After listening to Dr Jeff Ross on SLP recently I started thinking more about this idea to sell 8% of your stack per year when the time has come to retire. The idea of selling around 8% per year takes comfort in bitcoins "number go up" technology to find out that you most likely won't be able to spend it all. He gave an example that if someone today had 10 bitcoin, or roughly $600,000 worth, they would sell 80 million sats ($48000) in the first year. Then the next year 8% of the remaining BTC (9.2BTC) gets sold, and so on for as long as they live. As long as bitcoin continues to grow at a similar rate, you'll never be able to spend it all. Even if it grew at a much lower rate like 20% CAGR, you would still outperform everything else.
I did some math and it kinda checks out, but only if you have a lot of bitcoin AND you don't live for another 100 years. There are however too many variables like fiat inflation, cost of goods, improvements in tech (that bring costs down and living standards up), debt, interest rates, and war. Some of the numbers start getting ridiculous fast, and therefore carry less meaning as it's too far out in the future.
Some of the questions and criticisms I had of this idea are:
How long you are planing to live for? People are generally living longer these days due to advances in medical technology. Could there be another technological breakthrough that allows us to live a lot longer that we might be planning for?
Can bitcoin really go up foreva Laura? It's currently doing something like a 50% CAGR. If the whole world is on a bitcoin standard in say 50 years, will it still increase in purchasing power?
It also comes down to how much bitcoin you have. Someone with 1 bitcoin will have to wait until a certain price point (maybe $400-500k/BTC) for this plan to become possible. Someone with 10 million sats might have to wait for a million dollar BTC, and someone with a million sats might have to wait for the $10 million BTC. But again, this will all come down to other variables like the cost of things where you live, whether you own your home or not, and how frugal or lavish your lifestyle is. Then there are also unknown costs like an emergency operation or an expensive new hobby.
...
For me, it is interesting to entertain the thought of retiring this way, but in the end I don't think it's for me. I want to keep working on stuff I'm interested in as long as my health permits. Hopefully I'll be providing enough value to people with sats to pay me when the time comes, and won't need to sell 8% of my stack every year.
