My last net worth update shows that I am close to the four million mark. I am appreciative of this of course.
Nonetheless, my net worth is nowhere close to my FIRE* number yet, which may take more than a decade to go. I have never disclosed a goal number in this blog but there is a set number in my mind at which I feel we may be able to FIRE.
You probably know the rule of thumb–25x annual expenses is a sustainable amount to FIRE.
25 x Annual Expenses
I hate math so let’s keep this equation short:
25 x Annual Expenses = FIRE goal net worth
25 represents the number of years that you must self-support yourself until social security or other retirement pension kicks in at 60 years old.
For conservative money bloggers, the FIRE goal net worth excludes the value of your home or car. It consists mainly of cash and other assets that may readily be liquidated to fund your early retirement i.e. money market funds, mutual funds, UITFs, shares of stock.
In theory, these passive-income investments will have time to grow and give out passive income, well beyond the 25-year period, having already enjoyed those 25 years to grow.
For us, our FIRE number is:
25 x PhP600,000.00 = PhP 15,000,000.00 / USD 28,850.00
See, it’s a lot isn’t it?! So don’t fault me for getting the service water instead of pineapple juice. I’m just frugal like that! Haha. I do not know yet how I will steer my finances towards that boat, but i’m always optimistic.
How much cash do you think you’d need in retirement? What’s your FIRE NUMBER to retire early?
*If you are new to this blog, it stands for Financial Independence, Retire Early.