$2M was just a rough guess. It should be enough for financial flexibility. If he retires on $40k on a $1M portfolio and the market crashes 40% his withdrawal rate jumps to 6.7%. His principle and future income are permanently damaged. But start with $2M only requires drawing 2%, and even during a market crash his withdrawal rate is below 4%. And in most years a 2% withdrawal rate should increase principle, even adjusting for inflation. For example, in 5 years he finds he needs $80k a year to live on, his portfolio is $2.2M+ and a withdrawal rate under 4% can generate that.

@TracyCramer I think we are entirely in agreement on the important issues, just disagreeing on his mental expectations . First I doubt he's living on $40k, whatever he made the last 15 years he's likely now making more. And even if he is living on $40k, there is a huge difference between choosing to and being forced to. Making $150k is not just a lot of money, it's self affirming, a mark of success, providing security, flexibility, and lots of options in how he chooses to live. In retirement making $40k (pre-tax!) he'll have almost no more choices left.

All your points are excellent, but let me point out that expectations are also working against him. If he made $150,000 a year, even if he didn't spend much and and saved most, only having $40k a year to live on is a huge shock. His options for unexpected circumstances are simply much more limited. And it's not much comfort that his living standards are still good by US standards, when he was earning more than double US averages.

@victor Recommending a book is not pushing anything on you, and Black Swan isn't an value investing book. Just pointing out that a very good book was written explaining how relying on historical stock trading patterns can be a fools errand, something that should be of great interest to anyone using TA. You don't have to agree with Taleb, but you of all people should read and understand his arguments.

@victor clearly I was greedy, and while I planned my risk exposure at times, I didn't continue to update those plans as circumstances changed. In a relatively short time I went from having a very low cost life-style to a very high cost one without considering how it changed my risk profile. It was a great learning experience, and while the end was painful, I did enjoying going nearly decade supporting my family in a great lifestyle without holding down a job.

@victor I'm not going to comment further on how wise it is to attempt to trade the market, just point out that you should both read, and understand Taleb's Black Swan. The risk of MBS were back-tested for many decades, as long as mortgages existed, and backtesting "proved" them to be extremely safe, which created a massive market for MBS that eventually revealed them to be immensely risky. The very definition of the market implies that tradable patterns will be soon be diminished or even reversed by the same forces that created them.

@victor The principles for buying investments below intrinsic value are laid out very clearly in "The Intelligent Investor" by Ben Graham, and "Security Analysis" by Graham and Dodd (an excellent update was released about a decade ago). IV estimates aren't "guesstimates", they are estimates based on rigorous research and analysis, Warren Buffett has written extensively on this (his last 40 shareholder letters are available for free on the internet). IV estimates require a margin of safety, and determining when IV estimates can't be reasonably accurate.

OP was discussing investing, not trading. Investments should be purchased only if trading significantly below value, making stop-lossing a foolish "buy low, sell lower" strategy. And your entire trading strategy is suspect and poorly tested. Even including the GFC, the market of the last ten years isn't likely to have any predictive ability for the soundness of your strategy. Your results cover a minuscule time frame, making them nearly meaningless. History is filled with thousands of back-tested trading systems that produced superior returns until they blew up with massive losses.

This is the best answer, because a narrow focus on state income taxes ignores other important factors that drive total cost of living. In fact, a remote developer has much wider choices than just income tax free states. I moved from Oregon, to Arizona for two main reasons, taxes and weather, but found that cost of living was even more important. Income and property tax rates in Oregon are more than double Arizona's, but OR has no sales tax while AZ has an 8% tax. A much bigger factor was home costs, the rental component of the RPP is almost 20% higher in Portland than in Phoenix.