Why I’m Working after Reaching FI

I’ve mentioned before that my goal for FIRE is to be able to spend $4,000 a month, or $48,000 a year. I thought I’d go into a little bit about how I arrived at that number and the assumptions that I’ve made and why some might say I’m working past reaching FI.

What my current numbers would be

If you’ve been reading my expense reports, I spend about $2,100 a month (or at least that’s what I shoot for). While that fluctuates a bit from month to month, it’s close to what I spend, it’s also the maximum a month that I shoot for in spending. If we throw in a bit for a silver plan (see this calculator for 1 30 year-old-adult, no tobacco use, without a spouse’s plan, and 0 children), it comes out to about $2,500 a month ($405 for a silver plan without subsidies) or about $860,000 to achieve FI (I shoot for an average of 3.5% withdrawal rate instead of the usual 4%). If I was going with the more traditional path to FIRE it would be to save to that number instead. So why not shoot for closer to $900,000? In a word, safety.


While currently, I can pay $2,100 a month to enjoy my lifestyle that might not always be the case after inflation. I may get married down the road or have children. These kinds of things could increase my cost of living more than I currently spend. Will they double my living expenses? I doubt it.

I also have budgeted out some things for my post-FIRE lifestyle such as travel, but just because I’ve guesstimated it today doesn’t mean my numbers are accurate or that the kind of low-cost travel I’ve budgeted out will be the kind that I go with. Just wanting to travel alone could increase my expenses somewhat from that base $2,100 amount, depending on how I do it.

I could be underestimating how much things like medical expenses will cost me in retirement, overestimating stock returns, or several other ways I could not have saved enough. All in all, having a bit of a cushion to cover expenses I haven’t budgeted for is good, I don’t know what my life will look like 20 or 30 years from now. I have an idea of where I’d like it to be, but who knows if that will be the case.

Am I worried about saving too much?

Of course, saving extra is good. But saving too much could be considered a failure as well. Say in retirement I only spend $2,500 a month and I can cover my medical expenses without dropping that amount too much. That would mean that at $4,000 a month, I worked too long, several years too many even.

I’m not too worried about that. If it turns out I saved too much money, I can always increase my lifestyle a bit to adjust, donate the extra money, or any other number of other ways. If there’s leftover money when I die, that’s fine. I have plans for what I want for my money after I die.

Sure it would have sucked to have worked beyond what I would have needed to maintain my lifestyle, but having that extra bit of safety is important to me. After all, I don’t want to screw up this calculation.

Now that we’ve covered why I think having a bit of a cushion is a good thing let’s get on to how I arrived at $4,000 a month specifically. I’ve rewritten this section several times to try and make it sound better but I just can’t. It just boils down to that being my take-home pay after getting my first job, a little less than $2,000 a paycheck twice a month. Maybe this number is too high and I’ll rarely withdraw that amount, and that’s fine too.

Why I am going with 3.5% average rather than 4%

Anyone who has been in the FIRE community for any amount of time has probably heard of the 4% rule. I’d be beating a dead horse if I went over that and others have written far better breakdowns of the rule. Instead, we’ll go over why I’m shooting for 3.5% instead.

I’ve mentioned it before but I’m a huge fan of Early Retirement Now’s Safe Withdrawal Rate Series. In parts of that series, he breaks down how adjustable safe withdrawal rates that are based on the CAPE ratio of equities. While something like that would be even better than my plan, it’s a lot harder to plan something like that while saving (I want X dollars at Y CAPE ratio).

I did like the simulations he ran at 4% for 60 years showing some of the issues with the 4% rule. I’d instead move to something lower that has a significantly higher success rate for my planning purposes. For that, I drop it down to 3.5% even just half a percent is enough to make me feel confident (although my actual will be closer to 3.2%).

Some notes on rounding

I prefer to round rather than look at the specifics. Usually, I round to close enough numbers. For instance, with my 3.5% rule for FIRE, I’d only need to save $1,371,428. Since that’s a hard number to remember off hand, plus on the lower end that level of precision may not be useful. Instead, I round that off to $1.5 million.

Why did I choose 1.5 million over $1.4 million? One could do all sorts of statistical tomfoolery to justify one number over the other, it just boils down to that I like the look of $1.5 million over a different number. The difference in the total portfolio value is almost something that your value could change in a year left to its own devices. It’s more of an art than a science for my FIRE number. I don’t think there’s any issue between using either number as they aren’t much of a change and both are higher than the number I’d need for my other goals.

However, I’ve used rounding elsewhere on this blog. I’ve had to apply more stringent rules as I go along. In my monthly expense reports, I round my expenses up to the closest dollar and round my income down to the closest dollar. I could round these in other ways, but I figure this is a good way to account for those cents over time.

For my net worth, I’ve started rounding it down to the closest half thousand. I may start counting those out to the dollar or hundred again instead. But as I mark these as the account values on a specific day (after market closure on the last day of the month) I feel like the more precise your number gets, the less useful it is as those parts of the number could be different by the time the post goes live. In some cases, I’m still figuring out the science of art.


So that’s a little bit on how I arrived at my FIRE number, my withdrawal rates, the rounding I’ve had to do, and the methodologies I’ve implemented when applicable.

For some items, I just go with a number that psychologically looks nice (my FIRE number, the amount I want to use each month, the withdrawal rate I want) and some have more hard rules involved (rounding on my savings and expenses).

I think an important part of planning for retirement is to examine the beliefs you have about the numbers you’ve decided on, why you’ve decided on them, and if they have merit. After all, during last week’s post on my asset allocations, I found that I didn’t have a good reason for why I have an even split of US to international stocks in some places and less in others.

Another thing I want to note, this is the process that works for me. It may not be the process that works for you. I try to stress regularly that what I portray on this blog is just what worked for me, not necessarily what will work for you.

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