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Old 03-05-2008, 08:18 AM   #21
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Originally Posted by Bankerwithabrain View Post
I am 24 and currently work in Investment Banking. I work, on average, 70-80 hours a week. Life is brutal. The only thing that keeps me going is my dream of being FIRE'ed.

I am currently single, but I hope to raise get married and raise a family, around 4-5 kids (if I ever get out of work that is...).

Current financial situation:
Assets:$175k (divided in stocks, CD's and money markets)
Liabilities: $15k (low yield student loans)
Income: $125k/yr

I am trying to create a concrete goal of when I can retire. Both timewise and number wise. What year should I aim for? How much money do you think I will need to retire and be able to support a family of 6/7.

My spending habits are very good and I would say I saved about 60% of my salary last year. I do want to send my kids to a private school though which will end up being fairly expensive I imagine.

I am thinking a realistic goal is $1.2 million by age 30, but is that too ambitous?
I work two jobs, around 70 hour per week total, and am married happily to the love of my life for 6 years this August.

My opinions to answers of other questions:
I would look at withdraw rate and current expenses to determine amount needed. The guideline I use for myself is retiring before age 50 required a 3% withdraw rate, retiring after age 50 is a 4% withdraw rate. If I know total expenses for a year, the amount needed is

before 50=expenses/.03=33.3X expenses
after 50=expenses/.04=25X expenses

The most important variable, IMO, is having a handle on what expenses you have on a yearly basis. New roof every 20 years, so each year you need to pay for 1/20 of that new roof. New car every 10 years, so every year you need to account for 1/10 of the new car.

According to above, you save 60% of your income (75k per year). This will achieve the above goal of FIRE quickly. How aggressively is the money invested (in stocks-bonds-cash)? I would suggest 80-15-5 or something similar at your age.

For private school, I would assume you could drop the 75k savings to 30k, and use 45k to fund the education needs. 30k is still 25% savings rate, which is impressive.
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Old 05-14-2008, 02:21 AM   #22
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My networth is now up to $175... This is going to take forever to retire!!
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Old 05-14-2008, 07:10 AM   #23
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Sounds like you're so miserable that you're counting every penny saved and every day that goes by.

You need a change in your routine. Fewer hours? New job? New career?
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Old 05-14-2008, 08:06 AM   #24
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Your right

But so hard to make the move. How can someone willfully choose to take a 50% pay cut for another job? Nowhere is going to pay me as much as I am making now.
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Old 05-14-2008, 08:32 AM   #25
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Sometimes it's not about the money.

Ever hear the phrase, "money can't buy you happiness"?

Can't you cut your hours down a little. Doesn't have to be by 50%.

Get a life.
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Old 05-14-2008, 11:30 AM   #26
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Banker, you have done well to accumulate what you have by 24. Congratulations.

I may come across like an old fart here, but it may be a little early for you to project a year and a number for you to RE. You might need a little more data.

Quote:
Originally Posted by Bankerwithabrain View Post
But so hard to make the move. How can someone willfully choose to take a 50% pay cut for another job? Nowhere is going to pay me as much as I am making now.
Is there a contingency plan that covers the situation in which the current job goes away? Jobs come and jobs go...

Can you keep up the 75 hour/week pace long enough to hit your number?

I admire you for having started your planning now, but I will echo some of the other replies and say that you need to slow down some.
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Old 05-14-2008, 11:51 AM   #27
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I think the goal of being ABLE to send your children to a private school is excellant. When the time comes don't think it is a must.

I am not sold on private schools as the only answer to a child's education, and one of my children has attended both. You really need to look at the public school served by your home and consider their results, and you need to look at the child's individual needs. Some kids need a mellow setting and the school has cliques that don't work for that child so find a more suitable educational environment.

Take the financial resources you would spend on a private school and enrich your child's education... music, art and language classes for example.
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Old 05-14-2008, 02:44 PM   #28
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Rustward- I am starting to agree with you. I notice that a lot of people on this board are my age - and I think we are starting to dream to early. I think people my age are just smart enough to see the stupidity of spending ones' life working the entire time. I guess I have to wait until I have more money to really start dreaming.
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Old 05-14-2008, 03:20 PM   #29
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Banker, I wouldn't say it is a pure money thing. I just think that at 24 it is difficult to know what you are going to want your life to be like when you are, say 50 or 60. As you look forward, the near term should be in pretty good focus and you are probably able to control your near term life and stay in a relatively narrow range. It seems to me that the farther out (in years) you look, the wider that range needs to be if you are defining a range that you expect to stay in.

Kindof off topic, but somebody that I respect a lot once told me that when asking another for a favor, ask as early as possible because the farther out the request (in time), the more likely that the other party would agree to do the favor. As the time approaches for the other party to deliver, they sometimes tend to wish they had not agreed, but most will go ahead and honor their word.

It is not too early to plan, or to dream, but keep the long term part of the plan somewhat flexible so you will be in a position to handle whatever fate hands you.

I guess I have given away the fact that I might not be a type A.
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Old 05-14-2008, 03:24 PM   #30
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I used to work a similar number of hours for a similar salary. I gladly traded that for a $25k pay cut and a shot at some normal hours. Then again, in my case, it was the 110+ hour weeks at the end that did it for me.
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Old 05-14-2008, 04:21 PM   #31
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Rambler is correct. you are looking at needing $4-5M to ER. I was not in the high-tech, not financial industry but I worked 80+ hour weeks for 6 years while I had 3 kids to be able to pull off the big payday. I did it for the same reasons you have articulated and for me, it was worth it. My wife did not work at the time. I wasn't involved in everything when my kids were younger and I did bring a lot of work home, I did have a lot of stress, wasn't thrilled with my job but I was very good at it. Since pulling the plug I do not regret anything I did to get here. I have been more involved in my kids lives from elementary school through high school than any dad I know.

