What sort of dividends are they receiving? 10% would give you 30K a year, and seems pretty optimistic for planning.
Edit: Something important to note is that you can live very well in other countries for what would be considered the poverty floor in the US. For $2k/month, I can pay for a very nice luxury apartment, day camp, and a nanny for my kids in parts of South America.
Obviously anything can happen, the world could end, whatever; there's no truly 'safe' option. But it's reasonable.
That basket would be dominated by the S&P 500 so it wouldn't change things too drastically, but it would pull that number down somewhat.
The amount you withdraw from your portfolio, in perpetuity is:
"4% of your portfolio's value on the day you retire, adjusting annually for inflation."
Say, on the day you retire, your portfolio's value is $100,000. For the next thirty years, you withdraw $4,000 annually (adjusted for inflation). You now have $96,000 in your portfolio.
Say the year after you retire, your portfolio has done supremely well, and doubled in value to $192,000, and inflation has been 0%. You get to withdraw: $4,000. You now have $188,000 in your porfoloio.
The next year, your portfolio tanks by 50%, and it is now worth $ $94,000 (and inflation is still 0%). You get to withdraw: $4,000. Your portfolio is now worth $90,000.
(There are additional rules about the composition of the portfolio too.)
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Historically, by following this rule, there has been no thirty-year period (since records of the US Stock market have been kept) where the portfolio would fail--where you wouldn't be able to withdraw your $4,000. And the vast majority of the time, you would end up with a very, very much larger value.
It is a fairly conservative system and keeps purchasing power constant, which is useful.
But it is only a starting point. If you will have a longer retirement, don't follow their composition rules, or don't need constant purchasing power (most retirees don't), then you should adjust it as appropriate.
With that said, our actual income will be ~7x our budget, so there’s plenty of cushion.
But the key word in "never have to work again" is "have". Removing the need to work and only do so when you want to must be a liberating experience.
>Within two years, they plan to hit this “magic number,” after which they’ll quit their jobs and roam the world.
If you stick to cheap areas like SE Asia and Central Africa then you don't need half of that. Throw in couch surfing or buying a van to live in and you can spend a lot, lot less.