Ah... no, you can't. You just think you can, because you've never tried. I've actually lived off that magical 2K number with my family in a (large city in a) 3rd world country. It was edgy, we hardly broke even every month, and any 1-time event (s.a medical) was covered from savings. Maybe if you go super rural you can pull that off. Keep us posted!

I know a family who has been doing it for 10+ years, and they publish their budget online. It can be done!

With that said, our actual income will be ~7x our budget, so there’s plenty of cushion.

That money gets you a good life anywhere, except for US and some big capitals/tech cities.

Is that 4% before or after inflation? A 4% real return (aka 7% if inflation is 3%) already requires quite risky investments.

The Trinity study's 4% "safe withdrawal rate" is actually a bit technical:

The amount you withdraw from your portfolio, in perpetuity is:

"4% of your portfolio's value on the day you retire, adjusting annually for inflation."

Say, on the day you retire, your portfolio's value is $100,000. For the next thirty years, you withdraw $4,000 annually (adjusted for inflation). You now have $96,000 in your portfolio.

Say the year after you retire, your portfolio has done supremely well, and doubled in value to $192,000, and inflation has been 0%. You get to withdraw: $4,000. You now have $188,000 in your porfoloio.

The next year, your portfolio tanks by 50%, and it is now worth $ $94,000 (and inflation is still 0%). You get to withdraw: $4,000. Your portfolio is now worth $90,000.

(There are additional rules about the composition of the portfolio too.)

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Historically, by following this rule, there has been no thirty-year period (since records of the US Stock market have been kept) where the portfolio would fail--where you wouldn't be able to withdraw your $4,000. And the vast majority of the time, you would end up with a very, very much larger value.

It is a fairly conservative system and keeps purchasing power constant, which is useful.

But it is only a starting point. If you will have a longer retirement, don't follow their composition rules, or don't need constant purchasing power (most retirees don't), then you should adjust it as appropriate.

S&P500 90 year average is 9.8%. people FIREing typically have nearly all their money invested in low cost index funds.

You know what they say in the fine print - past performance is not a guarantee of future results...

And one of those years the return was -37%. Not a safe return.

9.8% is not a safe return, no, which is why the safe return is about 7%. The worst-performing 30-year period averaged around 7%, which is what the 4% withdraw rate is calculated from (accounting for inflation).

Obviously anything can happen, the world could end, whatever; there's no truly 'safe' option. But it's reasonable.

It does assume the continuation of American exceptionalism. I believe that a better benchmark would be a basket of stock markets rather than just the S&P 500.

That basket would be dominated by the S&P 500 so it wouldn't change things too drastically, but it would pull that number down somewhat.

The 4% safe withdrawal rate usually refers to the net return. To your point, in today's interest rate environment that would mean aiming for >7%+ returns.

Also, it seemed that the couple were willing to move to a lower cost of living location/country so their safe withdrawal rate would take them further. I don't think children were factored into the base equation, although it's entirely possible one or both of them could work part-time to augment income during child-rearing years.