Tech workers who are engineering a mid-30s retirement

Put your assets in a trust, if you go bankrupt personally, it's irrelevant.

Once my companies valuations + my net assets hit my magic number, I'll use my estate tax exemption and move 100% of it into a trust.

I will agree though, working for yourself is fantastic if you can afford to do so.

THIS. All the early retirees I know are either extremely rich (from their tech startups), or have a working spouse or immigrated abroad. No one has solved the riddle of healthcare costs while staying in the US post retirement on meagre income. This will especially hit hard when early retirees hit their late 40's / 50's, when health problems start kicking in but your resume starts looking rusty due to 15-20 years in retirement.

> ⌘+f 'health', ⌘+f 'insurance' - no hits.

This, if you live and work in the USA. I don't know how it works in Europe or Asia, but in America, unless you have F-U Money like OP says, you are just 1 major health issue away[1] from bankruptcy if you go the "frugal" retire early i.e. retire without F-U Money.

Source: My Manager's sister, in her early 50s, who had early stage throat cancer. Despite having insurance, it quickly maxed out, and hospital stays even for 3/4 days are in 1000s of $, and not all medical events are covered at 100% even by the best insurances. She (the sister) is now using my Manager's insurance to pay for some of it, and hasn't been at her job in 8 months, so also afraid of getting laid off.

@dacebalus1

I am 23 and I read a lot from Mr Money Mustache, Early Retirement Extreme, Frugal Hackers, and many others. I fully agree with you but I still save close to 60% of my income (no debt, own my own car/house and have $45k invested in 401k/roth ira/hsa/taxable account) and live extremely comfortable.

I will be able to "retire" by age 33+ but I don't plan on actually quitting work. I am naturally minimalistic and frugal, but I live a very comfortable life on $15-20k or less (past 2 years I've lived on $10k in midwest US).

I am mostly doing this to secure a buffer of time to buy freedom and start-up costs for a small product I am creating.

The concern for health insurance is a huge issue for early retirement, especially when you have a family. I'm an eternal bachelor so that won't be a huge issue for me, so I can't truly comment on it.

I think all your advice is early retirement aligned but with the caveat to buffer for health insurance. I think early retirement has become so popular because the vast majority of Americans don't save for retirement and over-consume (which is not good nor bad but subjective to each person's internal purpose).

I don’t think MMM is “full of crap” intentionally or that the whole thing is a scam. But I do think it is a bit misleading to claim you only need 25x your annual expenses to retire because of a 4% SWR. He does recommend those Vanguard index funds like most early retirement people but he has a free and clear rental property that covers the whole family’s expenses. And a free and clear primary residence. So a huge chunk of his portfolio is in real estate. Same goes for Financial Samurai or Frugal Woods.

The frugal path works for some personalities though. Myself, for example - I’ve lived on $1000 a month for seven years in a decent paying job. Everything went towards buying rental properties. When I quit I moved out of the US to avoid high medical premiums and high costs of living. (City center in Paris or Tokyo still cheaper than NYC.) I don’t plan on having kids or getting hitched, and I’m practically a hippie. So my opinion is that you need a combination of (1) Good salary (2) sustainably low expenses (3) major flexibility in lifestyle (4) updated skillset and social capital. I’ve lived in my car for fun. I plan to spend this summer sleeping rough on a beach, gratis. If the economy goes to shit I am not opposed to dumpster diving. Or offering my services as a live-in tutor.

I hope many people realize that early “retirement” is not just numbers - you’re still going to want to do something “productive” and you have to constantly be leveling up skills and relationships.

> become a specialist

Any suggestions for a specialization?

I've seen a lot of specialities become worthless or at least marginalized. I'd like some examples that stand the test of time. (For tech that's probably 10± years).

Ive seen plenty of niches were a few folks were able to cling like barnacles in Finance, Telco, etc but TBH their lives didn't seem that appealing. Lots of time on the road, etc.

> I bought my first house in Berkeley > rented out 2 remaining rooms > buy a house in south SF > my mom and I bought a 3 unit run-down place in Oakland and fixed it up > rental income coming in around 13k / month > Looking back, the best thing I did for myself is to refrain from living extravagantly

Surprising! Sounds like the best thing that happened in this story was partnering with other wealthy people to engage in leveraged speculation on Bay Area real estate.

