How many BTC do you need to store for retirement in 2035?

Bitcoin temporarily stabilized at 26k overnight.

Several netizens on X (haha, look at the name Musk changed) discussed an interesting question: If you want to retire in 2035 (that is, no longer need to work), how many BTC do you need to hoard?

Friends who often read Jiaolian’s articles should remember that Jiaolian also wrote an article titled “How much BTC should you hoard?” (2023.6.28 article). In that article, Jiaolian introduced the use of the proportional hierarchy method to calculate the relative position of how much BTC you hoard in the BTC wealth pyramid, and then infer how much BTC you should hoard based on your desired hierarchy position.

This time, the discussion among several netizens provided another perspective and calculation method. Share it with everyone.

Retirement is a long-term plan that people need to make. The longer the plan, the more we need a long-term stable and reliable wealth ruler for benchmarking. If everything around us is changing rapidly, then we can't make long-term plans at all. That would be a disaster for human society, because real wealth accumulation must go through extremely long-term planning, preparation and execution. In this sense, BTC is undoubtedly an excellent ruler, because its issuance is completely determined in a mathematical sense and will not change for hundreds of years.

Netizen BitPaine calculated that by 2035, there will be four more halvings from now on. The block reward, that is, the number of newly issued BTC per block, will drop to 0.390625 BTC/block. That is, 0.390625 x 6 x 24 = 56.25 BTC/day.

Now it is 6.25. After the halving in 2024, it will be 3.125. After the halving in 2028, it will be 1.5625. After the halving in 2032, it will be 0.78125. After the halving in 2036, it will be 0.390625. So BitPaine's calculation is a little bit off, let's assume that he calculated the BTC issuance rate after the halving in 2036. Our focus is to understand his reasoning logic.

In the past cycle, we estimate that the average rate of new capital inflows into BTC was approximately 900 BTC/day x average price $25,000 = $22.5 million USD/day.

Then he used a conservative estimate as a benchmark: assuming that the rate of new capital inflows would remain unchanged over a decade, ignoring the expansion of market share.

Based on the principle of supply and demand balance, the new equilibrium price can be calculated as $22.5 million/day divided by 56.25 BTC/day, which equals $400,000 USD/BTC.

Now, considering an annual inflation rate of 3% (a very conservative number) on this basis, the compound inflation rate over 12 years is (1 + 3%) ^ 12 = 1.42576, which multiplied by $400,000 equals $570,000/BTC.

Then, based on this, consider the expansion of BTC adoption. Assuming that new users each year can bring in 10% incremental capital inflow (still a very conservative number), the 12-year compound growth rate is (1 + 10%) ^ 12 = 3.138, multiplied by $570,000, which is approximately $1.8 million per BTC.

At that time, 1.8 million USD would only have the purchasing power of about 1.3 million USD today (so the inflation rate calculated above is just a guess). But in any case, hoarding 5-10 BTC, that is, having a retirement fund equivalent to 6-13 million USD in purchasing power parity, should be able to meet your retirement wish in 2035.

Today, BTC is about $26k. The total cost of 5-10 BTC is about 130,000-260,000 USD. This netizen's retirement plan only needs to meet two requirements in terms of execution: first, he needs to be able to pay 130,000-260,000 USD; second, he needs to hold on to it for 12-15 years.

Perhaps before 2025 is the last time window for the plan to be implemented. Assuming that the new cycle rises 5 times from the bottom after 2025 to $26k x 5 = $130k, the total cost of 5-10 BTC will rise to $650,000-1.3 million, which is probably not an investment amount that ordinary people can afford.

Another netizen replied that if it really reaches 1.8 million US dollars, 1 BTC is probably enough for retirement. Assuming that BTC continues to appreciate at an annualized rate of 8% similar to the S&P 500 index, then as long as you spend no more than 4% of the value of your holdings each year, which is about 72,000 US dollars, you can enter retirement status.

BitPaine responded to the netizen's reply, saying that many people may spend more than $72,000 per year, especially if they need to support a large family and have no social security, the medical expenses alone are estimated to cost more than $20,000 per year. Education is also a big expense, and a child's college tuition is about $72,000 per year (the evil United States, three mountains). Therefore, if you are still young, it is recommended that you continue to work and save money to hoard coins until your income is not worth mentioning compared to your total assets.

The median working income of an American aged 45-50 is about $100,000 per year. To make this income insignificant, the asset appreciation return should be at least $300,000-500,000 per year. BitPaine reasoned this way. So, according to his calculation of $6 million to $13 million in assets, an annualized return of 5% would be $300,000-650,000 per year. This is almost consistent with his calculation.

However, remember that this is 15 years from now. A 45-50-year-old hoarder today will be 60-65 years old in 15 years. If the median annual income is $100,000, $130,000 to $260,000 is probably his total income for one and a half to two and a half years.

If this hoarder is an IT engineer in Silicon Valley, he should have an annual salary of more than $100,000 at the age of 30-35. It should be easy for him to save money for two or three years to hoard enough BTC. In this way, he can retire freely when he is about 45-50 years old.

What if you are a low-income freelancer who can only earn $20,000 a year? Then divide the above numbers by 5. Of course, your retirement life will be different from that of the IT elites in Silicon Valley, but freedom is always a comparison between your future self and your past self, not a comparison with others, right?