Grand Rounds: Feel The Burn
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Welcome to this session of grand rounds, a collection of posts I have discovered in the blogosphere and have found of interest and hope you do too.
This offering of Grand Rounds presents articles from the web addressing Financial Independence and perhaps Retiring Early as well (FIRE)
Only very few of us are fortunate enough to be born with a silver spoon in his or her mouth and essentially enter this world already financially independent.
Unless you are indeed a royal, most of us have to claw our way up to that level of wealth.
When you are just starting out, especially as a resident with a significant negative net worth, it may feel like FI is just a pipe dream.
It is therefore important to break the financial journey into manageable segments so that you do not get discouraged early on.
Gen Y Finance Guy shares with us his financial tier system with, “The Five Major Milestones of Financial Independence,” and for good measure throws in a bonus level at the end.
I am sure you have heard of it, the famous 4% rule.
It basically says that if 4% of your nest egg can support your living expenses you are considered financially independent.
Not so fast.
Analysis extraordinaire Early Retirement Now cautions you against dropping everything the moment you hit this milestone and burning every bridge possible in your workplace in, “Ten Things The “Makers” Of The 4% Rule Don’t Want You To Know.”
Not to continue to rain on the 4% Safe Withdrawal Rate parade, but there are more and more articles coming out that warn against this “one size fits all” guideline.
One of the assumptions that the makers of the 4% rule made was that the United States would continue to have growth like it had at the time of the study.
As other countries start exerting their might on the global economy, the United States starts losing its stronghold.
There is a new, 3rd generation of analysis that is starting to take place that pokes holes in the 4% SWR 2nd Generation findings.
In an incredibly comprehensive article by Financial Mentor, you may soon discover that your planned safe withdrawal rate might not be as solid as you think in, “Are Safe Withdrawal Rates Really Safe?”
You have reached your goal of financial independence.
It truly is a great achievement.
Hopefully you have created a “Capital Snowball,” that will feel like you have created a perpetual money printing machine.
But what happens after you are gone?
Are you worried that the first thing your progeny do when they get their grubby little hands on your snowball is melt it?
Wealth Management, helps address some of these issues in, “Six Common Wealth Transfer Pitfalls”
A million dollars just isn’t what it used to be.
A couple of decades ago a million dollars could afford you a great lifestyle in retirement.
However the erosive effects of inflation continues to make future dollars worth less than current ones.
The Retirement Spot highlights this disturbing trend in the post, “Three Million Dollars May Not Be Enough To Retire On.”
Hope you enjoyed the reading material.
Have a great rest of the week.
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