The 4% rule is wildly optimistic. You're assuming that there exists an investment that:
- is 100% liquid
- will return 4% consistently over decades
- every single year
- post-tax
- post-inflation
Good luck finding that one.
So that's why I am saying that the FIRE theory is a theory. A much more realistic number is 2% (and I am still being optimistic here). That means that for someone who needs $5K/month (not insane if you want to have kids), you need $5K x 12 months x 50 = $3M. To get that sum post-tax, you need roughly $5M of income somehow. The set of people who make that amount early enough in their career is very limited.
You may want to look into it more. You don't need consistent returns, you need 4% yearly returns on average over a long time period. Looking at historical returns for a broad index fund (like VTSAX), this is very achievable. However, 4% may still be aggressive. This is why I am personally targeting closer to 3%.
- is 100% liquid - will return 4% consistently over decades - every single year - post-tax - post-inflation
Good luck finding that one.
So that's why I am saying that the FIRE theory is a theory. A much more realistic number is 2% (and I am still being optimistic here). That means that for someone who needs $5K/month (not insane if you want to have kids), you need $5K x 12 months x 50 = $3M. To get that sum post-tax, you need roughly $5M of income somehow. The set of people who make that amount early enough in their career is very limited.