If you hang out in FIRE spaces long enough, you see the same script:

“Max your tax-deferred accounts, buy broad index funds, follow the 4% rule, coast into retirement.”

It’s a good script.
But there’s a silent assumption baked into it:

  • That growth in tax-deferred accounts is obviously superior, and
  • That anything involving taxable income and dividends is a sucker’s game.

I don’t think that’s always true.

This isn’t a “4% rule is dead” post.
This is: “If you want $4,000/month forever, is there a way to get there faster than a taxed 4% rule?”

Let’s find out.

The target: $4,000/month after tax, forever

We’re going to fix one concrete goal and build everything around it:

  • You want $4,000/month after tax
    → that’s $48,000/year spendable.
  • You pay 24% tax on the money you actually spend.
    (Ignore capital gains vs. ordinary income for now. If you spend it, it’s taxed 24%.)
  • You’re starting from $0.
  • While you’re working, you can save $2,000/month
    → $24,000/year into your portfolio.

You can scale the numbers up or down later.
What matters is the relationship between the strategies.

We’ll compare three paths:

  1. Growth + 4% rule (the classic FIRE playbook)
  2. “Safe” income at 6% (bonds + AAA-ish loans)
  3. High-yield income at 8.5% (an Oppenfolio-style shell/core/fuel build)

Same tax rate. Same savings rate. Same $4k/month lifestyle.
Different engines under the hood.

1. What the 4% rule really means after tax

The classic 4% rule says:

“You can withdraw 4% of your portfolio per year and it should last ~30 years.”

If every dollar you withdraw is taxed at 24%, your net spending rate isn’t 4% anymore:

  • Gross withdrawal: 4%
  • After 24% tax, you keep:
    4% × (1 – 0.24) = 3.04%

So with a taxed 4% rule, your portfolio effectively needs to throw off 3.04% net to your bank account.

You want $48,000/year after tax:

  • 0.0304 × Portfolio = 48,000
  • Portfolio ≈ 48,000 / 0.0304 ≈ 1,578,947

Call it $1.58 million.

That’s about 33× your annual spending:

  • 1,578,947 / 48,000 ≈ 32.9

So under these assumptions:

A taxed 4% rule is really a 3% rule and a 33× spending target.

That’s the mountain you have to climb on the standard growth path.

2. What if you live off 6% income instead?

Now take a boring income setup:
Think Treasuries, IG bonds, AAA-ish loan funds.

Today, a carefully constructed portfolio in that world can realistically target around 6% yield. Yields move over time, but 5–6% from high-quality fixed income is not science fiction in the current rate environment.

Let’s assume:

  • Gross yield: y = 6%
  • Tax on yield: 24%
  • Net spendable yield:
    y_net = 6% × 0.76 = 4.56%

If you want to live entirely off yield (no selling principal), the math is:

  • 0.0456 × Portfolio = 48,000
  • Portfolio ≈ 48,000 / 0.0456 ≈ 1,052,632

Call it $1.05 million.

That’s about 22× annual spending:

  • 1,052,632 / 48,000 ≈ 21.9

So just by switching mindset from “4% rule” to “net 4.56% income”, your FIRE target drops:

  • From ~33× spending (growth + 4% rule, taxed)
  • To ~22× spending (6% income, taxed)

Same tax bracket.
Same $4,000/month goal.
Just a different engine.

3. What if you build an 8.5% income machine?

This is where Oppenfolio lives.

The live portfolio I’m running is designed around a shell/core/fuel structure:

  • Shell: Treasuries, ultra-safe loans, cash-like stuff
  • Core: sturdy income ETFs, preferreds, boring yield
  • Fuel: higher-yield, higher-decay instruments (the weird stuff) sized carefully

The target gross yield right now is around 8.5%. That is not a promise, it’s a design target, and it moves when markets move.

With the same 24% tax:

  • y = 8.5%
  • y_net = 8.5% × 0.76 = 6.46%

If you live entirely off that net yield:

  • 0.0646 × Portfolio = 48,000
  • Portfolio ≈ 48,000 / 0.0646 ≈ 743,034

Call it $740–750k.

That’s about 15.5× spending:

  • 743,034 / 48,000 ≈ 15.5

So now our three FIRE targets look like this:

  • Growth + taxed 4% rule: ≈ $1.58M (~33× spending)
  • 6% income: ≈ $1.05M (~22× spending)
  • 8.5% income: ≈ $0.74M (~15.5× spending)

Same $4k/month after tax.
Same tax rate.
Just changing the engine shrinks the required pile by more than 50%.

That’s the theoretical attraction of a high-yield income strategy.

4. How many years until you can actually quit?

Targets are one thing. Time is another.

Let’s keep our savings assumption:

  • You save $24,000/year ($2,000/month).
  • Contributions go in once per year in this toy model.
  • Once you hit your target number for a strategy, you “FIRE” and start living off it.

We also need to assume how fast each engine grows while you’re saving.

