Hi everyone,
I've been lurking through the forums for some time now and am so glad to see discussions focusing on retirement as a lifestyle and not the end-of-life that is the reality for many. I had a client mention this website to me after commenting that I reminded him of MMM himself during our meeting (I work as a Financial Planner).
I've repeatedly told many of my clients about the reality of lifestyle inflation, the lack of frugality in today's culture, and the disillusion of over consumption being recognized as success.
Anyway, given this forum consists of what I feel to be a very financially savvy bunch; I can't help but question why the retirement calculation baseline is 25x expenses for everyone? Don't get me wrong, this is a phenomenal goal and solid way to work towards an early retirement. Yet, I don't see much discussion surrounding the individualism of each and every retirement scenario which could very well allow you to retire with much less than 25x expenses.
To better explain, consider the following example:
Client A is seeking to retire at age 40 with a $40,000 annual income indefinitely. He therefore aims to save $1,000,000 (i.e. $40,000 x 25). Very simple math.
Client B is also seeking to retire at age 40 with a $40,000 annual income indefinitely. Believing in the 4% SWR theory, he therefore calculates the present value dollar amount required to fund this income stream: approximately $859,000.
He then incorporates a small pension he is entitled to at 55, and government assistance payments as well.
He now requires even less
The only explanation I can predict is that we are focusing on capital preservation throughout our retirement; albeit based on my reading I'd imagine more here are focused on a happy and healthy retirement moreso than leaving a large inheritance.
This is just a genuine observation, and I'm hoping to hear some thoughts or insights from this community!
Thanks everyone.