How Much Do You Need for Early Retirement? (How to Calculate Your FI Number)

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 8 October 2024

⏱️ 40 minutes

🔗️ Recording | iTunes | RSS

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Summary

How Much Do You Need for Early Retirement? (How to Calculate Your FI Number) Podcast Description What’s your financial independence number (FI/FIRE number)? Are you being too conservative, or are you cutting things close? Do you even have one? Today, we’re taking a deep dive into this hotly debated topic to help you build a nest egg that will support your early retirement! Welcome back to the BiggerPockets Money podcast! How much money do you actually need to retire? For years, the four-percent rule has been the “official” stance of the FI community. But why is it, then, that so many people continue saving and investing when they can comfortably retire? In this episode, Scott and Mindy talk about their own FI numbers, how they calculated them, and how their financial positions have evolved over time. You’ll learn whether the four-percent rule still works today or if you need a larger buffer! If you’re worried about inflation, one of the best things you can do is keep your living expenses in check. This might seem out of your control, but there are several ways to either lock in certain costs or eliminate them entirely. We’ll discuss the many advantages of a paid-off house, self-managing your rental properties in retirement, and a one-time investment that could help you save thousands of dollars over your lifetime! In This Episode We Cover How to calculate your financial independence number (and when to adjust it!) The four-percent rule explained (and whether it still works in 2024) Why most people chasing FIRE don’t retire on the four-percent rule How to control your expenses and protect against inflation in retirement The “home run” investment that could save you thousands of dollars And So Much More! Links The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?” (00:00) Intro (01:18) Calculating Your FI Number (07:37) Does the 4% Rule Work? (15:32) Locking in Your Expenses (22:40) How to Combat Inflation (31:48) Retiring on a Different Portfolio Mix Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-570 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	In the fire community, one of the most frequently asked questions is, what is your fine number?
0:05.2	I've asked this a ton of times. It's one of my go-tos. It's a great icebreaker.
0:10.3	Everyone wants to know if their fine number is too low, too high, too conservative, or hopefully just right.
0:18.0	More often than not, people are too conservative.
0:21.0	Have you inflated your fine number just to be a little too high?
0:26.6	And could this be impacting your retirement today?
0:30.8	We're going to talk about that in just a few minutes.
0:32.8	Hello, hello, hello, and welcome to the BiggerPockets Money Podcast.
0:36.0	My name is Mindy Jensen, and with me as always is my knows his own risk tolerance co-host, Scott Trinch. I don't think you could have come up with a
0:44.7	beta introduction for me if you tried Mindy. Bigger Pockets has a goal of creating
0:50.4	one million millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone no matter when or where you're starting as long as you actually know what your number is.
1:01.8	Today we are going to discuss how to calculate your Fy number
1:05.2	and what you may be doing wrong.
1:06.7	We're going to talk about why your Fy number may be too high,
1:10.2	too conservative,
1:11.8	and why that may be costing you a number of years and why the
1:15.4	traditional ways of calculating your fine number, the 4% rule, are already baking in
1:20.8	the most conservative assumptions that you probably need to plan out for your
1:24.4	portfolio.
1:25.4	Excited to get into this today.
1:26.4	I am too, Scott.
1:28.8	Let's jump right in.
	...

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