Dreaming...

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.

Bankerwithabrain said:
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.
Click to expand...

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.
 
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.
 
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.
 
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. ;)
 
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.
 
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
 
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?
 
Book Recommendation: Your Money Or Your Life, by Dominguez and Robin.

Ignore the investment and inflation advice. But carefully consider the rest...
 
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!
 
Bankerwithabrain said:
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.
Click to expand...

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...
 
Bankerwithabrain said:
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?
Click to expand...

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: http://www.early-retirement.org/forums/f28/how-much-would-you-need-28916.html

Most popular answer was "$3M+", and the kids were older than I thought.
 
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.
 
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.
 
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.
 
jIMOh said:
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.
Click to expand...

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?
 
explanade said:
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?
Click to expand...

To quote Dory36, the guy who wrote the FIRECalc program:

The "4% Rule" is shorthand for a lot of research by a lot of different people that finds, in general, long term withdrawals are sustainable if they are roughly 4% of the portfolio, when there are no other sources of funds (Social Security, etc.) and no variations in the spending throughout the retirement.

The source of the 4% rule is research done about ten years ago and published in the Trinity Study. Here is an old thread that discusses it in some detail:

http://www.early-retirement.org/forums/f28/explain-4-withdrawal-rate-19234.html
 
If you're living expenses are under 4%, would you withdraw 3% or still withdraw 4% but reinvest the remainder or better to leave what you don't need in existing investments?
 
REWahoo said:
If I could live the way I wanted to withdrawing less than 4%, I would do so. It will make your heirs very happy.
Click to expand...
We could call those lifestyles "With the Class A" and "Without the Class A".

explanade said:
If you're living expenses are under 4%, would you withdraw 3% or still withdraw 4% but reinvest the remainder or better to leave what you don't need in existing investments?
Click to expand...
See, that's the neat thing about the 4% thumbrule-- it's your choice. If you're younger then you might choose to reinvest and sleep more soundly at night. If you're older (or with less than 30 years to live!) then you can probably spend it without a second thought to enjoy experiences that will guarantee that you'll sleep more soundly at night...

Another consideration would be putting the excess in a charitable remainder trust that would generate "just in case" income while funding your legacy. The challenge is finding a CRT you care to fund (although many non-profits would be happy to help you in your quest) that would take the donation in small increments over a number of years.
 
I thought I would update everyone on my progress towards ER, as well as keep a record for myself of my financial situation, as well as keep me motivated for the future.

Current financial situation:
Assets:$220k (divided in stocks, money markets)
Liabilities: $15k (low yield student loans)
Income: $135k/yr

Recently got bonus so assets shot up a little.

I've still got my eye on that 30 goal.
 
I say accumulate while you can. You may burn out and it may not be tons of fun - but if you can sock away enough for a few years, it will be worth it. It is only a few years. Hell, I am working a job I hate for a few years for only a few paltry thousand dollars more!
 
explanade said:
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?
Click to expand...

It is opinion which is based on consensus, backtesting (monte carlo) and a number of assumptions based on spending and asset allocation.

But the guideline persists through most planning efforts.

4% is 25X current expenses
I would not start detailed planning (choosing dates) until you have 12X in the bank- at that point you have one double to go (money needs to double once and you are at the goal).
Even 25X may not be enough for a long retirement. What is long to you might be normal for someone else. IMO 4%/25X will last for about 35 years. If you retire early, you will probably use a lower percentage (I use 3%/33X).
 
Bankerwithabrain said:
I thought I would update everyone on my progress towards ER, as well as keep a record for myself of my financial situation, as well as keep me motivated for the future.

Current financial situation:
Assets:$220k (divided in stocks, money markets)
Liabilities: $15k (low yield student loans)
Income: $135k/yr

Recently got bonus so assets shot up a little.

I've still got my eye on that 30 goal.
Click to expand...

One point- I read on previous page you are looking at 1.5 M at age 30... but others said you would need 3 M+ because of kids and education. My comment would be if you could hit 1.5M at 30, you could let that money ride for about 7 more years and have your 3 M at age 37 or 38 without much furtner contributions- consider then downsizing career at age 30 to something more to your liking (you would not need to save so much).
 
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