What are some common mistakes software engineers make that prevent them from getting their sooner?
A friend of mine did it, at 30. It sounded like a good plan. Living in a developing country with a small capital. Ten years later, he's broke, isolated, unable to travel or to access good medical care or even to provide good education to his daughter. At 40, after 10 years of doing nothing in a poor country, he has very limited options to make money.
Another thing to keep in mind is that retiring implies a change in lifestyle. Once you get used to a lifestyle, it's difficult to go back.
To answer the question, I think I'll retire the day where I'm unable to work. Hopefully not before my 60s.
Sounds like bad planning (or a lot of bad luck).
My timeline is 5-10 years to be safe (age ~40). However, I get satisfaction out of creating and delivering software, beyond collecting a paycheck and don't have any intention to stop working - just not as a wage slave once I've reached my number.
I am hard-pressed to think of mistakes that software engineers would make that people in other professions don't make - there are the usual things like buying too much house, too much car or letting someone else spend your money. Perhaps the only unique-ish mistake would be to assume the large salaries will last forever and not save for contingencies. My impression of people in finance is that they know they're worked like dogs, so they are trying to get out as soon as possible. Tech is so cushy that people can get lulled into forgetting that there's more to life than foosball and free lunch.
Reason: (i) no kids (ii) I don't need anything other than phones and Macbooks and some shoes (iii) no expensive cars/houses to maintain (iv) high income (but not out of the ordinary for Eng).
More generally: earn money in high pay cities and live frugally (London, Dubai), spend money in low cost cities (Budapest). Works like a charm.
Rents in London are prohibitively expensive. Did you share a place?
In Toronto my min-expenses swallow 50% of my salary.
how? are you working remote in a low cost of living area, while getting a high wage?
* Max ESPP, max 401k, max Roth. No excuse for not doing these if they're available to you.
* No debt. Paid off student loans ASAP after college, which were not huge, but I also lived on scraps in college, lived in cheap dumps and worked during the summers and holiday breaks to make ends meet.
* Very moderate living expenses. Seattle area. Our rent is $1700. My share is $950 and my fiance pays the difference. Got lucky with the place, but we also don't live in a sexy neighborhood and my fiance is a bargain hunter.
* Excellent compensation package, although not out of band for my experience level.
* Don’t rent in a high cost of living location; purchase in such a location only under the assumption that your property might lose value
* Don’t waste money on depreciating assets (never buy a new car, no iPhone upgrade cycle)
* Do live below your means, keep your expenses in check, credit card debt must be avoided like the plague; no cable TV, cheap phone service, no Starbucks
* Do save at least 15-20% of your pretax income in retirement accounts, the more the better (contribute enough to your 401k to get company match, then max IRA, then contribute again to 401k up to annual limit, then taxable accounts, generally); I suggest a low expense ratio target date fund for retirement accounts, with anything above %0.20 being exorbitant
* Don’t value your ISOs at anything above $0; cash is king
* Don’t get attached to your job; you are a mercenary, attempting to extract as many dollars per hour as you can (either FTE or freelance); friendly coworkers and beer in the office fridge doesn’t cover retirement expenses
* Do be interviewing and job seeking passively to stay practiced and ready
* Do fund ways to invest in productive, income generating assets (rental properties are my thing, YMMV)
Good luck!
Edit: Thank you! I really appreciated your detailed reply.
I didn’t start saving heavily until my late 20s, so I hustled hard to save faster (day gig, consulting as much as possible for 3 years) while supporting my disabled mother. The best piece of advice I can give is save early and save more. The longer you put off saving, the harder it is to catch up.
I succeeded from nothing except innate curiosity, grit, and a huge helping of luck. You can too.
Edit: You’re welcome! I wish you much success.
I expect to get lucky somewhere along the way. My basic plan is to work hard and work with people who are the best in the industry whether at a startup or at a top large company. If I do that for 15-20 years, I don't see why I don't have a high chance of being rewarded in the technology industry (again, assuming a bit of luck along in the journey). My personal "number" is at least $2.5m in assets with at least half of it in fairly liquid financial vehicles. I think I can reasonably achieve that with my strategy. A number closer to $3.5-5m would make me super, super proud if I could ever achieve that kind of success.
I try to work out everyday to stay healthy and fit. I try not to make dumb purchases or spend too extravagantly - but that doesn't mean I don't spend big every now and then. I try to pace myself in my work (no working on weekends, for example). I try to recognize burnout early and take steps to prevent it. I try to learn as much about finance and investing as possible. I try to make the more risky but smart bets over more conservative options when possible. I try to take pride in my work and not get cynical (not easy). These are some of the things that help me take a long term view of my career and keep my relatively aggressive goal in sight.
But even with all that being said, life is short so I know that the goal isn't an end in and of itself. Who knows what'll happen along the way - I could get hit by a train tomorrow. That's why I still try to appreciate each day for what it is.
