How much savings does an ordinary person need to feel secure enough to lie flat?
I've seen an interesting set of data online.
100,000 —— No sense of security at all, afraid to resign.
200,000 —— Still anxious, feels like it won't last long.
500,000 —— Some hesitation, worried about encountering unexpected situations.
800,000 —— Just barely enough, but will consider factors like inflation.
1 million —— Relatively relaxed, but still not enough to cope with potential major illnesses and large expenses.
2 million —— Now I have some confidence, but to maintain a relatively high quality of life, I still need to calculate carefully.
5 million —— Relax and lie flat, the interest alone is quite substantial. As long as you don't invest or start a business recklessly, there shouldn't be much of a problem.
10,000,000 yuan —— Peaceful lying flat, can almost cope with various unexpected situations and enjoy life.
……
I think to achieve 'peaceful lying flat' (i.e., FIRE), we cannot just look at the savings number, but must estimate based on your living city and consumption expenses. For example, the cost of living in Shanghai and an eighteenth-tier small county is vastly different.
Of course, there must also be a few core prerequisites (otherwise, you can't feel at ease):
No Debt: Home loans and car loans have been paid off.
With Housing: Own a home without needing to pay rent.
With Health Insurance: Urban and Rural Resident Health Insurance or Flexible Employment Social Security (to prevent falling back into poverty due to illness).
Let's first set a core formula:
Lying Flat Capital = Annual Expenses ÷ Investment Return Rate
(Note: The internationally recognized FIRE movement standard is the '4% rule', which means saving 25 times your annual expenses. However, considering the current downward trend in interest rates, it's more prudent to calculate based on a risk-free return rate of below 3%, which means saving 33 times your annual expenses.)
Divided into three levels:
Level 1: Low Desire Lying Flat (Rural Areas/Eighteenth-tier Small Counties)
Living Status: Cooking for oneself, rarely socializing, not buying luxury goods, with the main entertainment being surfing the internet and walking.
Estimated Monthly Expenses: 2,000 - 3,000 yuan
Annual Expenses: About 36,000 yuan
Required Savings: 1,000,000 - 1,200,000 yuan
Currently, the annualized yield on large-denomination time deposits or steady investments is about 2.5% - 3%. A principal of 1.2 million yuan can generate 30,000 - 36,000 yuan in interest per year, barely covering living expenses.
Risk Points: Extremely fragile. Once faced with a serious illness or soaring inflation, the quality of life will decline rapidly. This is considered 'survival lying flat.'
Level 2: Comfortable Lying Flat (Second and Third-tier Cities)
Living Status: Occasionally dining out, having normal social interactions, going on 1-2 local trips per year, raising a pet, and having a relatively comfortable daily life.
Estimated Monthly Expenses: 5,000 - 6,000 yuan
Annual Expenses: About 70,000 yuan
Required Savings: 2,000,000 - 2,500,000 yuan
With a principal of 2.5 million yuan and a return of 3%, the passive income is about 75,000 yuan per year. This is a relatively 'decent' threshold. It can not only cover daily expenses but also leave a little room to counter inflation.
Risk Points: Whether due to fluctuations in investment returns or unexpected large expenditures from personal relationships, balance can be disrupted.
Level 3: Affluent Lying Flat (New First-tier/Some First-tier Cities)
Living Status: Maintain middle-class living quality, pursue spiritual abundance, have more expensive hobbies (such as photography, skiing, gaming), travel long distances annually, and purchase commercial insurance.
Estimated Monthly Expenses: 10,000 yuan+
Annual Expenses: 120,000 - 150,000 yuan
Required Savings: 4,000,000 - 5,000,000 yuan
Reaching this number, one can live very well in most places in China. With a principal of 5 million yuan, even if the yield drops to 2%, there will still be 100,000 yuan per year, combined with the slow consumption of the principal, which can support for decades.
Feeling very secure. This is the true meaning of 'financial freedom' entry level.