Asked on 03 Feb 2020
Are there other factors that you should be considering before you potentially FIRE?
Nothing is foolproof in this ever-changing world. Choosing a profession out of passion and having the luck to be situated into a favorable work climate ambience makes FIRE useless.
It really depends on the investment portfolio you are holding I guess. 4% withdrawal rate can be extremely risky, just imagine you FIRE this year and you are experiencing huge losses in your investments. 30% paper loss in the market and you still have to liquidate 4%. This will also be an issue when you FIRE earlier, because there is a longer withdrawal period.
I would want to work on passion projects that can help me be employed easily if I choose to. These could be something like content marketing, digital marketing, which has a broad application that can be applied on whatever you are interested in. In that sense while I have "FIRE"ed, I wouldnt let my human capital suffer "losses".
I have 25x of my annual expenditures, but I don't really feel its enough. It's not foolproof, and also involves other things like insurance come into play. Also, 25x is enough for me, but not for my family members as a unit (should they not be able to provide for themselves).
The only thing full proof is yourself. How likely are you to change your lifestyle, needs, wants and desires? What would you do with your free time?
There are people who can FIRE but choose not too because they are happier having something to do day by day.
The 25x rule works as long as your expenses do not change and you can guarantee yourself at least 4% returns from your income generating assets.
If your expenses go up due to lifestyle creep or hyperinflation, or your investment returns fall below 4%, and you aren't able to make the necessary adjustments to balance it out, the rule will fail.
More or less, pretty foolproof, except for the effects of inflation. For example, if you have 1M, based on 4% return, you will get 40k a year, totally live-able in Singapore. This works out to be $3,333 a month, which is roughly a 4k gross monthly income (after you take away 17% CPF, you are left with 3,333).