The 4% rule is wildly optimistic. You're assuming that there exists an investment that:
- is 100% liquid
- will return 4% consistently over decades
- every single year
- post-tax
- post-inflation
Good luck finding that one.
So that's why I am saying that the FIRE theory is a theory. A much more realistic number is 2% (and I am still being optimistic here). That means that for someone who needs $5K/month (not insane if you want to have kids), you need $5K x 12 months x 50 = $3M. To get that sum post-tax, you need roughly $5M of income somehow. The set of people who make that amount early enough in their career is very limited.
- is 100% liquid - will return 4% consistently over decades - every single year - post-tax - post-inflation
Good luck finding that one.
So that's why I am saying that the FIRE theory is a theory. A much more realistic number is 2% (and I am still being optimistic here). That means that for someone who needs $5K/month (not insane if you want to have kids), you need $5K x 12 months x 50 = $3M. To get that sum post-tax, you need roughly $5M of income somehow. The set of people who make that amount early enough in their career is very limited.