Originally Posted by friar1610
I'm not sure that's entirely true. When I was looking at early retirement as a possibility, I ran across John Greaney on the web. IIRC, he retired at 38 or some ridiculously young age an did not have a windfall. . . .
As mentioned by others, the point wasn't about retiring early, it was about replacing 100% of your peak earnings
on a recurring basis at a very early age.
Just to show how nearly impossible this is I ran some numbers. Assuming our retiree earns 100% of his peak earnings every year of his 20 year working career, earns a 5% real return on his investments, and plans to withdraw 4% of his portfolio at retirement (a high WR for a ~38 year old retiree), our retiree would have to save 76% of his GROSS pay (before taxes), every year. Many people pay more than 24% of their earnings in taxes.
If we assume he gets even a modest 2% raise every year, he would need to save 96% of his gross pay.
While this might be an interesting mathematical exercise, the bigger question is why anyone would set this as a goal in the first place. If one is capable of living on a fraction of their pre-retirement salary, why would they need to replace 100% of their peak earnings anyway?