[Serious] Inflation Just Exploded My FIRE Number – How Do You Stay Hopeful?
26M here, my current FI number is $2.5M (based on today’s expenses), but after adjusting for inflation over 30 years?
- At 2% inflation: 2.5M∗1.02^30 = 4.5M
- At 3% inflation: 2.5M∗1.03^30 = 6.1M
This absolutely obliterates my motivation. Suddenly, what felt achievable now feels like chasing a mountain that grows faster than I can climb.
Am I missing something? How do you all factor inflation into your long-term plans without losing hope? Do you:
- Assume aggressive investment returns to outpace inflation?
- Plan to save way more than your current FI number?
- Rely on geoarbitrage, side hustles, or other variables?
- Just… ignore it and hope inflation stays low?
Honestly, this math has me questioning whether FIRE is even feasible for someone starting early with a long timeline. Any strategies, success stories, or tough-love advice welcome.
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Update Based on Community Feedback:
Wow, thank you all for the incredible insights! Here’s a summary of what I’ve learned:
Inflation-Adjusted Returns Matter Most:
- Many of you emphasized using real returns (nominal returns minus inflation) in calculations. For example, assuming 7% returns already accounts for ~3% inflation (10% nominal - 3% inflation = 7% real). Double-counting inflation by projecting both higher FI numbers and lower returns is a mistake.
Investments (and Income) Grow Too:
- Inflation doesn’t just raise expenses—it also lifts wages, investment returns, and asset values.
Stay in Today’s Dollars for Clarity:
- Tracking progress in today’s dollars simplifies things. For example, if your FI number is $2.5M now, aim for that amount adjusted for real returns over time—not a nominal future number.
My Takeaway:
I was conflating nominal and real returns, which made the math feel impossible. Shifting to real returns (7% = 10% nominal - 3% inflation) restored some sanity.