[00:01] called your set for life number, and here is how it's calculated. You take your annual spending and multiply it by 25, and then that's your number. So, I did not say income, and I'll explain why in a second, but this formula is used by
[00:14] community, as well as financial advisers, and it's widely also known as the 4% rule. Let's pretend you spend $60,000 a year on everything in your life. Well, 60K * 25 is $1.5 million. That would be the number to hit to make
[00:29] you set for life. That amount lets you withdraw 4% of it, or about $60,000 every single year, and historically, a diversified portfolio grows fast enough The money you gain from investing replaces what you pay yourself out every
[00:43] single year. So, why don't we use our income? That's because spending is the you're set for life. Somebody who spends 40K year doesn't need a huge portfolio to hit that number, but someone spending 200K per year might need $5 million.
[00:57] That's how somebody with a modest lifestyle and income faster than say a lawyer making four times as much. What is your set for life number? Let me know is your set for life number? Let me know in the comments.