What year did you buy your first house? I'm guessing 2009-2011 since that when house prices were still low enough that early college graduate could buy a house in the Bay Area -- especially Berkeley.

> I don't hate working

You answered your own question right away. Apparently, these people hate working more than they like being less frugal. I've had to be frugal to get by and it does become sort of like a game, where you are always trying to optimize your savings and tradeoffs. However, the stress involved with making these decisions and worrying about money made me appreciate working and making a good income, and I prefer this balance for now.

I believe in the rap game this magic number is called "Fuck You Money". It means freedom from a lot of things.

Because some people have skills that don't easily translate to happy job environments and they'd rather do things like tend a small veggie garden and teach their kids how to fish after they come home from school than clock another 65 hours balancing a spreadsheet for a hedge fund.

No, the point is freedom. Liberating a tremendous chunk of our one, single life from the obligation to work in order to not starve/be homeless/etc.

You can even keep working after you're reached your retirement number, but at that point it is because you chose to do it rather than having that choice thrust upon you.

It's hard for me to get into it. It seems that you basically just work your ass off for 20 years, live like a pauper, then you can retire once your (arguably) best years are gone. I'd rather just work and spend my money and experience things during that time.

What also kind of bugged me with this article was that it sounds so crazy that these two people are doing this so young but then it's revealed they made a bunch of dosh off crypto which cheapens it a bit for me. This isn't just a road map one can follow, it implies some sort of luck ahead of time. I guess fortune favors the bold.

Well, if someone _does_ hate working, then it's immediately obvious why this would be appealing.

There's also the idea of getting to a point where you know you could retire, at which point any job do you do take is financially unnecessary.

Some of these people might want to hedge against the possibility that they will be forcibly retired early by some misfortune (economic downturn, disability, ageism, ...).

I think these people will find life tremendously boring post work. If your work is drudgery, then sure, retire early. But if you enjoy it, why the hell would you give that up to live a life of poverty?

While I'm sure that some people are trying to retire early because they hate working, others are doing so because they love freedom. Speaking for myself, I spent about a year travelling, and found it very hard to go back to a full-time job. So for me, a job is a way to buy freedom / quality of life, and the FIRE folks are just compiling a list of ways to get the best exchange rate.

It also doesn't hurt that if you save up enough money to retire, then realize you want to continue working, you're not exactly in a bad place.

I think there is something huge in being able to not work. That necessity is very binding.

Can you quit your job for 2 years to study AI and change fields and earn more money and get a more rewarding job? (not you specifically, just an example). The constant nagging of rent, then work + strees and then spending to relieve that stress has something rotten at its core, and its that its aimless.

Fire is a way to cope with that dynamic.

> The goal is to live extremely frugally while you work so that you can retire very early and continue to live extremely frugally?

No, you don't understand, that is not the goal.

The goal is to live a happy life in a way that allows you to save enough money to retire early. Step 1 is to disabuse yourself of the notion that you need to spend all your money to enjoy yourself.

The idea is FIRE.

FI - Financial Independence. This is the big one, and basically means you have enough money such that you aren't dependent on a job. It gives you freedom to leave a position you don't like, to take a job with less pay that you enjoy more, to ride out periods of unemployment without worry, etc. It can mean different things to different people.

RE - Retire Early. This is an optional part that only some people aspire to. Many, like yourself it seems, don't mind working so will continue to do so. If you've already achieved a degree of FI, then you'll simply be able to spend more, or donate more , or whatever you'd like to do. For those that don't enjoy traditional employment, they might want to focus on personal pursuits, volunteer work, family, etc.

The point is that you can make these choices on your own terms.

One core idea in all of this is lifestyle creep; as you start to earn more, you find ways to spend it. No matter how much you make, it can seem like it's just enough. Even without being frivolous, it's an easy trap to fall into. And to an extent, it's just fine so long as you anticipate working until a normal retirement age and do save appropriately. But the observation here is that a relatively small delay in gratification, in delaying lifestyle creep, can lead to a large amount of financial independence. A bit of measured frugality can accumulate a large degree of wealth due to investment returns.

Naturally, some will take this to an extreme that seems silly, but the basic idea is a very useful one.

