Reddit users feel unprepared for financial independence
Several users express a significant distance from achieving Financial Independence, Retirement Early (FIRE), with one estimating needing an additional $7.7 million to reach a $10 million investment threshold and another stating they are 'not even chubby'. The posts reflect a sense of being far from the goal.
SOURCES (60)
“Assumptions: 24 years of contributions (age 26 to 50), deposits at the end of each month, a steady 10% annual return, and no inflation adjustment. $5 million: about $4,500/month $10 million: about $9,000/month”
“Moreso I think most people are afraid of even looking at their 401k balance, which is a far cry from the type of person who gives advice on r/PF for fun”
“Don’t forget to lower that $32 by about 70% for inflation. So every dollar will be worth maybe $10”
“Wouldn't this only be obvious in retrospect? The worse case is based on equities underperforming expectations, not locking in a guaranteed low base case.”
“That's not really true. At 7%, the $160 will double in 10 years, and again at the 20 year mark (the rule of 7 is helpful). That means that without any contributions, only factoring in compounding, the $160 will be $640 in 20 years. Now, if you are growing that principle by 10%, then yes, it will double three times in 21 years, so you could get to the $1.2M, but 20% is a stretch, don't you think?”
“I’ve already adjusted the nominal rate of return (10%) for inflation (2%). You can make any adjustments you feel are needed.”
“The 90% liquid part gives it away. No one with $50M keeps $45M sitting in a checking account letting inflation eat it. Back to the simulator, buddy. 😂”
“My dad is the same way and has been nagging me constantly to invest the pennies I have to “become a millionaire someday.” But I took every cent out of the stock market a few weeks back… the global economy is about to collapse, and the last thing poor people need is to be even poorer when we lose our investments. Investing is about playing the long game, but there isn’t a long game anymore. If I were you, I’d just save your money. Not to mention how investing in any company that might actually ma”
“Any plans you make 25 years in the future is going to be a no go IMO: 15M won't even be close to what it is today then (Imagine having 5M in 2000: you were set for life!). On paper if you find a reasonable investment that doubles every 5 years, your half mill will already get you there when you're 50. So you don't need to save more lol. Where you are: I would assume your income will go up considerably and work on maxing that out. Savings are great, more money is even better. My guess”
“REIT exposure is completely redundant if your home value is already significant part of your total NW.”
“You need to drastically improve your income over the years. The way to FAT is high income for many years, selling an asset you created (most often as business) or getting very lucky (or good) at investments.”
“While we appreciate your post, its content has little that makes it specific to FatFire, as opposed to FIRE at any amount or other subs, such as investing or taxes. In the future, please consider whether your post would have applicability to someone spending $50k/year in retirement and to someone spending $500k/year in retirement. FatFire posts usually have no relevance to the former, and plenty of relevance to the latter. We also remove posts in which the only relevance is the large number - eg”
“I'm on the way to fat firing, not there yet. But max out retirement every year, make good investments, and it gets big.”
“Inflation for a person with 7 figures of NW? You think food costs matter? This is going down a rabbit hole. RE underperforms bonds, and you’re investing in one or a handful of properties. Concentration risk. Just as guy above commented he did great with RE, I’ve invested and done poorly. There was never a good argument for RE, I just wanted the risk and I got the risk I was looking for lol.”
“What’s different between this and all the “how do I keep my MAGI low enough to qualify for ACA subsidies in fat fire?” posts that always seem popular?”
What can you possibly do to make this much money in early 40’s?
“Will fail? No. Adds to risk? Yes. Multiplying that risk by at least 20? Not helpful.”
That finance AO shook me 😭 i shouldnt have spent so much time on it.
“40-45% of your net worth into an illiquid, non-income-producing asset while also carrying a PAL doesn't make sense to me. Also, you're giving up years of compounding on that $3.5 million.”
“Thanks for that link. I’d rather exclude him from calculations, he is a bit unreliable. Right now he is a crutch but I need to do this on my own. I think I could increase the stocks like that. The 144/wk is because that maxes out the Ira contribution”
“We need to start a movement to allow dollar amounts for 401k contributions.”
“Totally agree. I'm coming from a personal place of hitting a mid-market outcome and wishing I had that extra 0.5% or 1% in my name so its a bit of immediacy bias :D”
“Delay 5 years and your same buying power will be $12m, and zero quality of life improvement.”
“I really didn’t do anything special. Just managed my spending. Live below my means. Invested and maxed out 401k and invested when I could in standard diversified mutual funds and ETFs like VOO. Prob 50% saved vs income over the years. I lost $20k back in the day when I tried my hand at actual stock trading. But past 20 years it’s just using the “invest it and forget it” method. Time in market took care of much of the growth. Good luck to you!”
