Why not just ask about stash size, not net worth? I won't be drawing down on my home to pay my expenses. Home value is irrelevant for me.
I've already hit my target, which well in excess of the highest option available in this poll, which again, excludes my home.
Someone with $500K and a paid off house is completely different than someone with 500k and no home equity who either needs to pay a mortgage or rent.
Good for you.
Your poll question doesn't state to assume that someone has a paid off home, it says to include up to only $200K of it if you own one. So based on the answers you get, you won't know if responders have to pay rent or not and whether they even own a home.
When you are figuring your target number, it's typical to take the 4% (SWR) by multiplying it by your invested stash, since that's the money you draw down on, and is where the 4% figure came from. If you include $200K worth of home equity in that figure, your stash is more likely to fail to provide that. You should exclude your home equity in that calculation, although if you were planning to downsize significantly by selling a very expensive home to relocate to LCOL, then you could make a good case for including the estimated increase in your stash through that transaction since that difference would then be part of your stash.
Hopefully this explanation will settle this question once and for all. If you are comparing renters to non-renters their "stash" will vary drastically because one has to pay rent. If you want to be able to compare this apples to oranges situation, its very simple.
All 3 scenarios live in the same size house on the same street (worth about 200k), with identical spending habits.
Scenario A: Renter
$1500 in monthly expenses excluding rent
$700 rent
Total stash needed: 2200x12x25= 660k
Scenario B: Home Owner
$1500 in monthly expenses
200k home equity
Total stash needed: 1500x12x25= 450k + 200k equity = 650K
Scenario C: Home Owner w/Mortgage
$1500 in monthly expenses excluding mortgage
$700 mortgage payment
Total stash needed: 2200x12x25= 660k
All three are living basically the same life with the same consumption levels, the only thing that is different is how they are paying for their housing. So their net worth needed FIRE should be about the same. Its only the same if you include home equity. If you exclude home equity then it looks like its much easier to FIRE if you own your own home (only 450k stash compared to 660k) if this was the case everyone starting out would just buy a house but its not easier because you still need to come up with 200k to buy the house. Or another way to look at is if person in Scenario A wanted to they could use 200k of their stash to buy a house and nothing about their situation would really change. Vice versa for someone in scenario B.
Obviously this is a simplified explanation and rents will not equal mortgage payments all the time or correspond with the 4% withdrawal rate of the fair market value of the home. But in general I think this a pretty fair bench mark. Also, some people choose to live in very expensive housing markets for personal reasons having nothing to do with FIRE. This throws the calculations off and they could easily live someone else for less money, so the extra $500k in equity that they have is irrelevant to the discussion when comparing net worth to FIRE to the general population. An analogy would be scenario D where this person has the exact same spending as the other three but has a rare chronic disease that costs 1000/mo in medication. When comparing FIRE thresholds you would tell person in scenario D to ignore the 1000/mo medication for this discussion because it is not applicable to the others.
Poll
