Don't Retire Early (Fire movement is Wrong)

The 4% rule is withdrawal is year 1, from there on out its 4% plus adjustments for inflation for the next 30yrs.

I'm sure this video maker is a nice guy in real life... but... it was a CLOWN MOVE to leave out social security impact from this video. What's going to happen in your 60s, 70s, and 80s? Your income will get a booster shot... and that additional income * IS * indexed for inflation for life! Very poor job leaving this out of the video --- it's an extremely relevant rebuttal to the entire first half of the video. Did he not mention Social a Security on purpose??? 👎👎

I think when we have more money like $40.000/ year.
we still can invest half this money not to spend until empty.

FIRE movement is the way to get freedom to live what like we do.

im a 26 year old self made millionaire what are you talking about invest in the stocks and crypto then rentals not just houses maybe look into passive income and not be a tax lord

Did you forget the principal? Your math is all screwed up

Most people speaking about retirement forget that someone had to WORK to produce the phones you use, the internet you use, the food you buy in the supermarket etc. Someone had to do it, so the work you do connects to someone elses needs. If we all decide that early retirement is the way to go, then WHO will work in the restaurants, shopping malls, banks???? Who??? Come on guys lets be realistic. We still have to work one way or the other.

Yikes. You're a sharp guy, I've watched a bunch of your videos, but you didn't do your homework on this one. It's been explained below by many people in the comments here why this is off. I'm surprised you haven't addressed this big misstep. Real Estate is good, but Stock is also good. Not everyone wants to own, manage, operate and maintain real estate. Some folks like a simpler path to their wealth. Sure, it may take longer, but it's also a solid way to get there.

Real estate is a big headache. My investments do better and don't call me with problems. 🤣 I do agree on The financial independence. I always thought of F.I.R.E movement of having options when you go to your number.

Good point about reaching FI and then carrying on with something else. Thanks! :)

I'm all for healthy skepticism and questioning the established rules and I agree with your ideas around real estate but, whether accidental or on purpose, your misrepresentation of the 4% rule is wrong and not helpful to anyone pursuing FI. If you honestly want to educate people on FI as you say in the video, you really should try to have a fundamental understanding of these concepts.

Yes, $40k after 20 years would be worth $22k with inflation but after 20 years at average market returns and 4% withdraws, your $1M would have grown to around $2M. 4% of that would be around $80k which is inline with the spending power of $40k after inflation. There are flaws with the 4% rule and there are no guarantees of those future returns so you don't have to misrepresent it to show the benefits of real estate.

Okay change my retirement about mentality. m still waiting

Some people will have you believe that you are in this world to just work.
Many Americans work 40+yrs and still retire broke. If you only cater just for your needs, you wouldn't require 40+ yrs of work.
Eliminate your wants and retire early.

8% profit per year in the stock market? Who is getting such a terrible return in the stock market? You should be getting 15% or more. You could of bought shares in Bershire Hathaway or another awesome compounder.

This is just wrong and misleading. You simply haven’t understood the 4% rule - it gets adjusted for inflation. You are misleading your viewers with your ignorance

Pretty much I agree with you; but my experience as a landlord were negative so I sold it all. So I put a lot of money into REITS & REIT etfs (like VNQ) & draw profits that way from real estate. I'm looking to buy land though, like you said, I couldn't sit on a beach all day, I'd get bored. Like the saying goes: "...a bored mind is the devil's workshop."

Your growth has to beat inflation with extra X% to withdraw. In past 30 year all kind of asset should in average growth with inflation plus X%

Have you heard of dividend growth investing?Totally disagree with your video.

Real estate is a safer bet than stocks for FIRE. Your rents increase, mortgage stays the same, properties appreciate, and one day they are paid off and your cash flow sky rockets. Or you can just cash out refi constantly to live on too. Some people do that. I prefer letting them get paid off.

I am 50 retired 2 years ago. when I got married 28 years ago, we had 5K to our name. now 1.9 million and 100% debt free. we just saved for 28 years in investment accounts, Roth IRA, traditional IRA, 401Ks, taxable investment account. building wealth takes time.

What you said only applies if someone has they're entire networth in all cash, that makes zero sense

As everyone else already said, the FIRE idea and 4% rule accounts for inflation raises every year so your standard of living should be fair constantly through the rest of your life.

I plan on using 50% real estate, and 50% dividend investments to retire in my mid to late 40's. Some of the dividends are passively invested also in real estate REITs as well. Since I don't have a family to worry about, I plan on cutting my costs way down in Southeast Asia bouncing between Malaysia, Vietnam, Thailand, Philippines. In my 60's I'll have a decent pension, and access to my 401k and ROTH IRA money. That is the point in time when I could probably move back the US permanently and retire here. (if I even want to) I love the idea of just traveling for 10+ years and living out of suitcases, but I'll be sure to keep one rental unit empty for me in a duplex incase I come back.

Exactly what I have been trying to discuss on other "FIRE" channels. How do people expect to be able to keep on living decently on this low, low income of $40.000 ..... for decades !? Long live the Financial Independence Recreational Employment Movement.

