Even if someone got a late start or has a high amount of debt and retirement isn't looking so possible, building a safety net and improving your financial situation is never a bad idea.
I just got laid off myself, and while I'm many years away from any kind of potential retirement, my savings over the last several years put my mind at ease because I know I can easily go a year if I have to without any additional employment, even though hopefully I'll have a new job much sooner than that.
Sorry to hear you are laid off. I have been there twice. Short advice: 1) make a schedule so you do not spend ALL day troweling for a job (it gets depressing), 2) schedule in time to exercise 3) if you can find co-workers who were let go, and you like, try to meet with them weekly. It provides a stability and a sounding board for ideas.
Congratulations. Depending on how you look at it, it might feel the worst thing that ever happened to you but looking back, this would be the best thing (or pretty much up there) ever!
Feel free to reach out to me if you're in the U.S.
Been there. It’s a good opportunity to think about what you want to do. If you’re interested in a tech job contact me privately.
if you're breaking even on unemployment - say $500/wk post-tax (???), then you just have to be disciplined enough to not inflate your lifestyle wildly when you land FTE.
if you make $1000 post-tax a week with a job and no spending increases, you immediately have a savings rate of 50%, which translates into working about 17 years. so you'd retire at 57.
here's the calculator i use: https://networthify.com/calculator/earlyretirement?income=50...
NO.
Sure, people can achieve FIRE by being frugal, but hoarding money won't get you anywhere.
It's how you use it that's important.
For example, you can also achieve FIRE by setting up cashflow sources so that you are net positive cashflow.
FIRE is about learning that your life depends on net positive cashflow and figuring out ways to achieve that.
If you invest well over that time, you can either retire earlier or do it with a somewhat lower savings rate.
I just think the concept of decoupling them isn't something people quite appreciate until you get really into personal finance. When going from college into a career your salary can double quite a few times and if you can keep you living expenses restrained it's a lot easier than a decade later trying to pull back and pay down debt.
Personally I would say that you should instead focus on 1) cutting down spending and 2) finding a part-time job that gives you free time to live your ideal life. Both of these are actionable items, doable within six months. An abstract FIRE plan of 10-15 years is not.
Many people interested in FIRE would be better off analyzing why they want to retire and what they could do then, that they can’t do now. Much of the time, ‘retirement’ is just sort of a magic undefined goal that goes unexamined.
Ten years of life is a VAST lifespan. Plus, you might not even make it till 65.
All the research and anecdotes I've come across illustrate how staying active and working (in whatever way possible) extend lifespan more than being retired and purposeless. So personally, I think FIRE only makes sense if you're retiring to pursue a greater goal that otherwise wouldn't be possible. And for most cases, this goal is still achievable without FIRE, if you get a little creative.
As I said above: better to figure out what your ideal life is and work at it now. IMO, FIRE is really only a rational option if you're young, have a high income, and are OK with living cheaply/into DIY. Even then, assuming that the markets/civilization in general will be predictable for the next 50-100+ years seems rather naive, especially with recent events (COVID).
It seems doable until something goes wrong and you get a huge bill?
The individual pays a larger fraction of smaller medical bills, but because the bills are small, this is also affordable to someone with savings. The majority of medical events are inexpensive.
There are a number of reports of out-of-pocket spending and insurance plan policy detail is generally available. Do you have a preferred source for that data? This conversation is about FIRE, but a summary of the prevelance of burdensome healthcare costs in respect to the broader US population was published here: https://www.commonwealthfund.org/publications/issue-briefs/2...
Again, these are just gentle introductions to the data. I would be happy to read what you’re looking at.
Looks like private insurance, previous employer benefits, your spouse's insurance (if they're still employed), and bare-bones plans are all options.
Before he passed away last summer my grandfather was using $26000USD/mo of insurance benefits which the state paid for as he was a retired public employee[0]. Literally added up all the expenditures because I was visiting and bored. This was mainly GP/Antibiotics at a hospital/PT work. The only thing they don't cover is long term care, of which we are currently paying $7500USD/mo for my grandmother.
Yeah, it's a lot of money and they sold their [Grandparents] house last year for approximately $490,000USD after realtors comissions and fees thankfully before COVID. But I hope that puts things in to perspective for those outside the USA.
Basically you have to do a medicare trust for your house or pay $6000-$13000USD/mo for longterm care. Usually what happens is people spend down the parental assets then apply for medicare and they try and find them a nursing home or memory care bed.
[0] https://www.hca.wa.gov/employee-retiree-benefits/retirees/ho...
0. fix your personal finance situation
1. attain financial independence
2. retire early (if at all)
0 is a pre-condition that most people in the world are stuck at. Some manage to get to step 1. Step 2 is optional because it has a hard time limit and has a fuzzy definition.
Does retiring at 64 count as early?
Does working a part time job count as retirement?
So based on the above stipulations, I think FI is possible but RE depends on your POV.
I can attest it makes life better!
(...with or without purchasing one of his books/dvds/etc; no affiliation but customer; we bought some of his materials for our children. Some of them told us they prefer a free BYU personal finance course, but I dont have that link as handy at the moment).
So there you have it: The event horizon is based on how realistically you can soldier on and invest 66% of your target retirement income each year for 15 years. Not sure how realistic that is for most people, let alone this hypothetical 40-something in the doldrums.
I'm using 6% for sake of argument for no good reason, but it's the usual rate used in converting a pension into a lump-sum. It is possible to do much better - stock market has been about 8% to 11% on average. So maybe 6% works as a fudge-factor in this sort of planning versus life's many ups and downs.
Anyway, if one had 30 years towards this "$50k FIRE", then the yearly "at 6%" investing is $10k; at 20 years, $21k; 10 years, $56k.
So any money accrued above those limits will be taxed and any money you need to withdraw before that age will need to be separate and taxed.
To clarify, the same money generally isn't taxed twice. Contributions to pre-tax retirement accounts are not taxed, but distributions are. On the other hand, contributions to Roth accounts come from taxable compensation, but qualified distributions are tax-free. Finally, you buy taxable investments with after-tax principal, and only its earnings are taxed later.
> Keep in mind you can't start withdrawing until age 59 1/2
This doesn't apply to taxable investments, obviously, but even for retirement accounts, there are ways around that.
https://www.madfientist.com/how-to-access-retirement-funds-e...
So for $50k, that's $1.25M principal. If you can wait and supplement with social security or part time work so you only need to withdraw about $35k, then it's $875k principal.
[0]: https://www.fool.com/retirement/what-is-a-safe-withdrawal-ra...
keep your costs fixed and live within your means
theoretically if I saved the entire year worth of salary of a SWE, could live off of that for 3 years (3 years of 50k salary)
it really is easy if you come from a struggle background - everything I get from this point on is simply a +
I can attest it makes life better!
(...with or without purchasing one of his books/dvds/etc; no affiliation but customer; we bought some of his materials for our children. Some of them told us they prefer a free BYU personal finance course, but I dont have that link as handy at the moment).
Two suggestions:
Read Rolf Dobelli’s “The art of the good life” to get a realistic idea of how the world works, and how both character and the fates have a role in how your life plays out.
Set up a spreadsheet to model earnings and expenses from age 40 to age 90 and see what the model tells you. Play with the numbers to develop a strategy that works for you and your situation.
Are you willing to live in a mobile home? If you are flexible and self reliant then definitely yes. If you need luxury, meals delivered, swimming pool, etc then probably not, well not in 10 to 15 years, maybe 25 to 30. But it depends how much you make.