During accumulation:

  • Growth portfolio (60/40-ish in tax-deferred accounts):

    • Assume 7%/year compounding, no tax drag (taxes arrive later when you withdraw).
    • Historically, a 60/40 portfolio has landed in this neighborhood over long stretches. It’s not guaranteed, but it’s a reasonable placeholder.

  • 6% income portfolio (bonds/AAA loans in taxable):

    • You collect 6% yield, pay 24% tax, and reinvest the after-tax 4.56%.
    • Effective compounding rate: 4.56%/year.

  • 8.5% income portfolio (shell/core/fuel in taxable):

    • You collect 8.5%, pay 24% tax, reinvest the 6.46%.
    • Effective compounding rate: 6.46%/year.

Using the standard future-value-of-contributions math:

Portfolio after N years ≈ C × ((1 + r)^N – 1) / r
where C is your yearly contribution and r is the growth rate.

Solving for N in each case (with C = $24,000):

  • Growth + 4% rule target ($1.58M) at 7%:
    → hits around 25½ years in.

  • 6% income target ($1.05M) at 4.56%:
    → hits around 24½ years in.

  • 8.5% income target ($0.74M) at 6.46%:
    → hits around 17½ years in.

Rounding a bit so you can breathe:

  • Growth path: about 25–26 years to $1.58M
  • Safe 6% income: about 24–25 years to $1.05M
  • 8.5% income machine: about 17–18 years to $740k

Same savings rate.
Same tax rate.
Same $4,000/month lifestyle.

The only thing we changed was the design of the engine and what “safe withdrawal” means under tax.

5. Is this “better”? Not necessarily. Is it faster? It might be.

Important honesty break.

This math does not prove that income strategies are “better” than a growth + 4% rule. A few reasons:

  1. Return assumptions are squishy.

    • 7% for a 60/40-ish portfolio is a historical rough average, not a guarantee.
    • 6% “super safe” yield is plausible with today’s rates, but if rates crash, it might not hold.
    • 8.5% from a shell/core/fuel income machine is an aggressive target that requires constant monitoring, realistic decay assumptions, and a strong stomach.

  2. Income portfolios have volatility too.
    “Living off dividends” doesn’t mean prices don’t move. CEFs, BDCs, and option-linked ETFs will swing. The point is that they throw off enough cash that you’re less forced to sell into a downturn, not that you never face risk.

  3. Sequence risk still matters.
    Even if your long-term return is fine, a cluster of bad years at the start of retirement can hurt any strategy—growth or income. High yield helps, but it doesn’t make sequence risk vanish.

So I’m not arguing:

“Ditch index funds, income is superior.”

The claim here is narrower and more interesting:

If you can build an income engine that throws off a reliable 6–8.5% and survive the tax drag,
then the math says you might be able to hit FIRE years earlier than a taxed 4% rule with the same lifestyle and savings rate.

Not better.
Just potentially faster—with different risks.

6. Why I’m running Oppenfolio

Oppenfolio is my attempt to answer one simple question in public:

“Can a carefully engineered, high-yield income portfolio buy back years of your life compared to the default taxed 4% rule?”

So far, a few things are clear:

  • Tax-deferred is powerful, but tax-deferred is not tax-never.
    At some point, the IRS shows up for both strategies. What matters is how big your pile is and how efficiently it turns into spendable cash.

  • A taxed 4% rule is a 3.04% rule in a 24% bracket.
    That pushes your FIRE target up to ~33× annual spending.

  • A well-constructed income portfolio shrinks the required multiple.
    At 6% yield you’re closer to 22×.
    At 8.5% yield you’re closer to 15.5×.

  • Once the income engine’s after-tax growth rate is in the same ballpark as growth, time-to-FIRE becomes a design parameter, not a law of nature.

None of this means you should copy my allocations.
It does mean that if you’re grinding toward a 33× target on a taxed 4% rule, you’re allowed to ask:

“Is there a way to lower the target, even if it’s more work?”

That’s the controversial part.

Takeaways for the FIRE crowd

If you skimmed everything above, here’s the short version:

  • If you want $4,000/month after tax forever, a taxed 4% rule means you’re aiming at ~$1.58M and about 25–26 years of saving $2k/month (with optimistic growth assumptions).

  • A 6% income portfolio (bonds + AAA loans in taxable) aiming to live off yield only needs about $1.05M and can hit that in a similar timeframe, even with tax drag.

  • A high-yield 8.5% income machine shrinks the target to ~$750k and, in toy math, gets you there in ~17–18 years instead of 25–26—if you can maintain that yield and handle the risk.

  • “Tax-deferred” isn’t a force field. Once you care about after-tax monthly cash, tax structure still matters, but engine design matters more.

If that sounds heretical, good.
The whole point of Oppenfolio is to test these ideas against reality instead of arguing about them in comment sections.

You can always reach The Architect at [email protected] if you want to poke holes in this or run the math on your own numbers.

Disclaimer: This post is for informational and educational purposes only and reflects personal opinions, not financial advice. Oppenfolio is not an investment advisory service. All return assumptions are hypothetical and not guaranteed. Talk to a qualified professional before making investment decisions. See the site disclaimer for full details.