Nicely done... I've seen a few recently FIRED people post in various threads that their balances have gone up instead of down.
Hindsight is a wonderful thing (FIREing earlier) but I don't think anyone will be too unhappy seeing their numbers continue to go up.
Your net worth pretty much darn well better go up in FIRE, most of the time, if you don't want to head for ER failure.
One big reason: Inflation. If your numbers aren't going up (which is a nominal amount), your portfolio won't be able to keep up as your expenses inevitably rise.
Sure, some years it might step back a bit (I mean, you are withdrawing roughly 4% of the value, and sometimes market gains are meh, or negative), but the overall trend should be up. And most cFIREsim runs have the lines going up and to the right--your portfolio gaining value (and that IS in real dollars, so gaining massively in nominal dollars)--as your portfolio gains vastly outstrip your withdrawals.
In fact, I'd consider it a huge red flag if it's not growing most years, or hasn't after a number of years (unless it grew for awhile, but there was suddenly a crash--that's fine, and normal, and to be expected, and it will come back... but if it's not growing at all, it's something to keep an eye on).
Here's a whole thread from earlier this year asking "
Has your networth grown since you Fired?"
In it, the OP asked:
How common, do you think it is for your net worth to continue to grow after retiring early?
So I ran some cFIREsim numbers to get hard data on how common that would have been, historically.
Very, very common.
The longer your ER, and more aggressive your investment strategy (i.e. more equities), the more likely it is.
For example, using cFIREsim default numbers (40k spend, 1MM portfolio for a 4% SWR, 75/25 allocation, 30 year retirement--95.69% success rate), out of 116 total 30-year periods, after 30 years:
In nominal dollars, 19 of them ended with less than the 1,000,000 you started with. 97 ended with more.
In real (inflation adjusted dollars), 41 ended with less, 75 ended with more.
So if you're just looking at straight dollar amounts (which most of us tend to do, we don't naturally, intuitively discount for inflation), about 84% of the time your portfolio would have risen (and, in real dollars, 65% of the time it would have risen).
That's with you spending down on it year after year, not earning another dollar, not adjusting your withdrawals down in bad years (down markets) or as you get older and spend less.
The majority of the time, portfolios go up if you're using a 4% WR and have a decent (> 33%) amount in equities, with us doing nothing (and we tend to do something if things start going wrong).
If my net worth wasn't growing (not every year, but over multi-year periods), I'd look at that as a caution sign to take a closer look.
(Emphasis added.)
