I think these are great questions. To throw another variable into the mix (along with pre-tax/post-tax calculation), how do you adjust for inflation?
I am at the beginning of my career, and I am having a difficult time calculating how much I will need to save in the context of inflation, since I plan to work for another 20-30 years. My financial freedom number now will be much higher in the future due to inflation. So if I adjust my financial freedom number upwards for inflation, how do I calculate my financial freedom number in the same context?
For example, let’s guess my annual expenditures will be $120,000 (today’s dollars). Adjusted for inflation, that number will be $222,000 in 25 years, assuming 2.5% inflation. The financial freedom number in this scenario would be $5,550,000. Assuming a net worth of zero at the outset, that means I would need to save $8,430 per month to reach this number. However, my wages now will most certainly (hopefully) be less than my wages in 20 years. Therefore, if the same proportion of income is invested now compared to 20 years from now, the amount that could be saved would increase (due to the rising wages post-inflation). How do I account for this in the calculation of how much to save?