Hello -- I'm new to the idea of FIRE and am excited by it. I have a beginner question I was having a hard time finding the answer to!
I understand that retirement income will be 4% (or less) of savings (which translates to 25x annual expenses) but am not clear on how to calculate when taxes are considered.
In other words, much of my savings are in tax deferred plans, aka a 403b (or 401k for others) and that will be taxed upon withdrawal (as the money went into it was pre-tax). If my annual expenses are $50k for example, and that $50k needs to be after tax money because it is what I need to spend, then my savings need to be MORE than 25x that amount because they are getting taxed, no? In other words I will need to withdraw about $70k or more (totally a guess for this example) so that I end up taking home $50k for my expenses, which means that I would need 25x the $70k number and not 25x the $50k number.
It seems the calculation is somewhat more complicated than originally presented, no? I am having trouble figuring out the actual number. I hope this makes sense.
Thanks!!