Poll: under 50 with 30X+ annual spend/income

[Luck_Club]

A recent thread had me thinking:
1) How does someone achieve such a high multiple at a young age?


So a poll to answer those two question. Basically I'm thinking 4 possible solutions to such a high multiple at a young age. Inheritances, Marketable security investing, entrepreneurship (high risk startups, small businesses, real estate, stock options), and finally the often preached index investing frugality.

 

[mrfeh]

In reality, it's not gonna be such a clear distinction, but a combination of factors.

I also don't think you can ignore income. Much easier for somebody making $200K than somebody making $40K.

 

[Senator]

I was pretty easily 30x spending in NW at 50. I had a tech career, relatively higher wage, and lived pretty frugally. I also had a side gig, mowing grass and plowing snow. I had a couple of duplexes at that time as well, which started to allow me to take many business deductions and shelter my income from taxes with depreciation and other expenses.

I was too busy I just did not have the time to spend any money. Any maintenance on the house, unless it was going to cause further damage, was delayed. My own lawn I skipped mowing until I saw the neighbors coming around with a petition, although I can generally get away with a 1x a month mowing.

And just before the age of 50, I started the quest to buy more rentals, and added 21 renters since then.

 

[aaronc879]

In reality, it's not gonna be such a clear distinction, but a combination of factors.

I also don't think you can ignore income. Much easier for somebody making $200K than somebody making $40K.

That's a often over-looked component. I have never spent over $20K in a year but I have never earned over $49K in a year. If I had a $1XX,XXX income then I would easily retire before age 50 but my average income in 20 years of working is under $30K/yr so i'm only at about 10X expenses at age 37(38 later this month).

My path to get there would be frugality and low cost index investing.

 

[traineeinvestor]

Income/Savings + real estate (equities to a lesser extent) + DW having a similar and supportive outlook to financial matters.

I'm not sure if I would describe my real estate investments as "high risk".

 

[bradaz2488]

Not sure we will learn much from this poll. I answered index fund investing, but that is not how I really got to +30X expenses by age 50. How I got to 36X expenses, not including house, at age 49 was saving. On average I saved 53% of my gross income over 25 years. On top of 401K savings I tried to save all funds from bonuses, options and RSU's. After age 30 I carried no credit card debt, bought cars with cash and payed off two house mortgages early. I did get an inheritance when Dad passed which equals ~4X of today's expenses. We also chose not have kids, so that also helped with saving more.... Now 53 with ~50X expenses thanks to Mr Market. It was more about saving early vs how I invested. I made my investing mistakes as well during the Tech bubble ... Could of had a lot more $ and retired earlier than 49 if I had been more diversified out of company stock and not day trading.... Lesson learn....

 

[jebmke]

Stock options for me and wife was in a lucrative field when we got married. We did tilt very heavily to small cap value investments so that clearly helped.

 

[Sojourner]

For me, it was definitely a combination of factors. 1) Lucrative high-tech career for many years with a 6-figure salary, 2) Stock options and equity in a tech startup, and 3) Dedicated, consistent low cost index investing. Oh, and also LBYM for the past 30 years. But since the poll allowed only one choice, I selected "High risk entrepreneurship/ stock options Buyout".

 

[T-Minus]

Small inheritance, some stock options, saving >35% of gross income for a couple decades, focusing on keeping living expenses very low, blind luck in real estate, market growth, company car, good paying career area (tech), and only one spouse who shares my priorities (divorce can be very costly).

 

[kcowan]

Pension, 10-Baggers, high rate consulting income...

 

[W2R]

A recent thread had me thinking:
1) How does someone achieve such a high multiple at a young age?


So a poll to answer those two question. Basically I'm thinking 4 possible solutions to such a high multiple at a young age. Inheritances, Marketable security investing, entrepreneurship (high risk startups, small businesses, real estate, stock options), and finally the often preached index investing frugality.

I'm not young like that. But my goodness, the bull market has resulted in my portfolio growing to be much bigger than expected, as it has for almost all of us. Bull markets affect people under 50 just as they affect people over 50.

Someone might have 30x expenses NOW, but just wait until we have a repeat of 2008-2009. Then they will be cutting back and scrabbling just to stay retired.

