# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: alaskacobalt on January 12, 2015, 06:56:20 AM

Title: Realistic Calculation
Post by: alaskacobalt on January 12, 2015, 06:56:20 AM
How are you guys calculating your fire age?  I have been trying to find a blend of calculators, but haven't found one that I feel is accurate.  They all tell me that I need \$3 million to retire, but I can do basic math and feel like they are way off base.

Basically, when I look at it, I figure I can retire when my earnings on my money are enough to cover my expenses.  For example, I expect a rate of return of about 5% into retirement.  I expect to be debt free when I retire (or I wont retire) and will only need about \$30k a year (pre-tax), which seems high to me with no debt, but I want to be comfortable.  So I assume this means I need about \$600k to retire comfortably.  And this doesn't even factor in SSN or the fact that I have \$600k to pull from.  That would be my safety net.

Am I oversimplifying this?  Why would my fire number be so dramatically different from the "experts"?  Why would anyone need \$3 million to retire on?  Does this assume everyone will carry the same expenses into retirement?
Title: Re: Realistic Calculation
Post by: shotgunwilly on January 12, 2015, 07:27:01 AM
A safe bet is 4% withdrawal rate. Which means once you have 25 times your yearly expenses invested, then you can retire.
Title: Re: Realistic Calculation
Post by: AlanStache on January 12, 2015, 07:32:22 AM
Have you seen  http://mustachecalc.com/ (http://mustachecalc.com/)  ?

Are not well linked and I am not sure of the official relation to mmm but some good tools there.

Title: Re: Realistic Calculation
Post by: Cromacster on January 12, 2015, 07:35:39 AM
Am I oversimplifying this?  Why would my fire number be so dramatically different from the "experts"?  Why would anyone need \$3 million to retire on?  Does this assume everyone will carry the same expenses into retirement?

No, you are on the right track.  Check out CFiresim (http://www.cfiresim.com/input.php) or Fire Calc (http://www.firecalc.com/) for a more detailed breakdown.

Most experts or financial institutions usually rely on income as a factor for determining what your retirement income will need to be.  Usually I see 80% of your income when you are working.  IE if you are earning 100k/yr in retirement you need 80K per year.  So a portfolio worth about 2,000,000.
Title: Re: Realistic Calculation
Post by: BooksAreNerdy on January 12, 2015, 09:04:12 AM
I also like the AARP calculator. It allows you to change your spending % in retirement. It is pretty accurate.

Though, we are currently using a 4% SWR, plus paid off house. Which is 25x current expenses, plus a buffer of 5-10k per year, plus a paid off house.