NYT Article: How to Retire in Your 30s With $1 Million in the Bank

I've posted on a few of these threads and I always have the same advice; avoid mega-metro areas when you are young to avoid the mega cost of living so that you can invest while still enjoying life. The idea is to have enough saved to provide options if/when you need them due to burn out, mergers.....

I am teaching my teenage daughters to learn to do something unique, that can possibly be done from home and part-time because you 'will' want kids at some time and you 'will' appreciate flexibility as to expenses and free time.

These goals are impossible for all but a few in NYC, San Fran, DC and you get the idea.

There are great museums, operas, symphonies, universities, pro sports, parks and even better nature in countless smaller metro areas throughout the US. You don't have to give up today to plan for tomorrow.

FIRE here wrote:

Not so fast bro wrote:

A million in investments living off the proceeds for 40-50 years doesn't seem like a recipe for success. They'll end up back at work. Health care costs will eat them alive when they get past a certain age.

Someone above claims to be retired but is working 35 hours a week. Huh?

I could volunteer for 35 hours a week for all I care. That's the point. Financial freedom.

Look up the 4% rule. If your NPV spending is less than $40k/ year you can retire off your capital gains on $1M indefinitely. As already mentioned, this is possible in all but two years in history, in which case if you retired at 30 you have the skillset to either A) cut your expenses or B) have the initiative to earn $10k/yr.

...and one bad week or month with health care and your $40k/year is shot. Very easy to make this work when you're retired at 30 and your health care costs are low. It won't stay that way. Good luck to those who are retiring with only $1 million -- I would not. I'm on track to retire at 55 (I'm 47), but I'll have significantly more savings than that, plus a pension (~$50k per year) to collect.

That's the beauty of it. I could weather a 40k or even a 100k hit in a year off my investments because I could easily cut back my spending by $1600 or even $4000 per year.

There's no sense trying to convince you so I'll leave it at that. Enjoy working for the next 8 years :).

Not so fast bro wrote:

...and one bad week or month with health care and your $40k/year is shot. Very easy to make this work when you're retired at 30 and your health care costs are low. It won't stay that way. Good luck to those who are retiring with only $1 million -- I would not. I'm on track to retire at 55 (I'm 47), but I'll have significantly more savings than that, plus a pension (~$50k per year) to collect.

CAGR of the SP500 over the past 146 years, adjusted for inflation.

Run the numbers. It's not really hard to do. Taking inflation into account, there's something like a 99% chance you will never run out of money if you follow the 4% rule.

There are plenty of people that live off $40k per year. $40k per year means you're making more than 64% of the people in the US, so most people do it.

To each his own, but there are reasons big cities are popular. Trying to argue that small metro areas have the same amenities as the top cities is like arguing that your average D1 14 min 5k runner is the same as Bekele. Sure they might share some similar traits, but one is clearly far superior.

another data point wrote:

Has anyone here done this? Plan to do it? As a millennial in my mid-30s with a decent nest egg, the whole FI/RE idea appeals to me somewhat, but for a lot of reasons (kids/lifestyle/generally like my job) I would rather work at least until my youngest kid goes to college and then re-assess the situation then (I'll only be about 50, so still pretty young). Seems like there a lot of financially savvy folks on here -- what do you think?

https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html

I like the concept of "FI" and am pushing myself to invest and save so that I have flexibility later in life should I take a break from the life of an employee. The article barely touches on a key concept: Multiple passive/semi-passive income streams are important to have for firing, as having multiple income streams means you have less stress if your 401(k) + IRA tank, because you're rental properties (or other income stream) continue generating cash flow.

For many FIRE folks I've read and listened to on podcasts, the "RE" is more of a retirement from trading time for money (i.e., employment) and not the "pina coladas and margaritas on the beach" the word "retirement" is typically associated with. The freedom FI provides is terrific.

Don’t what FIRE is but I retired at 42.

Having the freedom to do what I want when I want at an age when I can enjoy them is fantastic.

No desire to do that. Get a really high paying job, learn how to generate wealth (businesses, entrepreneurship, financing deals, real estate) invest in any of those, generate passive income that isn't entirely based on the stock market. At 28 I have 6 rentals, which is honestly really low as far as cash flow but it's more about gaining experience and making connections. I have a good set of contractors, wholesalers, property managers, and I'm aiming for long term. Hoping to close 10 deals a year for the next few years until I can rely more on the income, then I can start leaning out the business by doing my own property management, marketing, etc.

None of this works if you only make 40k a year, or it's just way slower and brutal. I would never try to "retire" at 30 that's just dumb.

Stay Healthy wrote:

They ignored the elephant of health insurance. With a paid of house, and being reasonably handy with respect to home and car repair, I could easily live off $40-50,000/year, the interest from $1,000,000. The problem is that health insurance alone for a couple would be $1,000/month.