 

[Cobra9777]

I don't understand the poll choices, so I didn't vote. In our case, we hit 28X at age 52. It's now grown to 34X, 4 years later. We had no inheritances, no businesses, no risky investing, no real estate until after we retired. Just 2 college-educated people, working hard for 30 years, raising two kids, maxing out 401Ks, investing consistently in low-cost equity index funds, and staying out of debt except for a mortgage.

We both stuck with our employers the whole time, which paid off in terms of pensions, bonuses, stock options, retiree health insurance, etc. Early on, we spent a lot of that bonus and option money. We were not extreme LBYM types; we just maxed out the 401Ks and spent the rest. Later in our peak earning years, when we could smell ER, the bonuses and options helped to build up the taxable account very quickly.

Our combined SS is a very large figure that I discounted heavily in planning for retirement. We probably could have retired earlier had I counted that fully. We're still 10-11 years away from FRA and I still harbor some doubts, but my pessimism is shrinking somewhat. So we're spending a bit more on discretionary items and enjoying every day of retirement like we're in a dream.

 

[sengsational]

I think this discussion under appreciates the power of the difference between what you earn and what you spend....in other words, your saving rate. True that a larger inheritance can play a significant role, as would finding yourself at a successful startup (stock options), but the difference between the contribution from the various forms of investing probably is not that big of a deal.

So for me at least, 90% of the problem is solved by simply putting aside money: saving. Even if it was in a bank account, you'd still be way ahead of the "smartest investor" that didn't put aside enough.

 

[Koogie]

30 x income in my [-]early[/-] mid forties. Reached through a combination of entrepreneurship and an affinity for baked beans.

Also, my income=my expenditure since I own my own business and don't pay myself a penny more than I spend for fear of johnny taxman.

 

[ghh101]

Started maxing out 403b and 457f at age 26. We use coupon for grocery shopping and eating out. As one poster stated blind luck in real estate starting at 27 and then learning to try and not continue making the same mistakes. Market growth has been nice but I hope to average 7%. My wife and I are on the same page but she doesn't do anything with the finances. Combined income is $190,000. Expenses are about $80,000

 

[dunkelblau]

My spending and net worth are much more stable than my taxable income so it's yes on 30x spending vs sometimes on 30x income. No on inheritance and everything you list under entrepreneurship, yes on marketable securities and index funds. But I could have hit 30x spending on CDs alone because for me the real reason was a prolonged low ratio of spending to after tax income. It just would have taken a decade or so longer.

 

[Totoro]

Pension, 10-Baggers, high rate consulting income...

Or my cousin: win the lottery.

Of course, then he spent it all within 10 years

 

[6miths]

I don't understand the poll choices, so I didn't vote.

Good income in work place and frugal lifestyle/high savings rate + index investing.

 

[ExitLeft]

As an early retiree, (well, working part time), I'm more interested in minimizing the "x" part of the equation (and correctly forecasting x over time.) That said, as others have already said, the poll doesn't reflect the combination of factors: abnormally high salary, stock options, investing, and LBYM.

 

[pj.mask]

Save over half my income. 30 with 6x income (15x expenses) from saving and +1&2x from inheritance. Plan to hit 30-35x income (60-70x spend) around age 45.

 

[scrabbler1]

When I ERed and had 40x expenses, about 1/3 of it was from the company stock I had cashed out upon leaving the company. One-third was rollover IRA money and the rest was accumulated savings in my taxable accounts, which, along with the cashed-out ESOP gave me the basis for my ER in 2008 at age 45.

 

[Alex The Great]

I believe, for most ordinary people (including myself) it is more about spending habits combined with high income, rather than investment or other sources. Financial markets are volatile and you have to put a lot of effort, knowledge and simply have a luck to be successful in investment.

 

[Aerides]

We were DINKs - much easier.

Also kept our spending at middle-career levels, didn't increase our lifestyle over the last 10 years of our careers when our earnings grew pretty well.

Where we put the money was the least smart part, we only really got good with that once FIRE was a tangible plannable goal.

 

[nash031]

Counting my chickens here, but we will be 30x by the time I'm 44 or 45 with below average mkt returns. Pension and index investing frugality.

 

[FIREd]

Primarily we got to 30X spending (and higher) in our 40's through a combination of high income (w2 wages) and moderate spending. Spending remained relatively constant through the years (in nominal term!) as our income increased by 10x, so managing lifestyle creep was a huge factor. Growth in equity investments was also a factor.