I’ve been planning to retire at 60 with $2M (4% rule ≈ $80K/year). But I’ve realized that if I keep aiming for $2M, I’ll spend more years working — years I could instead be spending with my aging parents while they’re still alive.
I don’t have kids and don’t plan to leave $2M inheritance to charity, so I don’t want to die with $2M sitting unused. At the same time, I can’t aim to die with exactly zero because I don’t know how long I’ll live and i need money until the last day i live.
Now I’m debating:
- Would you aim for less than $2M and retire earlier, maybe using a higher 5% withdrawal rate to still target around $80K/year?
- Or, if you don’t want to leave $2M to charity but also can’t plan to die with exactly zero, how do you decide what number to die with? Is there a formula or framework for that?
For those who’ve retired early or adopted a “spend‑down” mindset, how did you figure out what was truly enough — without oversaving and missing the chance to spend time with loved ones?
How do you decide your “enough” number if you want to die with almost zero?
byu/LearnRD infinancialindependence
Posted by LearnRD
14 Comments
> I can’t aim to die with exactly zero because I don’t know how long I’ll live and i need money until the last day i live.
Buy an annuity. But before that delay any social security or similar as long as possible.
I’d love to die with near-0, but would prefer leaving money to charity than running out of money when I’ve already left the workforce
It’s a guessing game, but while I’m still in my high earning years it’s better to round up on how much I’ll need, imo
You can’t. Dying with zero likely is impossible unless you have 100% of your wealth in an annuity. Dying with zero is more a mindset not a practical goal of literally the last dollar gets spent as the EKG flatlines.
If you have a reasonable risk of ruin the likely outcome is your wealth grows massively. If you don’t have a reasonable risk of ruin there is a good chance you outlive your money.
>Would you aim for less than $2M and retire earlier, maybe using a higher 5% withdrawal rate to still target around $80K/year?
$80k is 4% SWR not 5%. I would not consider a 5% SWR for early retirement. 5% SWR has serious risk of running out of wealth before dying. With FIRE we are balancing two goal: not running out of money and not working too long. The SWR requires us to be relatively conservative.
Better to target a more reasonable SWR and then if wealth grows substantially give the excess away prior to your death.
I think it’s a lot harder to spend as much money as you possibly can than many people think. Like “I have $2MM and I want it all gone before age 85.”
Better to work backwards by first establishing a rough retirement spend and then figure how much you’ll need to support that lifestyle. Once you get to that number maybe build a little bit of a buffer and retire.
If you don’t know where you’re going, any road will take you there.
25x is just easy math. In looking at the study you can find a 70% success rate if you picked 20x (95% with 25x)
https://www.forbes.com/sites/wadepfau/2018/01/16/the-trinity-study-and-portfolio-success-rates-updated-to-2018/
That doesn’t account for DW0, because that is considered a success.
So you can pick 5%, but be ready to reduce it to 4% during a downturn, and be prepared to go down to 3% if the downturn is extended (note that 3% was a 100% success rate)
Later studies found replacing corporate bonds with Treasuries increased the 4% SWR success rate to 100% (but by definition that means 5% of those failures became DW0!)
So if you want to die with zero you just need to be flexible.
I would rather have money to buy diapers and some charity getting my money than run out of it.
You can use SS as a hedge to get better success rate.
Start with conservative portfolio maybe about 50/50 and with 5% WR. So you will need 1.6M.
Keep withdrawing at this rate unless there is significant drop in the market and that is when you apply for SS and reduce your WR by the SS you get. If the market keeps chugging along delay your SS till 70 otherwise take it when the your portfolio is 80% of the staring value adjusting for inflation.
The world is as uncertain place, that lately seems to be getting even more uncertain. This is not a game I would wish to play.
I liked the book and the concept but in terms of specifically ending up with noting when you, it doesn’t actually make sense to think of it that way.
The real point is just to ensure that you actually live your life – travel, spend money, give to love ones or charities if that’s your thing – instead of being afraid to live.
To me, if you know the life you want to live and plan your FI number to support that lifestyle without fear of running out of money, you can still live according to that philosophy.
I’m budgeting $5k/month in “travel and fun” money during my retirement (of course increasing it for inflation). However, I’ll still be drawing down 4%-5% for the most part – I’ll be using dynamic guardrails to give myself a raise or to rein in spending based on how my portfolio is doing.
It’s more important to me to be confident I will never be poor and never worry about paying my bills than to think about whether I will leave money behind – as long as I’m enjoying life, I don’t care about that.
I’m retiring earlier than I thought I would be able to just to have the time to enjoy life – I could keep working and watching my net worth grow and my retirement budget go up instead – I think that is what would cut against the “die with zero” idea.
It’s really more about considering your life energy and experiences as more important than building wealth. If you can live a life you’d enjoy with less than $2 million, working more years is a bad trade.
>I don’t have kids and don’t plan to leave $2M inheritance to charity, so I don’t want to die with $2M sitting unused. At the same time, I can’t aim to die with exactly zero because I don’t know how long I’ll live and i need money until the last day i live.
My biggest fear is living longer than expected, then ringing up a 1M bill in a long term care or nursing home before dying. So, I’d rather have a buffer, and maybe a plan for legacy giving to something like Meals on Wheels or a grant to the local college.
Use a more comprehensive planning tool that the 4% or 5%. Fidelity, empower, boldiin, etc.
I turn 56 january and have 1.7m invested no debt…probably under 80k spend a year.
Collect 1200 rent per month now and ss will be 27k at 62.
Its tempting to retire now…i left job of 32 yrs to start teaching but not liking it so far
Pretty sure be fine to go
I would advise against this mindset.
The point of having that 2 mil saved is so that it constantly generates income for you, that’s where the stability and peace of mind for FI comes from. If you start touching that principle then it starts decreasing how much you get back each year, leaving you more vulnerable to years where the market either downturns or gives weak returns.
The other thing is once you’re past a million that second million comes way faster. So while I get what you’re saying, I think it’s better to hold on and get there.
Rather than try to hit 0, I’d say look at your lifestyle and see if you can accept a lower income as a trade off for less years working.
Or you could look into coastFIRE. Which means you get to a point that you don’t need to invest in the 401k anymore to grow to your target, allowing you to take a different job with less hours or more flexibility to cover your expenses until you get there.
Or there is BaristaFIRE, where your 401k generates some amount of the income you need, but not all so you still need some kind of lightweight job for insurance and/or supplemental income. But might still give you the flexibility you want.
“How much is enough?” is the great question. I pondered this for the last few years and finally after running the numbers a thousand times, I feel like I have enough. It is really about knowing yourself, how much you spend, what are your spending habits and how long your pot of money will last. Just know that you can be flexible, maybe one year you will spend 100k, and another 50k. For me, having no debt and very low living expenses is a huge comfort factor for me.
I worked “one more year” for the last 3 years and convinced myself that I had enough. I could have worked at a great salary for many more years (46) but found peace in tracking my spending and knowing my habits. good luck!