Notice I used "try" a lot. I don't always succeed, but I'm always trying :)
Also to be clear, I probably wouldn't stop working if I hit my number - I would probably just work on different things or have a more flexible on/off work schedule.
Also remember, luck is an important piece of it, so if you've got some to spare, I'd be happy to take it off your hands.
However, common mistakes: Not demanding equity, not understanding equity and options, living in overpriced cities, thinking the latest technology is somehow more important than the one that stood the test of time.
I can't recommend the annual Venture Deals course from Techstars enough to really grok equity deals, as these are really where the money comes from, whether you are founding or an employee. In the US anyway, tax is an aberration.
Realistically though, more like 40 (another 17 years). I generally save about half my income, which over the next 17 years should build to >$1M, which is enough to buy a house outright in a nice area with a few hundred thousand left over to spend on living expenses.
> What are some common mistakes software engineers make that prevent them from getting their sooner?
Living and working in the bay area, spending their money. If you work at MicroGoogleBookZon, you can usually transfer to a region with a lower cost of living without much of a salary hit and save that money. Even if you stay in the bay area, you can drastically reduce the cost of living by increasing your commute or living with others. It's less pleasant but you don't have to do it as long.
Also, you don't have to retire to the same place you save your money in. You can work and save in Seattle, then retire to say rural Minnesota. If you're happy with that, you can retire much earlier.
For now, what's insane is thinking that society can survive with people not working in their able-bodied years.
It's already silly that I'm spending my 20s and 30s writing code.
Plus the code I write doesn't do anything for society's survival. We could just about switch the entire tech industry to maintenance mode, cut jobs by 90% and society would get along just fine, as long as we figure out a way to distribute necessities like food and housing without money.
The same can be said about an enormous chunk of the workforce. We're forced to work for survival but the jobs we perform aren't truly necessary, they're ultimately derived from an illogical and unsustainable obsession with growth.
Most of society doesn't _need_ to be working at all and society would get along just fine if it wanted. It just doesn't want to.
When I was living in Silicon Valley, I couldn't wrap my head around how much pointless consumption my colleagues engaged in. Couldn't they see that they could escape this stupid rat race and leave if they just saved their money? I guess the liked the rat race more than I did. I hated the rat race and don't regret leaving. I should have retired sooner.
Political issues have caused me to wander around the world looking for a country willing to simply give me a visa. I'm now 28, and finally got 3 years of work experience in Taiwan, which will be enough to start applying for a Skilled Migrant Category (NZ) or Express Entry (Canada) visa.
I have no debt. No car. No house. My salary here is low, but my living costs are also low. Flights are expensive though, so I have to spend 3 months savings to visit relatives once a year.
I have a maximum wage, because my work visa doesn't allow me to have a second source of income.
If I am lucky to get a visa to a Western country, then I might earn more. Then I can spend it on the extortionate rents, saving for getting married, and when that's paid off, a good education for future kids.
I'm not sure if I'll ever be able to afford to have kids at all, and if I do, I'm pretty sure I won't be able to retire. I'm certain that I'll never be rich enough to buy a house. Maybe I'll get a driving license after I need to drive kids around; until then I'll keep riding a bike. AI will learn to drive before I do.
Assuming this is you: https://peterburk.github.io/
"Political issues have caused me to wander around the world looking for a country willing to simply give me a visa."
What are these nebulous "political issues"? Why do you think wandering around the world is likely to result in a visa?
You say in your bio: "Where am I from? To the English, England. To the Swiss, Switzerland. To the French, France." You also claim to have lived in France most of your life, which would entitle you to French citizenship should you wish it.
You should be able to live and work in the UK, Switzerland or pretty much anywhere in the EU. What exactly is preventing you from doing so?
> If I am lucky to get a visa to a Western country, then I might earn more.
Again, do you not have English, Swiss or French citizenship? Can't you work in most of Europe?
It sounds like you should be work in most western countries and derive a western income without any problems.
Probably won't happen, because I will eventually do a startup and burn some of the money, plus hopefully I'll have kids soon and everything will go out the window ;)
Same mistakes as anyone, namely not saving enough and being too emotional about financial decisions.
I save between 95-98% of my income. Max out all tax-advantaged accounts (401k, Roth IRA if income is low enough). No children.
Easiest mechanism, by far, is to reduce spending. After rent + eating out + drugs, I average between 100-200 a month in spending.
I think, if you're able to reduce spending heavily, you should aim for the highest possible salary you can get, regardless of cost of living (well, no company in the world could afford to pay me to move to SFBA, but that's more for personal reasons).
Value all options at zero -- all my compensation has always been in cash.
Invest money. I prefer putting 110% into S&P 500 indices (low effort; typically 30-60minutes/year of work). Some people prefer rental properties. Do whatever is most diversified if your goal is retirement.
Will retire by age 40.
Save money, buy duplexes, triplexes and fourplexes.
Already making 1k/month profit and living for free with roof over my head.