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How much (%) should I contribute to my Roth 401K
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So....is this accurate? 😂
What would be the in-hand salary?
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Additional Posts in FIRE Financial Independence Retire Early
First you need to define what your ideal FIRE lifestyle would be and how much that would cost for how many years. If you plan to FIRE at 40 vs at 50 or 60, costs will differ.
Then add some buffers to take into account for inflation, market downturns, cost of healthcare (for yourself & family), education cost (for your kids if you plan on having any).
Calculate the NPV amount in today’s dollars and depending on how you plan to fund it (eg drawdown on NW; or live off of dividends and rental yield and not touch principal; or shift to lower income & lower pressure job; or combination of the above), that would then determine your true FIRE number.
For example:
I am at $5M at 35, and plan to FIRE at 40 with $10M. Current cost of living with spouse & 1 kid (and planning for 2nd) is about $50k per year. Am main breadwinner whilst spouse is staying at home to look after the kid. Currently renting as haven’t decided where to settle down yet. No debt.
Bulk of NW is in $3.6M investments generating annual cash dividends of $200k plus $350k rental with rental income of $16k. Rest is in cash whilst we find the right investments to focus on. But we plan to aim for $300-350k cash dividend to buffer for the fact that we might want to buy property to live in at some point and also for kids’ education and our healthcare. So despite spending only $50k a year now, I’d anticipate spend to go up to probably $100k or more with kids and also buffer for inflation over the next 50-60 years since we’re targeting to FIRE by 40 and have our cash last us until we’re at least 90+years old.
Mentor
SA1 - Agreed, but the trinity study only looked at 30 years (I.e a relatively conservative assumption that someone in their 60s would live 30 years).
For someone looking at planning for 50 years, 3% with draw rate seems much more reasonable. So if they think $300k might be needed, then $10M is probably right. Especially if they are funding college expenses out of that as well.
You can easily FIRE at 3M. Anything on top of it is cherry on cake
I’d prefer to buying a house for myself to live in even it means to delay FIRE year. It’s like a basic living condition that I can safeguard when I don’t make money. Stock, dividends, interest income from savings, rental incomes all have a relatively higher degree of dependency on unforeseen economy factors, imo. When I get above 55 older, I’d feel more secured to have a stability of having a house to live at a low cost as a minimum threshold of a quality of life independent from a status of my other income sources. If you start now, you’ll still enjoy a low property tax and zero mortgage from 70 to until you die.
Because the rate applies to its purchase price + home improvement modeling not to an appreciated market value each year. Whereas rent mostly includes property taxes of the landlord’s mortgage. Is NY different in property tax law?
$3M at 40???? Damn. I’m jealous. Sorry no real feedback to give just wanted to say I’m impressed at your efforts to FIRE - especially without any real estate!