Trying to figure out my target for financial independence and is about to start building an investment portfolio for 3 lifetimes. (3 lifetimes as in I want to inherit it to my kids and grandchildren: 80 x 3 = 240 years horizon).
I'm looking for help to figure out my Financial independence (FI) target. I have been to the subreddit of said subject and found this thread here: https://money.stackexchange.com/questions/69993/
- I have also used this calculator: Networthify
- I have also used the formula from the wiki (see above answer)
I want to figure out my FI target and years to FI in my own calculations. I record all my income and expenses every month and I have made an excel sheet to update this as time goes by.
Here are some relevant figures:
- Age: 28 y/o
- Annual income: $31,000 after tax
- Annual expenses: $21,000
- Portfolio: $10,000 (zero tax on all financial investments)
- SWR (withdrawal rate): 4%
- Nationality: Non-US (401k etc. does not apply to me)
- ROI: 4%
- Savings rate: 32%
- Multiple: 25
Here is a quote by a money.stack user that uses some parameters I've found everywhere on the web (also from the Trinity study).
Which in turn means that I estimate I need investments 1/.04 times the yearly spending estimate to declare the "forever" independence/retirement, or 25x the yearly. @Keshlam
I have also visited the Monevator, a blog that recommended this process:
- Annual income / Withdrawal rate = FI target
- Take FI target
- monthly saving figure
- real return rate assumption
- Feed numbers into calculator
- = Years until you are FI!
Here are my calculations so far:
FI target using 4% SWR: annual expenses / SWR = FI: 21000/0.04=$525,000 FI target using multiple of 25: annual expenses * multiple = FI: 21000*25=$525,000 FI target using annual income and SWR: annual income / SWR= FI: 31000/0.04=$775,000 Years to FI using wiki formula: ((21000/0.04)-10000)/(31000*0.32)= 51.5 Years
Perhaps I am overcomplicating things, but I want this to work as I track the expenses on a rolling 12 month period and regularly watch my savings rate. Basically, I don't know if I can trust my calculations to be "fair". (they will never be the truth, I get that).