There is always the other risk of dying in an accident at 30. Live is an adventure but not guaranteed. Don't forget to enjoy the journey.

You don't hate working... right now. What about in a year or ten? What happens when your back is in constant pain from desk work, or your hands are jacked up from years of typing? What about when you're on your fifth language and 25 platform/framework?

You can't go back in n time and save. You can however live a full and fantastic life while still saving a lot of cash.

It's really about taking care of future you.

Do consultants not get "You've not been working for the past X months/years, how should we trust you've been keeping pace in tech?"

> if you follow your interest into extremely niche domains, the option of irregular highly-specialized consulting gigs becomes available. This income stream, while not consistent enough to live off by itself, proves formidable in conjunction with retirement-level investments and enables a much higher SWR.

I just had a weird moment this weekend where I calculated what my yearly cost of living would be at the house I'm inheriting. My mom bought her house in cash, in a low property tax state and it's amazing what not having a mortgage will save you -- and it's a _nice_ house. Yearly CoL, counting food, a small home emergency fund and estimated maintenance of the house and car came out to around 7k.

Considering what I make from sporadic consulting, I realized that I could live off that for years just working a few weeks a year. And I only have to do that until Social Security payments kick in (though I'm probably going to try to maintain this level of income until 62).

It drilled home the point that I need to save what I'm earning here so that when the time comes I will have a nice large, easy cushion.

Social Security also averages over 35 years of work as well.

It's a decent backup for extra income after 67-70 if you live that long, but it can also be a benefit for your spouse.

Especially considering insurance in the US can easily cost over $1000/m for a family.

Most people target 4% withdrawals if you want to live off the nest egg in perpituity, which in this case, would be $12k/year. Less safe investments would earn you a higher return at the risk of sacrificing principal.

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.

It is a pretty tight budget. Although they plan to "roam the world". There are a lot of cheap places all over the world.

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.

Next sentence:

>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.

Yeah I dont see that either, maybe you can retire in Costa rica or something but its still cutting it close.

Yes, you're just grumpy.

I agree they should be contributing.

In most countries you pay taxes on your dividends and capital gains.

Post-retirement plans mentioned by other people in the article: musician, angel investor, homeschool the kids, start a philanthropic enterprise.

Don't worry, you are not grumpy. But you are worrying a little too much since this is just a very small (and hence negligible) problem. If too many young / healthy / smart / educated people were to start doing this, society will adjust and pass new laws and regulations, which will force such folks to work or at least ensure that they don't mooch off the system (esp. free healthcare).

Hmm, no.

Why are you putting this "forced charity work" condition on it?

Someone who retires early has saved enough to live on their investments. That's no different from someone with a trust fund, but the difference is that they earned it.

Think of it this way; if you won the lottery tomorrow, would it be a better contribution to your community to keep working in order to pay taxes, or retire so that someone who needs your job to live and support their family can do it instead?

I can't imagine living such a shallow life that the only way I could see people contributing to society is through a fucking desk job. Do you think retirement just means watching reruns of Gilmore Girls all day?

Did you set out with the goal of early retirement? Or were you just relatively frugal, and at some point realized it was possible? It seems like you owned a house at age 24 which is pretty unusual.

I'm curious to know - how did you manage to buy and sell a house by age 24 in the midst of a major housing bubble?

Seems the down payment and credit-worthiness in any major metro would have been a pretty huge hurdle for someone only a few years into their career.

They'll probably get jobs again.

You are almost 60 - you should be close to retirement. It would be way more impressive if you were 35.

he probably doesn't know everything there is to know about engineering big data but, instead, knows everything there is to know about applying it to a business case. Create more than $180k of value each year and companies will fall over themselves to pay you $180k for your contribution.

What toomuchtodo said. I have some awesome colleagues that joined in a less technical role, then transitioned over to dev work.

This article is too light on details to speculate well, but it's entirely possible he already had good engineering skills and just happened to be doing something else for the article's starting point.

It's also possible he just knew someone and writes zero code and the engineer title is bogus.

Data "scientist", i.e., knows R, basic SQL, and maybe some light JS, and has experience creating nice visualizations in Tableau, etc.