That’s also my plan. I have several rental properties that generates passive income enough for us to live on. I will manage my rentals and continue to do some trading in cryptos and stocks after we retire early. I’m not FI yet cuz my stable day jobs are so important for us to continue getting loans from the banks to buy properties. Once I don’t need more loans from the bank, I’ll FI.

There is a major problem with your math! You are double dipping inflation. You are deducting inflation from the investments then on top of that you are dropping the income with inflation over the years.

I don't think you are not getting the point FIRE even though you are mentioning it. Thats the problem with the half baked math calc. 96% of assets is exposed to growth, over long term stock market has always beat Real estate. Lets take ur sample, if u FIRE on 1 million, first year u take 40K , next year u will have $1027200 @7% of 960K of growth. Next year ur expense will be 41.2K which when you deduct from $1027200 is 986K .. So asset will grow more to support inflation. You definitely did not grasp it even though you say the right words.

I think you did mention adjusted for inflation at the top of your video but then contradicted yourself with inflation eating away at the savings.

Please research further or make a follow up video so we better understand your thoughts.

Assuming you have enough money, there are literally zero downsides to retiring early; even if it's in your twenties. If I happen to be an athlete in the NBA or nfl, I would retire in my late twenties for good.

The fire movement actually calculates for inflation

Haha great information

I am looking for a place to buy in Puerto Rico for myself

Very good

I bailed at the six minute mark. He's trashing the 4% Rule without knowing it. It's 40K the first year, and next year it's 40K plus addition to adjust for inflation.

Dont be a real estate agent, that is a pathetic job. Create value, do not tax the value of others.

So I understood the math to be: 10% return. 4% is left in to account for inflation growth. Withdrawal the 6% and you pay tax on that. Which leaves you with 4%. So the 4% is continuously growing because your portfolio is continuously growing. the 4% rule accounts for inflation and taxation.

additionally they use historical numbers of 10% growth year after year. Because that is what the average is. Inflation is also historically 4% average. So if you take 4% even when the stock market is soaring you are then building the nest egg.

The 4% rule as I see it has inflation covered. If you get at least a 12% return on something like an index fund that’s 4% of your net worth that you can use and 8% to cover inflation.

I have issues with real estate because it’s kind of like just taking lots of money from people working and paying rent. Not so different from what we used to call slavery.

I understand that investing in index funds also supports questionable businesses, but we can only do our best day to day.

I'm going to go further and say it isn't just about going broke. Here was my take and I tried it a few times as I posted to my own subscribers. I was a physical therapy contractor and at times still am. But three times I went overseas to exit out of the workforce. Each time was four months. The first few weeks were great. Then I started sleeping later and later. Finally it got to the point where I was going to bed at 3:00 am and getting up at noon. You can only train in the gym so long and see the castles and temples so many times. Even living in Gdansk, Poland on the Baltic beach----you take that walk down the beach---again. And I had no purpose. Even though I was in the beginnings of making my own videos and setting up the channel I still had 7-8 hours of down time a day. And I don't go to clubs and bars so that left a whole lot of idleness. End point--a human feels the best when there is a purpose. I used to work with the elderly and can tell you that they have a lot of depression once their role in life is gone besides that fishing trip---again. I think I'll also have a part time gig whether it is becoming the almighty influencer or being a part time physical therapist. My mental soundness is far better with a role to play than when I was on permanent vacation. Hope that helps someone out there--Charles

You're completely off on the inflation piece, the 4% SWR already accounts for it. And real estate....puke. Who wants to deal with that shit? Go buy some stocks with leverage after a bear market. And sitting on beaches? Like what the fuck, the only alternative is work? Rant part over.

But yeah I think a Coast FIRE plan where you've actually made 50-70% of your target makes the most sense for most people. I think 4% is a little sketchy and aim lower and I also don't understand the leanFIRE folks who want to eat roadkill. Its just too difficult to save up 1.5M or so by a young age of like 35.

Part time work is still work so it still kind of sucks, but its a lot better than full time. I think the idea that people should work to "give them purpose" is bullshit, but working 500 or so hours per year makes huge financial sense when you already have a pretty stacked portfolio that you can let grow for 10-15 years before really being done.

TLDR target a career that gets you to 50% FIRE by 35 and then consult 500 hours per year in that field of expertise and let the Rule of 72 get you to FIRE in the next 8-15 years.

If you’d like to change your retirement about mentality, watch this vid.

I totally agree. I found fire a few years ago. The concept of being financially independent is intriguing. But the process is painful.

The trinity study shows that you can do safe withdraw of 4% with inflation. You are a retard that doesn't know anything about personal finance

Man things market investments can't generate recurring income... 🤡

Great content!

People's goal should be get money, not get retired.

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

I left out one point when I made this video which has a lot of people arguing with me about my numbers. There are a lot of people saying returns on stocks will be down over the next few years because of inflated valuations. If stocks don't take a tumble and things are fine, they could start to make 4 or 5% returns, instead of 7 or 8%. Also, inflation has historically been around 2% and most people in the FIRE movement use 3% for their calculation to be safe. But, now it's over 4% and could go higher. So if stock returns come down, and inflation goes up you will not keep up with inflation. That is why I used the numbers that I used in this video. I'm not trying to trick anyone or make up fake numbers. The numbers where not the real point of the video, the concept of Recreational Employment is the real idea I was trying to get across.