When I see someone planning to RE with <$1M and <30 years old in the US, I just wonder if they have considered:
- Health insurance costs if the ACA changes
- Healthcare costs out-of-pocket if a serious illness develops unexpectedly, even if you have insurance
- Added costs from partner/kids, even if that is not wanted now, sometimes things change
- Extended bear market (worse than 2001 or 2008) and/or high inflation (a la the 1970s)
- Loss of human capital if you are out of the workforce 10 years and something hits the fan and you need to go back to work again...you are not going to get the same salary after being out of the market so long
- Possibly living another +60 years...it's like someone in 1956 trying to plan a budget for life in 2016. Cell phone? What's a cell phone?
There are a lot of unknown unknowns. Maybe the Boglehead's $10M @55 is too conservative, but on the other hand $1M @ 30 has a non-trivial risk of catastrophic failure. And while I may not care if I end up eating dog food, I certainly do care if my wife and kids do.
While I agree that some of these are valid concerns (some are more far-fetched than others), I really believe that virtually everyone that has been in the MMM community for enough time preaches flexibility. Personally, we'll be retiring with ~4-5K in monthly income, or roughly the equivalent of $1.25-1.5M in a 4% SWR portfolio. That will be for two adults, plus 1-2 children long term (FIRE at age ~38-39).
Health Insurance/Health care costs are handled by our flexibility with regards to retirement location. We want to live abroad anyway, but if we came back and the US healthcare system went further down the tubes, we'd move back overseas for expensive long-term treatments.
We're already building our costs for ourselves and our kids into the budget, but anyone who does a low-cost FIRE would of course need to adjust if someone new came into their lives. That could be as simple as helping them on their own FIRE path, there's nothing that says you have to immediately absorb a significant other into your FIRE budget.
I am not too worried that things will get worse than 2008 (or the great depression), since the 4% SWR incorporates the worst historical data, and it would take a lot to beat that-- but if it did, we would again use the ability to go elsewhere to weather diminished returns.
Loss of human capital, I'll probably remain open to making a little money here and there to give us extra spending money, but then again, you only have to cover the shortfall between your FIRE income and whatever your costs are-- you may very well not need to make as much.
Living another 60 years: That's a problem I hope to have! I'll be retiring in what will feel to me like complete luxury. I expect to continue to have small luxuries throughout my life. But you know what? If I miss out on some luxury because I bought the rest of my lifetime's worth of time by FIREing? That's a good trade.
Anyway, just my personal chatter about how I would handle those kinds of things. I think everyone should have answers to some of these items that give them comfort, and I think everyone should be prepared to be flexible when warranted. I just don't think we should allow our human propensity to see the danger to diminish the time we spend in FIRE when that danger is relatively negligible. As ever, it's about the individual's risk tolerance.
