Top 5 Reasons to Exceed 25 Years of Expenses Before Retiring Story

Top 5 Reasons to Exceed 25 Years of Expenses Before Retiring

To start withdrawing 4% of your portfolio while maintaining your desired spending level, you need to accumulate 100/4 or 25 times that annual spending number.

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Is 25x enough for you? There are more than a few reasons you might want to exceed that number, as I did, before you leave your career behind.

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Top 5 Reasons to Exceed 25 Years of Expenses Before Retiring

A particularly poor sequence of returns combined with a lengthy retirement of more than 30 years could lead to premature depletion of your portfolio.

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Lifestyle inflation may be a part of your future plans whether you know it or not.

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I’ve argued that you do not have true financial freedom until you could double your discretionary expenses without violating the 4% rule.

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By working one more year, you could add two to five years worth of living expenses to your portfolio.

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Work a few more years after achieving financial independence and you’ll likely find yourself with an initial withdrawal rate of less than 3%. You don’t even have to work that hard to make it happen.

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Top 5 Reasons to Exceed 25 Years of Expenses Before Retiring

To start withdrawing 4% of your portfolio while maintaining your desired spending level, you need to accumulate 100/4 or 25 times that annual spending number.

Is 25x enough for you? There are more than a few reasons you might want to exceed that number, as I did, before you leave your career behind.

Top 5 Reasons to Exceed 25 Years of Expenses Before Retiring

A particularly poor sequence of returns combined with a lengthy retirement of more than 30 years could lead to premature depletion of your portfolio.

#1 Your Safe Withdrawal Rate May Be Less Than 4%.

Lifestyle inflation may be a part of your future plans whether you know it or not.

#2 Future You May Want to Spend More than Current You

I’ve argued that you do not have true financial freedom until you could double your discretionary expenses without violating the 4% rule.

By working one more year, you could add two to five years worth of living expenses to your portfolio.

#3 It’s Easy (for a high-income professional)

Work a few more years after achieving financial independence and you’ll likely find yourself with an initial withdrawal rate of less than 3%. You don’t even have to work that hard to make it happen.

SWIPE UP NOW TO READ MORE

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