Can you retire with Bitcoin? This article will explore the option of saying sayonara to your “fiat job” and the financial calculations that could be helpful in doing so.

Traders love Bitcoin’s volatility.

Austrian Economists love Bitcoin’s hard money principles.

Hardcore crypto-anarchists love the principles of privacy and self-sovereignty embedded in the system.

Mathematicians love the game theory and cryptography of Bitcoin.

Everybody loves the ridiculous Bitcoin gains during a bull run.

But at the end of the day, what do you as an individual investor manage your personal finances with Bitcoin at the head of the portfolio?

Some common personal finance goals might include

• Buying a house or apartment
• Buying a second home (3rd, 5th whatever)
• Selling for other assets, maybe ones with less volatility like index funds or bonds
• Buying toys (boats, lambos, and jets)
• Using on experiencing (vacations, traveling the world, champagne, getting a girlfriend after all these lonely years)
• EARLY RETIREMENT

The focus of this article will be on the last goal. Kicking the man to the curb and living on your own terms.

Financial Independence Retire Early F.I.R.E

The F.I.R.E. movement has been around for a little while, especially with the last 20 years of raging bull markets. Students of this philosophy believe in penny-pinching and saving anywhere from 30-70% of their earnings with the goal of retiring early.

Many F.I.R.E. movement aficionados aren’t necessarily lazy or opposed to a hard day’s work. Quite the contrary, they are usually high earners and thrifty spenders.

However, the desire to retire early comes from a deep understanding that time is the ultimate resource.

Bitcoin advocates share this same sentiment. Bitcoin and time both represent absolute scarcity.

At its origin, money itself is designed to better our human lives. As Bitcoin philosopher Robert Breedlove states, “Money is the technology we use to measure and move the value of our time savings across time and space.”

Both Bitcoiners and F.I.R.E. advocates put the preservation of their time as a priority. Both parties also tend to share a distrust of hierarchical structures like huge governments and big businesses as they can both kill individual freedom and time.

Bitcoiners and F.I.R.E. advocates also differ as the F.I.R.E. fans typically look toward stable, old school, and non-volatile assets.

Bitcoin believers on the other hand find themselves having achieved a massive portfolio quite rapidly, especially if they have been involved in the space for an entire bull run.

Old school financiers will scoff at this article and say, this is ridiculous or risky. However, we shall see as long as the Bitcoin narrative continues to play out, Bitcoin as a new monetary system is full capable of supporting a retirement given the right position sizing and continued growth of the network despite the dramatic volatility.

The 4% Rule for Retirement

A traditional retirement rule based off some solid mathematics and assumptions about the market is the 4%. The 4% rule holds that if an investor only withdraws 4% of their retirement portfolio per year they can retire without worries of their capital evaporating.

The 4% rule typically applies to a portfolio invested in something like 30% bonds 70% stocks or index funds. The basic idea being that the average growth rate will outpace and grow while withdrawals will sustain the expenses of the investor. For example –

Yearly expenses – $50,000

Required capital for retirement without worries – $1,250,000

Similarly if ou required let’s say $300,000 to live one. You’d have to store up $7,500,000.

Many people have tested this theory over variousd market types and the math wins out under historical market conditions with the retiree rarely losing their nest egg.

Testing the 4% Rule on Bitcoin

So how much Bitcoin would you need to retire? Let’s do a deep dive on the topic to hypothesize what it would take.

For this non-scientific just for fun excerise and not finanical advise we are going to use http://www.fourpercentrule.com/ calculator.

We will run the scenario under a few different hypthoesis to determine the answer to our question.

Retirement Scenario 1 – The Raging Bitcoin Bull Continues

Let’s assume for scenario 1 that the raging bitcoin bull continues on it’s reign of terror here are the assumptions.

• Current age 40
• Retirement age 65
• Current assets – 1 Bitcoin valued at $27,000
• Number of years in retirement – 30
• No other pensions or anything
• Inflation 2.9% (for this scenario let’s say the Fed gets things under control)
• 0 Contributions, you have your 1 Bitcoin and you are good. You just wait until you are 65 and then you start selling 4% per year to live off.
• For this scenario we will assume that Bitcoin continues to compound at a rate of 73.2% per year which is the 10 year return on investment at the current price. If you use the 14 year it goes up to 149%, but we’ll assume those early gains were exceptional.

In this rather wild scenario our investor retires with $33 billion dollars, and amazingly the US dollar hasn’t hyper inflated. Now, i’d consider this scenario rather unrealistic as Bitcoin would be worth many times over the entire wealth of everything in the known world. Therefore we can easily cross out the scenario in which one becomes as roughly as rich as Jeff Bezos by hodling until retirement.

Scenario 2 – Bitcoin Bull Run Continues but Returns Diminish with Time

In our second scenario we are going to assume the bull run continues but as number go up, the law of large numbers begins to slow down our parabolic growth.

For this scenario let’s assume that the returns get cut in half every 4 years. So therefore our 73% return in 4 years would equal 36, then in another 4 years 18, 9, and so on until we reach 3% inflation.

In a much more realistic scenario the Bitcoin price gets up around 2 Million per coin and generally stablizes. Our whole coiner here manages to do pretty well and easily retire for many years living off their Bitcoin with plentiful amounts to pass on to their children when they pass. Unforunately, using the 4% rule their life wouldn’t be too flashy at 100K, but isn’t too bad either. I’d suggest that given expectation for Bitcoin returns one could indeed retire off 1 Bitcoin.

Scenario 3 – A DCAer verses a Whole Coiner

In Scenario 3 let’s take a look at a dollar cost averaging strategy and see how they stack up against our HODLING whole coiner. In this scenario let’s imagine the same bitcoin price appreciation and inflation as the last scenario. The only difference will be this individual at the age of 40 begins with no Bitcoin and acquires $10,000 worth of Bitcoin per year.

There you have it, our DCAer does pretty good, but not as good as the whole coiner. Enough to retire off? Probably not.

Take Away from Bitcoin Retirement

The bottomline is buy Bitcoin but buy more now rather than later. Bitcoin’s continued success is inevitable, but when the numbers get too large it is likely to slow down as a rate of return (unless it is propped up by inflation). As Bitcoin adoption continues at it’s impressive pace, the gains will likely begin to diminish. Does this make it a bad investment? Heck no, it is still the fastest horse in the race!

Cheers.

Please read our disclaimer here regarding investment advice and risk. Disclaimer: This should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. Please consult an appropriate tax or financial professional to understand your personal tax and financial circumstances. I may get compensated by some platforms mentioned below (because of referral links). Do your own research.