Personal Investments • How think about reaching a FI number

Hi all

I am wondering if there is a generally suggested way to execute going FI when hitting a FI $ goal. What I really would like to hear thoughts on is, if I have a FI value of X I need to reach in my portfoilo, is it risky to say "ok job done" if I hit that number due to a big spike in the market? Sure it may keep going up but if it seems like a spike, is it a better idea to see if that level can be maintained for 6 months or more before pulling the trigger, going FI, and leaving a salary from a job?

Thanks in advance!

If your withdrawal rate has, say, a 5% failure rate, retiring the second your hit your number (presumably at the peak of a bull market) increases your chances of being in that 5%. How much you are increasing the risk compared to average is hard to quantify.

That being said, that is assuming constant dollar withdrawal with zero flexibility. If you have saved 25x your annual expense and you are ready to retire, you are probably going to be okay. You may have to cut back and/or use some type of Variable Percentage Withdrawal or endowment model, in effect cutting back on spending in the event of a poor sequence of returns.

I also don't think it is healthy to focus solely on portfolio value to determine your retirement date. It's one factor, but not the only factor.

WR will be 3% and will have flexibility in down markets to pull back and spend less. I believe that WR is pretty close to 100% in most simulations.

ZachFinch76,

The simulation cannot pay your bills. And, you only live once. You only get one sequence of return. There is no reset aka do it over option for your life.

KlangFool

Statistics: Posted by rs9876lg — Thu Aug 22, 2024 9:36 pm — Replies 57 — Views 4935