I think some of FIRE's basic mental models provide a useful perspective to help make some decisions, but like many things in life, it's not great to focus on one perspective myopically, to the exclusion of everything else.<p>While accumulating and investing savings it is reasonably useful to keep in mind your savings ratio:<p><pre><code> savings_ratio := (income - expenses) / income
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If you choose to focus on growing investments, make decisions to maximise the savings ratio, subject to other constraints. You can try to reduce expenses, or increase income. Or both. Sometimes you can find win-win decisions that increase your savings ratio while also giving you some other benefit (e.g. start riding a bicycle to work instead of commuting on public transport -- this saves money and can be more enjoyable, provided conditions for cycling aren't too foul and you live close enough).<p>Focusing on maximising savings ratio assumes that your expenses while saving will be similar to your expenses once retired. This may or may not be true -- for example, maybe you have high-paying work in a higher cost of living area, but you can move to a lower cost of living area when you no longer need a reliable day job.<p>Once retired, we want our investment income to cover our expected expenses:<p><pre><code> cash_flow_in + cash_flow_out >= 0
cash_flow_in = capital_invested * (expected_nominal_return - inflation) * (1 - effective_tax_rate)
cash_flow_out = expected_annual_expenses_when_retired
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We can calculate our progress by the ratio cash_flow_in / -cash_flow_out .<p>For example, let's plug some numbers in:<p><pre><code> expected_annual_expenses_when_retired = -20,000 USD / yr
capital_invested = 200,000 USD
expected_nominal_return = 6% (say we're 100% invested in the US stock market)
inflation = 2%
effective_tax_rate = 5% (complete guess, i don't live in the US)
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So<p><pre><code> expected_investment_income = 200,000 * (0.06 - 0.02) * (1 - 0.05) = 7600 USD / yr
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In this example, our progress to covering our expected annual retirement expenses with net real investment returns is 7600 / 20000 = 38% .<p>There are calculators to estimate the time until retirement. Here's a simple one: <a href="https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=25200&annualPct=5&withdrawalRate=4" rel="nofollow">https://networthify.com/calculator/earlyretirement?income=70...</a><p>All that said, real life is unpredicable and complicated, it might be good to leave a bit of margin in there to handle unpredictable events such as stock market crashes, large one-off expenses to repair a house, contingency for emergency medical expenses, etc. It's arguably not a great idea to be 100% invested in stocks at the moment, let alone US stocks.<p>Potentially useful resources:<p><pre><code> http://www.efficientfrontier.com/
https://www.bogleheads.org/</code></pre>