What is the 25x rule and when does it break down?

The 25x rule says you can retire once your portfolio equals 25 times your annual spending, because 25x is the inverse of a 4% withdrawal rate. It is a fast, useful sanity check on your target.

It breaks down in several cases. For retirements much longer than 30 years, 25x may be too thin, and 28x-33x is safer. It assumes a stock-and-bond mix similar to the original studies, so an all-cash or all-bond portfolio will not behave the same. It also ignores taxes, since a dollar in a traditional 401(k) is worth less than a dollar in a Roth or taxable account. Finally, it presumes stable spending, whereas real budgets have lumpy years. Use 25x to get in the ballpark, then refine with wealthserene.com/tools/fire-calculator.