Hypothetical question.. If I knew the market was going to drop 30% within the next 2 years, would it not be better to have more in bonds?
Knowledge is your ally here. Stocks and bonds are not negatively correlated. That is, there is no guarantee bonds will go up while equities are crashing. However, bonds have MUCH lower volatility. Last I checked, since the Great Depression, it is known equities can fall 50% or more. The worst the broad bond market has fared in that time is a 6% decline. So, if you are concerned about getting wiped out by a great recession or depression type event, bonds are the place to be. I use 60% equity and 40% bonds (6.5 years into FIRE).
I'd also recommend you research the "rising equity glidepath" which Google can find for you easily. Basically, there is lots of good academic research supporting the idea of retiring with a "large" bond allocation and slowly converting to 90%+ equity over time. The reasoning and mathematics are sound. But I still prefer to retain 60/40 for peace of mind. I don't need to die with millions that will never be spent.
So some math:
You are at 900k
Saving 20k/month
Target date 24 months from now
So your additional savings is 20 * 24k or 480k
Target stash (without growth) 900k + 480k or 1.380M
4% rule on 1.380M is 55,200 in annual spending.
On "paper" you are golden at that point.
Your main risk is "Sequence of Returns Risk" (SORR). That is, your outcome is sketchy if your stash declines 50% in your first 5 years or so.
You have the right idea to mitigate SORR by having a sturdy bond allocation that you can spend down while waiting for your equities to recover.
-----------------------------------------
Some other thoughts:
50k/year is pretty generous. I've been retired 6.5 years and I budget 25,000 in spending a year and typically come in thousands under budget. I feel like I live pretty high. I go to movies when I want, I eat out almost exclusively, I take vacations, etc. Granted my house is paid for, but you didn't indicate what your mortgage plus taxes/insurance are. It seems like at least on the surface for you are being pretty damn spendy pants for a single guy and might be in need of a classic MMM *FACEPUNCH*.
FIRE doesn't have to be binary. Could you work freelance after FIRE, just on the projects that really wind your spring and still bring in 40-50k a year? Or even 15k a year? That would really move the needle. You could also take on paying work or side gigs in something you have passion for to make some extra work. You could go back to work full time for just 12-18 month period in the event of a second Great Depression. You could do lots of things. The 4% rule is very mechanical. It doesn't account for the fact that people can adapt to their circumstances.
Might you get married and/or have children in the future?
International travel in your FIRE plans? This doesn't have to be expensive. Check out gocurrycracker.com for the lowdown on how to become a more or less permanent traveler on a small budget.
What is your medical situation? Be sure to price ACA in your state and know your budget. ACA is very reasonable in TX, even after multiple years of 25%+ annual premium increases. The HSA helps tremendously.
- Lizard King -