Final note: as you are in investment banking then I presume as you move up the food chain you will be able to earn some of the amazing year-end bonuses that wall-street is known for. If you can sock these away, I think you have a very good shot at ER. Can you do it by 30? possible... my guess, 35-40 is probably the more realistic target.

regards, Kevin
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Old 05-15-2008, 12:54 PM   #32
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Retirement Plan

I just played with retirement calculations...

At $1.5 million in 2013, assuming spending $100k a year, 3.5% inflation rate, 10.1% savings rate, in 2083 (I will be 100), I will run out of money.

Understandbly these are aggressive numbers. Anyone think I am calculating anything wrong?
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Old 05-15-2008, 09:02 PM   #33
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Book Recommendation: Your Money Or Your Life, by Dominguez and Robin.

Ignore the investment and inflation advice. But carefully consider the rest...
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Old 05-15-2008, 09:36 PM   #34
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It is great that you have started so early.
But.....I really think that it would benefit you to cut back on working the crazy hours and go on a few dates, buy something nice for yourself, and learn how to relax.
You have the foundation laid out.....now work on filling that with your dreams. It gets harder to date as you get older.....and if you want 4-5 kids.....it would behoove you to start dating at least!
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Old 05-15-2008, 11:49 PM   #35
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Originally Posted by Bankerwithabrain View Post
Rustward- I am starting to agree with you. I notice that a lot of people on this board are my age - and I think we are starting to dream to early. I think people my age are just smart enough to see the stupidity of spending ones' life working the entire time. I guess I have to wait until I have more money to really start dreaming.
Think about doing what you are doing and get paid a LOT less... that is what I did working for a Big 8 firm (back when there were 8).... during tax season 80 hours was 'short'... had some 100 hour weeks... but at least it was not all year long...

I traded and have moved up the ladder but have always kept my balance in life....

And I started to 'dream' (or should I say plan) on retiring when I was 16 or 17.... so it is never to young...

Just don't think it is the end all that will fix everything... you still have to do 'something'... that might be laying around and watching all those judge shows... but that gets boring (I would think)...

Try and get a nice balance in life.... and work will be (or should I say, can be) more pleasurable.... find what it is... do it... and you will feel richer.

BTW... if you are a banker... you should know ...at a decent return your $175 will be $350 at say 32 ish... $700 at 40 ish and $1.4 mill at (rounding) 50 ish with NO MORE INPUT...
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Old 05-19-2008, 12:12 PM   #36
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I just played with retirement calculations...

At $1.5 million in 2013, assuming spending $100k a year, 3.5% inflation rate, 10.1% savings rate, in 2083 (I will be 100), I will run out of money.

Understandbly these are aggressive numbers. Anyone think I am calculating anything wrong?
Didn't you say you wanted to send 4-5 kids to private school? I think that's your $1.5M right there. For a number of reasons, spending 6.7% of your nest egg is considered unsustainable. Read the FAQ on the 4% rule.

There was a poll here a while back, and, someone asked the board's opinion on how much to retire with two small children. If I remember right, the most popular answer was $3.5M.

Found the poll: How much would you need?

Most popular answer was "$3M+", and the kids were older than I thought.
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Old 05-19-2008, 03:29 PM   #37
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Those numbers are absurd!

According to that, almost nobody can retire at 30! (I guess that's the point...)

Ok time for adjusting plan...

I am thinking of going ex-patriot to a cheaper other first or second world nation. In addition, I think those calculations take into account my kids college tuition. I think my kids should take out student loans just like I did. It builds character. (And makes it easier for me.)

I am still aiming for the $1.5 million mark by 30, although day by day I am beginning to think I should at least take a year off or I will burn out.
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Old 05-19-2008, 04:23 PM   #38
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Sorry! Long term plans are filled with problems, so don't take any of it too seriously. I assume you are working 80 hour weeks for the potential for big $$$ down the road. Go for it, and see what happens. Or, jump off and try and find something that isn't so stressful. Only you can decide that.
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Old 05-19-2008, 06:57 PM   #39
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I'll offer a contrarian opinion.

The money gets a lot better and the hours get a little better. I'd give it a couple of years before making any decisions, you're at that point in your career where you're paying your dues. After you get some experience under your belt you could move to private equity, the pace tends to be a bit more sane.
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Old 05-21-2008, 12:24 AM   #40
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My opinions to answers of other questions:
I would look at withdraw rate and current expenses to determine amount needed. The guideline I use for myself is retiring before age 50 required a 3% withdraw rate, retiring after age 50 is a 4% withdraw rate. If I know total expenses for a year, the amount needed is

before 50=expenses/.03=33.3X expenses
after 50=expenses/.04=25X expenses

The most important variable, IMO, is having a handle on what expenses you have on a yearly basis. New roof every 20 years, so each year you need to pay for 1/20 of that new roof. New car every 10 years, so every year you need to account for 1/10 of the new car.
Where does this guideline come from?

Seems like I've seen references to 3 or 4 % references in various other threads and posts.

Is this a consensus or one opinion?
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