The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing
wsj.com
wsj.com
> Mr. Sabatier, 33, says his Millennial Money website made $401,000 last year. Blogger Joe Udo, 44, recently disclosed he has made almost $350,000 since starting “Retire by 40” in 2010.
> Tanja Hester, author of a blog called Our Next Life, called for FIRE bloggers to be more transparent about their financial lives in a post this year. She said she makes less than $1,000 a year on the blog, but declines to disclose her income from a book advance, saying “there’s no need to share your actual numbers if you are honest with readers about your general financial situation.”
Like much of the self-help ecosystem, seems the key to living that superior lifestyle is having other people pay for it.
There was an article a bit ago like "how I paid off $150,000 in student loans in a year" where the woman said that her aunt or something gave her a high paying job, her grandma gave her a condo, and she lived rent free with her parents while renting out the condo, then used the money she wasn't spending on rent to buy a second condo. Anyone can do it!
I really don't understand why that is the way it is, but whatever.
I'm on board with what you say, but frugality is a pretty basic virtue and there are a lot of people who set themselves up for failure - there are people earning more than ~$80,000 who have good excuses for struggling financially, but they are rare. The fact that some people luck out in life and don't acknowledge it doesn't detract from the basic good sense of consistently investing in the future, and being realistic about whether your purchases are buying you more happiness than they lose you time through working.
The core of the FIRE philosophy is to try and do all the production in one big up-front batch, and then benefit from any opportunities that come along. It is obviously easier for the upper middle class and harder for the lower working class. There isn't anything wrong with that though, as long as everyone acknowledges that saving isn't equally easy for everyone and it depends on their ability to contribute to the economy.
A self made financially independent individual is someone who went against general trends in society for a decent length of time, who now suddenly has essentially infinite free time (e.g. probably 10 times the amount of a salaried worker or more, normalizing for energy levels).
It would be odd for them to _not_ develop these side streams of income unless they just sat on the beach all day.
Making money really isn't that difficult. The difficult bit for most is satisfying basic needs so that they're in a place where they can actually _think_ and act upon those thoughts.
I don't think a 30 year old can 'retire'. From a specific field (e.g. professional football)? Sure.
In general? Money isn't the thing that makes successful people work.
It's really hard to spend 50 years on pure leisure. I can't think of any examples.
Honey, you ain't getting out enough.
People retire while they can still meaningfully work all the time, really weird to say otherwise.
Some people love working, some love not working. Shrug.
Retirement doesn't really have to mean pure leisure, lots of people do meaningful unpaid work in retirement.
I don't consider myself 'retired' despite not having a 9-5. It evokes pipe and slippers imagery to me.
Coming out of retirement is a not-extremely-rare thing; I don't think retirement implies finality, though it might arguably imply the absence of an expected financial need to return.
It assumes the front-loading of work punctuated with either long periods, or a complete (final) period, of mostly nothing.
Imagine a theoretical person that inherits 10 million dollars. If they never take a full-time job and instead just do the odd thing here and there, paid, unpaid, doesn't really matter, are they retired?
If you're a contractor and sometimes work and sometimes don't, are you continually coming into and going out of retirement?
No, they are probably just a capitalist, but part of the social support structure of capitalism is the fetishization of work and the fact that you don't talk about the non-laboring ruling class, just a spectrum of success of workers, some of whom have earned retirement through their work.
> If you're a contractor and sometimes work and sometimes don't, are you continually coming into and going out of retirement?
I would say no, if your expectation when you leave is that you will need to comenback to maintain your lifestyle.
If you occasionally take a job for self-fulfillment, maybe.
I like to talk about them all the time. ;) Though I think we're seeing eye to eye here.
Different groups see "work" in such different ways that I think the terminology of stuff like 'retirement' doesn't transfer well.
Some people cannot see a life without work. Others do it for toys. Others do it as a status game.
Others don't really do it at all. I guess you could call that the 'leisure class'.
A theoretical human who has no need for food - are they fasting?
- spend (much) less than you earn (by working)
- figure out your risk tolerance and long-term goals, develop an Investment Policy Statement (including desired asset allocation and re-balancing strategy, if any)
- stick to this plan until you're super comfortable with your plan, your back up plan, and your SHTF emergency plan
- enjoy your freedom to control your time before you turn 67
It's probably not useful to:
- take painful steps to reduce your spending
- risk your health
- do anything you don't want to continue doing after you stop working (except work!)
