What is Your Fire Number
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A common rule of thumb is that you need enough savings to generate about 25 times your annual living expenses to replace your income in retirement. This is based on the 4% rule, which suggests you can withdraw roughly 4% of your portfolio each year without running out of money. For example, if you need $40,000 per year to live, you would aim for about $1 million invested. The exact amount depends on your lifestyle, healthcare costs, and whether you expect any other income sources like Social Security. Ultimately, the goal is not to replace your salary dollar-for-dollar, but to replace the income you actually spend.
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