Sep 21, 2021
I’d tweak that to be (a bit more complicated but more accurate):
Liquid net worth/(annual living expenses minus fixed income)
where fixed income includes e.g., Social Security benefits, pensions, etc.
If those other sources cover $40k/year, and you spend $80k/year, you’re in better shape than someone spending $50k/year who has no such fixed income (all other things being equal).