- assume or rely on BLOG / BOOK / WRITING income like those that stopped the "usual" sources of income, but gained celebrity by writing about (the otherwise useful) ideas
Mods, are you there ?
As far as I can see, it only applies if the cash is inert in a bank account not being loaned out.
The $64,000 Question is what is the money being loaned out for. If it's bidding up the price of stocks, bonds, and real estate then it takes a leap of faith to assume that will lead to actual productivity improvements.
If there’s a glut of money for investment, then that’s a different story.
1) Firstly, the paradox assumes that maximising total output is an unmitigated good. This is clearly not so - imagine a world where everyone saved outrageously and pared down their lifestyle so much that we needed to move from a from 2 day standard weekend to a 3 day standard weekend.
This would have "catastrophic" consequences economically because you lose 20% (1 day in 5) of your economic output, but now everyone has increased their leisure time by 50% (2 days to 3 days per weekend). This is not an objectively bad outcome. I mean, empirically most people don't choose it, but if most people did choose it is not like suffering increases.
2) Someone has defined it such that savings means spending on things that don't cause demand. I don't buy that, because to me "savings" would include, say, investing for retirement by building capital. Eg, maybe a massive great research and development lab for old-people-drugs. That is going to set me up for the future, so I call it savings, but if savings reduces output I assume to an economist it is classified as normal economic consumption.
You are responsible for your own welfare though, particularly in the US
What are these people supposed to do - stay broke to make some soundbite economist happy?
It is perfectly rational for people living in a society without safety nets to weave their own
Another point that's pretty unrelated, why would you live decades of your life doing nothing, living extremely frugally? Sounds like a pretty garbage life to me.
If the US fails, I will sail my boat elsewhere.
We created the scenario these people are reacting to
Worry not, we will not run out of people willing to impoverish themselves buying baubles
Everything that's wrong about the USA right here.
I don't subscribe to the OPs opinion, necessarily, just pointing out a situation where it might be better to just take care of yourself.
http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-b...
The key quote: "If an entire society gradually decides that it wants to consume less, then it needs to produce less as well.
If there is less stuff that needs to be produced, then people don’t have to work as many hours to create it. That’s perfect, because many people will be dropping out of the workforce much earlier as they finish earning the money they need to get going on their early retirement. The shortage of available work will be balanced by the reduced number of people willing to do that work."
This is one of the things that bugs me about the FIRE “movement”. it’s a great hack for the people doing it, but it can’t become a mainstream system without breaking.
http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-b...
The key quote: "If an entire society gradually decides that it wants to consume less, then it needs to produce less as well.
If there is less stuff that needs to be produced, then people don’t have to work as many hours to create it. That’s perfect, because many people will be dropping out of the workforce much earlier as they finish earning the money they need to get going on their early retirement. The shortage of available work will be balanced by the reduced number of people willing to do that work."
so saving for retirement is a good move who ever you are and where ever you live.
Basically, it's obviously the case that _everyone_ can't do this in an instantaneous fashion.
Consider - if everyone works for 10 years in total, then in the stable state (no pop growth) at any point in time roughly 15% of people are serving the other 85%.
The claim, is more like "if you try, you can do it". As in, a randomly selected individual is likely to be able to push themselves into a higher income group and cut their budget, if they focus on it.
I think this sort of problem plays out all over. An individual can be paid well if they study computer science and get a job at a decent company.
The nation can't. It's a logical impossibility.
They will at least be able to take time off when they want, or self-fund an opportunity to be their own boss (which, at 48, I am convinced should be everyone's goal).
Another alternative is what I call the "slow burn"...work at brutal competitive jobs to build up a nest egg, then just "peace-out" and go work something mindless to keep a little income or maybe secure health insurance, while using your nest egg for life's big expenses
> Ms. Pattee, who married in 2015, says she and her husband, Andrew Hanna, 33, live off the rental income and save his salary in medical administration.
This doesn't sound like retirement. It sounds like being a housewife.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
To achieve the "shockingly simple" 11 year FIRE goal in that blog post, someone working 40 hour weeks at $15 an hour would need to indefinitely keep their annual expenses below an inflation-adjusted $12K to build the required savings prior to their early retirement and to live off those savings afterwards.
In reality, the math is only shockingly simple if you can control all the inputs.
Many of us in the IT space underestimate the harm & impact of working in our industry. You are the exception to not burn out, you are the norm to not be able to sustain the demand and you should plan for an early retirement.