The first time I learned of the Safe Withdrawal Rate was shortly after my first real job out of college. I recall thinking to myself, “wait, I have to do this my whole life?!”. After some quick math, I set a goal: Build a nest-egg large enough to never have to work again.
When I started dating my wife, I was heartbroken to learn that she was forced to give up her dream of living and working in Japan due to financial hardship. She pivoted to a reasonable backup plan: working remotely from her laptop. So, she began studying Software Engineering and Design under the premise that with a steady supply of clients, she could work from anywhere.
And so somewhat accidentally, we had found one another; two people with no desire to toil away in an office for 40-50 years, with dreams of traveling and experiencing the world as much as possible. When we got married we made vows to one another to find a way to not work our whole lives. Not long after, we discovered the FIRE (Financially Independent, Retire Early) movement and started strategizing.
A brief description of the FIRE movement…
The stock market has returned on average ~7%/yr for the last several decades. The Safe Widthdrawal Rate is the percent of your investments that you could spend without eating into the principal. The generally accepted SWR is 4%. The goal is to amass enough money that you create a perpetually money machine, of sorts.
Example: Erika has saved $3M and has that money invested in diversified index funds. She can safely sell 4% of her $3M of investments ($120k) and use that money to live on. Because on average the stock market returns 7%, her portfolio would still grow 3% that year.
Some words of wisdom: Your FIRE journey is YOUR FIRE JOURNEY, and no one elses. The r/fire, r/chubbyfire, and r/fatfire subreddits are filled with “Do I have enough?!” posts, because everyone has different circumstances and varying degrees of financial anxiety. There are 60 year olds with $20M who don’t think they have enough. Just the same, there are 35 years olds with $700k who will gladly live on $28k/yr to avoid working.
Long story long, my wife and I hit our FIRE number recently and decided to make good on our dream of traveling full time. What does this look like? We are in the process of selling our home in Bend, OR and for the next several years, we will be living in Airbnb’s. We briefly did this during the COVID pandemic and loved the freedom and novelty.
Where are we going? I am currently authoring this post from Mexico City where we will be for 6 months. We’ll bounce around a few different cities in Mexico, return to the U.S. for the holidays, and very likely head to Europe in 2027.
If you’re interested in chatting more about FIRE, do hit me up on all the usual channels and stay tuned for more travel posts.