The article mentioned "barista FIRE," which is where you work at Starbucks for the health insurance. I'm not sure I'd want to work at Starbucks though.

UsedToBeKnowItAll wrote:

Run the numbers. It's not really hard to do. Taking inflation into account, there's something like a 99% chance you will never run out of money if you follow the 4% rule.

There are plenty of people that live off $40k per year. $40k per year means you're making more than 64% of the people in the US, so most people do it.

Again, $40k per year is fine if you're a single healthy individual. If you have to carry yourself and a spouse, or god forbid a few kids on a healthcare plan, your plan is shot...shot to hell. Just hope you don't get sick. Otherwise you're declaring bankcruptcy or back into the workforce with a 10 or 20 year skills gap and you really will be working at Starbucks.

Or, wait a few more years until you have more like $2-$3 million and then retire....

So this is all contingent upon having no medical issues and no kids to support? The couple in the article didn’t appear super fit and had kids. Are they hoping their kids get college scholarships? Hanging them out to dry?

Find a way to get elected to congress, doesn't matter which party.

Dude man guy wrote:

Not so fast bro wrote:

Again, $40k per year is fine if you're a single healthy individual. If you have to carry yourself and a spouse, or god forbid a few kids on a healthcare plan, your plan is shot...shot to hell. Just hope you don't get sick. Otherwise you're declaring bankcruptcy or back into the workforce with a 10 or 20 year skills gap and you really will be working at Starbucks.

Or, wait a few more years until you have more like $2-$3 million and then retire....

So this is all contingent upon having no medical issues and no kids to support? The couple in the article didn’t appear super fit and had kids. Are they hoping their kids get college scholarships? Hanging them out to dry?

If we're talking about the Jensen couple, she's still working, and he is retired -- "Because his wife currently works, they have yet to draw on those accounts." He's basically a house husband. Nothing wrong with that.

Other than the Starbucks idea, health care isn't mentioned. It would be curious to know how they deal with it. The Jensen family could still be covered by his wife, since she works. The others, who knows.

Not so fast bro wrote:

A million in investments living off the proceeds for 40-50 years doesn't seem like a recipe for success. They'll end up back at work. Health care costs will eat them alive when they get past a certain age.

Someone above claims to be retired but is working 35 hours a week. Huh?

FIRE includes "Financial Independence", which is having the money to retire, but choosing not to because you enjoy work, want to stay busy, etc.

Millennial is given $3 million at age 21 by parents. Retires at age 30 with $1 million.

I didn't even bother reading any posts past the first, so this has probably been much repeated: but there is no way to live comfortably on $1 million and retire at, say, age 35. Unless your definition of "comfortable" doesn't require much...

3 mil in the bank wrote:

I took two years off in 2010. I'd be retired right now had I not done that. Whoops.

Yes and how did you take two years off in just one year? I’m wondering because I’m planning on a 40 year retirement but I’ll be doing it all in 20. Thank you.

Suck it up wrote:

Uh-huh. Two adults with two daughters living on $40k/yr. Not going to happen. $1.2 million in the bank at 43...that's great...think that's going to last 2 adults for 40 years of living?

Boo freaking hoo...stressful job...can't take it. We're a nation of pu$$ies now.

If they really can live off of 40k a year, then obviously 1.2 million in the bank is enough to do that.

3.3% annual interest rate, on their investment, would give them 40k a year in spending money, without ever having to touch the principle. In the long run, counting on only 3.3% interest is pretty recession proof. You can get CDs near those rates! With taxes its probably more like 4% interest, but still that is pretty conservative.

i find the whole premise rather sad.

FIRE crowd as i understand it says work sucks so bad that in order to bring balance and meaning back into my existance, i need to accumulate enough money so that i don't have to work anymore.

Okay. Then what?

Well, it would seem that is explained fairly clearly as vigorously managing your finances and expenditures and lifestyle and just about everything else in your universe so as to perpetuate your state of non-working, thereby avoiding a soul-sucking job.

Wow, i hope no one's going to die on a cross for that higher purpose!

Hey, how about just follow an old time truism that will rings true for many of us: reinvest your successes for more success.

By that i mean this: if your job is less than perfect, but it does fulfill some of your life's requirements, how about tweaking your career to adapt your evolving needs? You know, be creative! Sure, you can do that, though it may take a little more than just balancing your cash flow. Like maybe steer your career into a part of the field that benefits something you believe in, or benefits people who really need the help, or something you are uniquely talented at. And if that means maybe taking a pay cut, well, maybe you can afford it for the long term good it will do you.

You get the idea.

And another thing. The notion that a million dollars is enough to live on may be technically do-able, but i pity the pissant that would try it. For that poor sap, all i can say is: get a life.