Comment by georgecmu | Hacker News Reader

Comment by georgecmu | Hacker News Reader

early retirement doesn’t only happen to Powerball winners and those who luck into a big inheritance.

Right. It also happens to those who get lucky in the stock market, and chose the right job at the right time.

http://money.msn.com/retirement/article.aspx?post=dd544488-f...

I was able to save more: $5,000 into the retirement account, $3,000 into an employee stock purchase plan, and $10,000 in cash. Year 2 'stash: $23,000 ($13k cash/shares, $10k retirement).

Year 3: This was late 1999, and both the job and stock markets were on fire. I cashed out the stock purchase plan shares from Year 2, which were now worth $10k

The investment gains on stocks started accumulating, adding about $10k to our earnings this year. So we still ended up increasing the savings by close to $100k after tax. Year 5 'stash: $250k.

Investment gains on the existing savings contributed another $20k. It is complicated to remember what portion of income was taxable salary, and what was nontaxable gains inside of retirement accounts and such. But a reasonable estimate of the total is Year 6 'stash: $365k.

Year 7: No increases in salary, but similar amazing earnings and moderate spending, combined with $30k of investment gains. Year 7 'stash: $490k.

I wonder why more people don't do this.

I've read his analysis before and I had the same issue. It's quite easy to retire early if you have a high income and live frugally. Unfortunately a lot of people have to live frugally just to get by. Your average middle class family couldn't even dream of putting away $490k in 7 years even if they lived frugally and got lucky on stocks.

I read another blog, I think it was a different guy, who talked about how he did this by living on 30% of his income and putting away the other 70% and then went on and on about how anyone could do this. Of course, he made about $300k a year. He talked about how even if you make way less than this you can still do it, you just have to be willing to live on 30% of your income. That's easy to say when 30% of your income is more than 100% of most people's income...

Please keep in mind that most people's income is below US$2000 per year.

Seconded, yes. I've known some people recently with multiple kids (4 and 6, respectively), trying to get by on odd-jobs and $10/hour full-time jobs. Even slogging away night and day, floating a family of 8 (two parents, 6 kids) on $30k/year, and trying to do that on "30% of your income" - it's just not possible.

These people had/have income issues, not spending/frugality issues. In one case, one family moved to get a better job and is now at something like $45-$50k - still tight, but doable.

This is the part I feel needs to be highlighted. He got an early influx of money through stock plans, the dot com boom, and quick house appreciation. A lot of people have to make do without any of those things.

I feel with those conditions, his "advice" for retiring early has a huge asterisk.

You are throwing out the baby with the bathwater.

Even if he had $0 in investment gains he would of been able to do this at 33-35 instead of 30.

I have given a lot of thought on this subject as well. I think the first few months will go nicely, putting money into savings and spending wisely. But I have a feeling that keeping up with the lifestyle is hard for most of the people. Your pace is frustratingly slow, and you really need to trust that the lifestyle you are living will pay off someday.

Just to scratch my own itch, I've built a finance independence calculator for my daydreaming needs

http://yourdream.io

Cool little app. However, I'd like to see you raise the artificially low maximums you've put in place for the "Initial Investment" and "Monthly Investment" inputs. If you did, I'd be able to make use of it. (I'm 38 and definitely not "starting out".) It appears that you're making the assumption that the "Returns per Year" percentage input should also be used when figuring monthly income. I disagree with that. I'm comfortable guessing at a relatively high (7 or 8%) annual return on investment while building my savings, which would be derived from a combination of dividend income and capital gains. But, when it comes to living on a fixed income, I'm tempted to guess at a lower annual return (4% - dividend income only) because the negative consequences of being wrong are fairly high. My two cents.

It is an ugly hack, but /you/ could just scale initial investment, monthly investment and desired monthly income by the same factor.

Here is a link to the original "History of the Stash" article on his blog; http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of...

It's also worth noting that he didn't do this as a single person. A few years in the combined salaries of him and his wife were approaching $200,000.

His good fortune shaved years off of his retirement. Maybe even two of them.

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