These are skills any business analyst with a good working knowledge in Excel and statistics can learn in a couple of years.

Coming from a marketing background, he probably also helps run A/B testing and funnel/conversion/UI optimizations.

I hang out on reddit's financial independence sub, and there are a few Europeans and NL specifically; I believe there's even a specific FI NL sub (or maybe just FIeurope) for specific answers to your questions. Worth checking out if you are interested; more generally, it's the expenses not the income where most people struggle financially, and not having the US healthcare concerns makes a world of difference. You do need some kind of stable, middle class income to achieve FIRE - which is sometimes overlooked - but from there it's achievable if it's important (and it's OK for FIRE not to be important to you).

One of the tenants of FIRE that I hear is "create the life you want to live, then save for it". Nobody is saying to not try writing novels in spare time during career!

Interesting. Just finished running a conference in Australia, and was having a beer at the end of the day with one of the UK guys talking about how many of his team and network were making early to mid six figures GBP.

I only lived in London for a couple of years, but also knew a few. Most were 45+ years old and "financially independent", although they wouldn't have thought about it in FIRE terms because their idea of independence was pursuing interesting careers choices rather than retiring early. (Which is largely my plan as well.)

That's the FI (financial independence) part of FIRE. The retire early part is optional for many that are pursuing this goal.

There's an active community on Reddit at https://www.reddit.com/r/financialindependence/

One point that often comes up is that people shut their mouth about FIRE because if they bring it up, the reaction is often negative. There might be several people you know working towards FIRE but they don't evangelize it.

it's that middle bit that seems to cause all the consternation: "Save enough that work is optional". It also could be (and I don't mean to sound like an old grump or condescend so apologies in advance) that people in their early 20s haven't been soured on employment sufficiently yet. I was much more idealistic and had a greater tolerance for work-related BS when I was in my early 20s.

I'm nearly 50 now and after being burned several times I made a vow to myself never to be dependent on anyone else again. Even if you work for an incredibly well-funded company, that doesn't mean some dweeb with an MBA in some office in another city / state / country won't wake up one day and decide to wipe our your entire division just because she needs to make a bigger bonus.

I've seen pensions disappear overnight, industries collapse quicker than anyone ever thought, and vibrant cities crumble when big employers shut their doors. Painful and stressful in the extreme.

I've also blown $10k on something stupid instead of buying another bunch of Apple stock, reasoning that I'd make it up later in life easily enough. That was 1997. The $10k would be well over $1 million now.

The biggest thing to learn is that money doesn't equal happiness. That, for me, is the repeated lesson of MMM and related authors. Freedom to make decisions without reference to finances is a massive, amazing thing.

>>Like many other aspiring early retirees, Daniel also made lucky investments in cryptocurrency. “The crypto lottery forwarded my timetable by five, ten years.”

He also got very lucky.

Assuming no cryptocurrency optionality, even if it took him up to 25 years to diligently save and invest, ceteris paribus he would still be able to retire around age 50. The only catch is that family formation can be quite expensive unless you get extremely lucky and find a life-long partner who shares the same frugal mentality.

Finding said partner is much, much harder than it sounds.

I get that some developers at big companies make $600k+/yr but saving $15,000,000 over even 25 years requires putting away 15m/25 => $600k/yr. That's net income to be put away too. So, really you're probably making $1m/yr. I get you'll see return on investment over those 25 years but we're talking true 1% income regardless - which most software devs will never get near. (Even most in the bay area)

It's very far off. You would either need seriously over-performing investments or some kind of exit.

I ran the numbers for a simple scenario, assuming a current $150k income:

- With a 5% yearly raise and a 7% investment return, you end up with ~$3.8M at 20 years.

- With a 5% yearly raise and a 20% investment return, you end up with ~$14.5M at 20 years.

That 5% yearly raise would have you earning almost $400k at the end of 20 years too - probably up for debate how likely that is.

Yeah that guy is a nutter. There is absolutely no way to bank $15m after-tax in a continuous risk-risk free manner.

And his plan does contain banking a 46x return on his yet unconceived start-up ($500k -> $23m is 46x, Minus 35% for taxes in CA)

This is a discontinuous event. This is not “fat FIRE.” This is called trying to spike it and get rich, like everybody else in this town.