Not familiar with FIRE? Read the article on Financial Independence, Retire Early.

Estimating how much you need to retire early can be tricky. Research on this topic was conducted in the “Trinity Study” which showed that a person can calculate how much they need to retire by dividing annual expenses by 4%.

The 4% is based on the assumption that a person would withdraw 4% per year from investments to pay expenses, usually over a 30-year period with average market returns of 6% on your investments.

For individuals looking to live in retirement more than 30 years it may be wise to consider a lower withdrawal number to ensure the funds last longer. Using a lower withdrawal percentage rate means more savings are required.

Expenses in Retirement

This amount can vary a lot and depends on the lifestyle you expect to have during retirement. Having a look at your budget plan should give you an idea on your annual expenses.

Need to create a budget plan? I have written an article about how you can create a budget in 5 easy steps.

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