- Kale
FIRE: Your Retirement Nest Egg Needed CALCULATED
Let's figure out exactly how much we would need to retire in our 40's, 50's.
If you haven't read my prior piece on "Can I Retire in 10 Years?", we worked forward in determining how much we need to save by a certain age. The calculations were simplistic and not a precise as a typical FIRE chaser would expect.
Thus, here we are.
The objective of this calculation is to detail how much we will have spent before we kick the bucket at the census death age of 80 (morbid, but factual).

I'm going to assume that you can live "froogal-y" off of $40,000 per year (all-in: housing, food, basics) during your FIRE years. Obviously, more extravagance will increase this number. We will also add in a medical buffer (likely paid for with your social security & retirement account holdings).
Other assumptions:
5% long-term stock market return
Disregarding inflation (as we should be protected via our equity holdings)
Let's get a baseline.
$400,000
So you've put together a sizable chunk of change and have it entirely invested into a total market index fund.
At 5% return per year, you are pulling in $20,000 a year in earnings.
Don't sound the alarms. Although this is below our $40,000 annual expenditure needs, we can withdraw from our nest egg over the 40/30 years.
The problem is, next year we only have $380,000 and will then need to withdraw a bit more ($21,000) to cover our expenses.
As you can probably tell, this game won't let us go the distance (30 or 40 years).
As a matter of fact, we're only going to make it about 14 years.
$600,000
Same set up as before, just a bit more of a nest egg.
Thanks for the power of compounding - this gets us to 28 years of good FIRE livin'.
But that still isn't enough for either strategy.
$700,000
Folks, we have a winner.
After 30 years, you are sitting on $367,000.
After 40 years, you have just about $96,000 to go.
Now that we have this baseline, here's where life gets a bit tricky.
One of the classic pitfalls of FIRE is the medical ailments that arrive when you age. These can kill a nest egg quickly and need to be prepared for.
As you can see from prior blog posts, there are basic strategies to pursue when it comes to insurance but really you only have a few options:
Self Fund
Medicaid
Long-term care insurance
Obviously, the dream is to self-fund. But this is pretty much impossible when you're FIRE'ing off of the $40k annual income amount from your savings.
Luckily by 62 you will start to receive social security checks and you can tap into your retirement accounts (401k, IRA, etc) at 59.5.
This assumes you followed FIRE 101 and contributed to your 401k to maximize employer matching & that social security isn't bankrupt by the time you get there.
So let's be conservative and say that adds an extra $2,500 a month ($30,000/year) to your income, bringing it to $70,000.
Great, but you are going to give that all to these medical options.
If you've achieved this $70,000, you can say goodbye to the Medicaid option (requires you to earn less than approximately $1,000/month).
So that leaves us with self-fund vs long-term care insurance.
Per the man/the myth/the legend Dave Ramsey's own calculations:
The median cost of a semi-private nursing home room in the US is $85,000/year.
So we're a little short with our $70,000 income.
That being said, assisted living comes out to only about $45,000 so its' doable for a bit.
The average cost of long-term care insurance is a $2,700/year premium.
You would start paying this when you are 60 and it typically covers up to 6 years of long-term care. (Men typically need it for 1.5 years and women typically need it for 2.5 years according to this article).
As a quick side note, I have to assume that by implying the only "need" it for that many years is the equivalent of saying most of these people die after 1 or 2 years after being put into a home. Morbid, but no other articles address this directly.
So the point being- with our $70,000 salary, we can afford to pay for assisted living as we get older & pay the premiums for long-term care insurance to cover our final days at the home.
If we went the self-funded route, no insurance, we could actually afford to cover the extra $20,000 we'd need for the semi-private room under both the 30 year and the 40-year plan (barely, but we could). This is calculated by simply taking our $70k/year income and dividing the $90,000 we had left under the 40-year plan into 2 (for the 2 years of full-time care we need before we kick the bucket).
It's a narrow margin, but the basic math works.
So in summation:
A nest egg of approximately $700,000 will do the trick if you can live off of $40,000/year (adjusted for inflation since your all in on stocks) and have $2,500 in social security/401k (retirement account) income/drawdown capacity if you are attempting to retire by 40.
I would personally recommend adding in a 20% buffer layer (extra $140,000) but it is entirely dependent on your personal risk tolerance.