You'll see with about a 4% withdraw rate you can theoretically stay retired forever. aka be financially independent.
I disagree with 4% being a viable withdrawal rate forever. It certainly is within the realm of possibilities, but it is highly unlikely IMO. For mainly two reasons.
1) The original Bengen Studies were based on back testing to the 1930's (ish) I believe. I can't remember the exact date. I think this period of stock growth is different than what we will see going forward. Just like the "American Dream" for those born in 1950 is different for those born in 2012.
2) The Bengen et al studies have always maintained that the 4% "safe" withdrawal rate is for 30 years. And even then, a low probability of failure, something like 2-5% (again, the exact number escapes me). When you drive beyond 30 years, the "safe" withdrawal rate decreases very quickly.
Wade Pfau has done some interesting work in this area. Here is a table from Wade's Blog (which admittedly has a lot of variables). But, the point is there, the longer your duration of needing the funds, the lower your "safe" withdrawal rate will be (or higher the chance of failure). It is rather intuitive, but someone in their 50's will need less money to be "financially independent" than someone who is 30 (assuming spending is the same).
What is the point of being financially independent? Is it a state of mind? Is it something to brag about at parties? Is forgoing some gratification today worth being "financially independent" by the age of 40? It's all very interesting, and while there are no right or wrong reasons, some people become obsessed with a goal and loose other things in the process. And, if that makes them happy, by all means, have at it.
"If you only have 1 year to live, move to Penn...as it will seem like an eternity."
Good to see you back, I was starting to miss your incisive commentary!