, and often the lower earner may start taking their own Social Security as early as 62 years old, if they are not earning more than about 22,000 per year.

[Maribeth]

The standard answer is to understand your yearly expenses, and to figure out whether your safe withdrawal rate covers those. Most people use 4%, these days maybe less.

That’s how much of your savings you can withdraw every year to cover your living expenses. If you need 60k per year, you need 1.5 million invested to give you at least 4%.

If you keep some invested in stocks, it should give you more than that, which means you’re retirement money will keep growing. Look it up, there will be a lot of articles about it.

Since you enjoy working, you can delay your Social security until after FRA at least, to Max that out.

[Author]

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