The 4 Percent Rule & Why I Named Myself After It

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The Trinity Study or the 4 Percent Rule is a study that aimed to find the max someone could withdraw from their portfolio every year and still have that money 30+ years in the future. The study found that around 4% was the highest number that historically survived even downed markets.

So why is this study so important that I decided to call myself the 4 Percent Gamer? First, it gives me a goal, and we as humans are at our best when we are striving towards a goal. This goal is straightforward to understand. All I need to retire is take the amount of money I spend in a year, multiply that by 25, and when I reach that number I’m in a fantastic place to have my living expenses paid for until the day I die. Before that, if someone asked me how much money I thought I needed to retire, I would not have been able to answer without wildly guessing. Now that I have armed myself with this information, what has this knowledge gained me?

Second, the cost of the lifestyle I’m comfortable living puts my Financial Independence (FI) number at something way more obtainable than I imagined, and I have many options that would become available for me before I reach my FI number as well. Say I get laid off from my job, one of the biggest real nightmares most people can face. The more along I am in my FI journey, the more time I have to find a new job, or more options I have in what job I pick. I could even handle the risk of starting my own business if I wanted or I could take a mini-retirement for a year or two. I could spend that time traveling, focusing on my next Ironman, spending more time with loved ones, etc.

Third, the more I save, the quicker I could get there. Mr. Money Mustache has a fantastic article called The Shockingly Simple Math Behind Early Retirement. I don’t have to wait until I’m 65 to retire now. I can have this freedom during the prime years of my life!

Fourth, is that the further along I am, the more freedom I’m allowed to focus on things I am passionate about, and sometimes those things can make you money. Not only will I be much happier with the stuff I’m doing or the people I’m helping, but I could potentially be more aggressive and “retire sooner” or be more conservative if I’ve already hit my number and take out less from my portfolio allowing it more time to grow.

The 4 Percent Rule helps me understand my current situation and will allow me to react accordingly with whatever life throws at me. Having that number in my head or that goal in my head is motivation every day. It’s what has driven me to start this blog and to start my stream. It’s already allowing me the chance to follow some of my passions and to help others hopefully by sharing my journey here. Find your number, set your goal, and find out what you need to do to reach it.

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