“If you are using a nominal NW number, it SHOULD get pushed out 3% due to inflation. Five years ago, your target would have been $7.8m...”
“I have my own calculation is built into a Google spreadsheet but funny timing. Someone just asked this question in a different thread: https://www.reddit.com/r/Fire/s/Cvo3DroE9R”
“Very good point. I modeled a car purchase every 10 years approx , long term care (approx) and about 10-15k buffer in this number”
18 mil? Nah bruh, you gotta grind it out till you're old and spent!
“Well obviously in the long term, but this person is 52 and worried about SORR. I could see this being problematic if their first 10 years of retirement was lived with half the worth they retired with. That’d be similar to overspending double annually for ten years”
“Yes, financial independence retire early. The word wealth is not in there. I’m financially independent and retired early. Are you? You probably could be if you could break out of this delusion that the purpose of money is to measure your dick. Get a tape measure for that. No shoestring budget here. And the lowest number you posted, $10m, is more than enough to retire and do everything I’d want to do. So we’re not talking about shoestring budgets or anything close. You’re not asking if you can re”
“Easy to say that before you have it. I’m sure many people feel that way about $100k. And a good portion about $10k”
“You only need to get rich once. Experiencing transformative losses is something you can afford never to do. Think about building a portfolio of assets that can survive the worst imaginable bear market because at some point (maybe today, maybe in 20 years) you shall experience it. Here is an example. During the 1929-1932 bear market, stocks lost around 90% on average. This event helped usher in a global economic depression and most investors were completely wiped out. Most, but not all. Those who”
“Relatively speaking, your retirement isn’t that long. It’s ~10 years more than standard whereas some on these subs are in their 30s.”
“Well, it wasn’t ever really my goal. But I was miserable at work for last 3 years across 2 different FAANG companies and knew I needed a way out. I thought we had enough for both of us to eject. But ejecting was news for her. But she finally ejected 2.5 years after I did and loving it. It takes real relationship work to pivot from both climbing the first mountain to saying fuck it to that mountain.”
“I will be happy with 2008 pain. GDP and unemployment a la 1929-1931 with deflation. The deflation piece is the interesting part for FIRE.”
“Define painful. 2008 pain? Bc most younger traders have only experienced blips in 2020 and 2022. This decision is more about psychology than performance though. 82% in equities at retirement is aggressive but 100% in equities will almost always outperform Almost. And provided op doesn't buckle.”
Not if it keeps you invested in the market in scary times
“What would ya’ll invest that money in? I wouldn't. You can't guarantee 10%. You're basically describing leveraged investing with a terrible rate Borrowing at 10% to invest is a terrible plan”
“Considering 1.2 million in income, I don't think that $225k worth of expenses includes taxes. If he lives in California (which wouldn't be surprising with big tech), it's pretty borderline, and probably underwater when you consider healthcare.”
“Healthcare cost estimates are probably low, assuming you are in the US. $40-50K might be closer, expect healthcare inflation to grow faster than CPI.”
“We've really fallen to a new low in general financial intelligence if this question needs to be asked. NO OFFENSE.”
“No way to say whether you are prepared or on the right path to FIRE since there is no indication in your post regarding spending. What is clear is that your net worth could evaporate rapidly due to your concentration into crypto. In fact, an acquaintance of mine here in Lisbon lost virtually all of his net worth in June because he held leveraged holdings in Bitcoin. He literally went from an $8m nominal net worth this time last year to $0 today. Sadly, Bitcoin rallied shortly after all his posit”
“Your portfolio will continue to grow at a rate higher than inflation unless you are storing your money under your mattress. The reason you are seeing so much hostility on this sub is that you seem financially very naive although you have managed to earn a decent amount of money. This is an advanced fire sub and the question you asked about inflation is a very basic personal finance topic that is making people think that you are trolling them. Every comment that you are posting makes it obvious t”
Good point. A car purchase would increase it as well.. dang.
“I agree, thanks for confirming as we’re looking at the risk of the next 20 yrs more than anything else”
“To say generically that you cannot count illiquid assets as part of your net worth is absurd. Asset values and liquidity are two different lenses. Both are important but a lack of immediate liquidity does not mean an asset is worthless and/or does not contribute to your NW. I have deployed tens of millions into illiquid assets intentionally and those assets have generally outperformed my public equity portfolio as intended. They're more complex with all of the capital calls and K-1s but they”