Would you retire at 30 with $1m?

[stepford]

Seems more a matter of life philosophy than numbers. They'd be committing to a more "interesting" lifestyle than I'd be comfortable with, but can we really say we've done so much better by grinding through 25-35 years of work just so we can retain our affluent existence for another 30-40 years of increasing dotage.

(apparently run-on sentences are a sign of my own increasing dotage)

FWIW like others here I think the adventure might be worth considering for someone on their own or perhaps a couple, but I'd be uncomfortable suggesting it as an option for a family. The adults can freely decide to chuck the standard 9-5 and live the dream, whatever the consequences, but the kids don't get a choice.

 

[flyingaway]

I think people can "retire" at any age with any amount of money. The homeless people on the street can certainly claim that they retired with a zero portfolio.

 

[MooreBonds]

Over at another FIRE message board, people were discussing this family (two adults in mid-30s and a baby) that were theoretically retiring on $1M at 4%. Another case was a mid-20s shooting to ER at 30 with $600k @ 4%.

I said these folks were crazy for using 4% and thinking these amounts could realistically last the rest of their lives. I got downvoted to oblivion for this opinion. Am I wrong?

Let me guess - the MMM forum? I tried pointing out the errors in various posters' understanding of the 4% SWR theory (I even exchanged posts with MMM's wife once, when she claimed the 4% SWR meant "never having to spend your principal", but she never replied). They don't seem to want to acknowledge the risks they are taking on.

So what is their plan for health insurance? Are they prepared to shoulder a huge % of their annual budget for health expenses as a typical child grows up?

Does at least one of the 30-somthing couple have the full 40 quarters of SS to qualify to receive Medicare at age 65? This would be a major issue for someone retiring at 30.

 

[mathjak107]

not something i would do with only 1 million.

 

[Theseus]

Knowing what I now Know - no!

That tongue twister aside, if I could have a do-over and be 30 with a million bucks - I bet I'd be tempted Although, I'd still think it was less 'retirement' and more like 'dropping out' or going 'off-grid.'

 

[Travelwanted]

Agree with most posters in this thread. Given the young age, it would seem MORE stressful than w*rk! I would think a 3% wr or less would be much safer. Adding in kids...yikes. The idea of ER is great, but not if you will struggle financially forever.

 

[Badger]

No.

You never know what the future holds. I have always been in good shape and healthy. Two years before I retired I had to have 3 major surgeries on my back with the third fusing the lumbar. It has never been right before or since. Fortunately I had medical insurance through work. I am presently going through PT on a major destruction of my rotator cuff and another surgery scheduled in a couple of months to work on the other shoulder. Recovery and PT will continue for at least 8 more months. Fortunately again it will be covered by Medicare and Tricare for Life. I would hate to try and cover the expenses on $30k/yr.

In addition to medical expenses there are car repairs, home repairs if you own your home, etc.

I would not want to jeopardize the well being and future of my family at your age.

Cheers!

 

[rayinpenn]

Ok let's say you've got a million bucks and are 30. I'll assume you have no mortgage
And no other debt.

Retire? Hell no Id go back to school and get that degree in the field you wish you had on the first place... Law, medicine, web design, farming etc. I'd then find or create that job that I've always wanted to do. Live the frugal smart life debt free and just be happy...






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[soupcxan]

Let me guess - the MMM forum? I tried pointing out the errors in various posters' understanding of the 4% SWR theory (I even exchanged posts with MMM's wife once, when she claimed the 4% SWR meant "never having to spend your principal", but she never replied). They don't seem to want to acknowledge the risks they are taking on.

I can't stand MMM or his disciples. He makes thousands of dollars a month from his blog, hardly the same as living off your portfolio...

 

[jon-nyc]

Depends on the definition of retiring. If it's like MMM just switching to self-employment on their own terms the answer would be yes.

And if you had a health care put option at zero premium (Canadian citizenship in his case).

For the rest of us it's pretty risky. It could work, but it could easily fail for reasons out of your control.

 

[Fermion]

And if you had a health care put option at zero premium (Canadian citizenship in his case).

For the rest of us it's pretty risky. It could work, but it could easily fail for reasons out of your control.

How is the ACA not a similar put option for Americans? If your family income is that low, you are not going to pay much of anything for healthcare.

 

[Texas Proud]

How is the ACA not a similar put option for Americans? If your family income is that low, you are not going to pay much of anything for healthcare.

This should go to another thread if you want to discuss since it could get heated...

Even if you qualify for low cost insurance, your out of pocket could still be a cost that is hard to afford... the US system can still be costly as opposed to the Canadian system...

 

[jim584672]

I would be amazed if the ACA survives over the long term, which sucks for me.

 

[Mulligan]

The term retirement for a 30 year old is probably pretty fluid. Anyone who can accumulate a million by their 30s would certainly be confident enough to not worry about withdrawal rates. They would just go back to making a pile of cash again if they felt the money stash was too low.


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[REWahoo]

I would be amazed if the ACA survives over the long term, which sucks for me.

Prepare to be amazed.

Although I'm sure there will be changes, the ACA will almost certainly survive. The opposition to the ACA is very similar to what followed the implementation of Social Security in the 1930's. Like it or not, SS is still around.

 

[rodi]

Retire from what?
They haven't lived yet.

I disagree with the 2nd sentence here. Working at a wage slave job is rarely the same as living an interesting life. Yes - they are young, but that doesn't mean they haven't had experiences both in the workplace and out of the workplace.

Dave Barry had a quote that I always liked: "Don't confuse your career with your life". If the hypothetical couple has a rich life outside of work, why would they want to spend the hours at a boring job.

That said - the $1M gives them a nice cushion to figure out if there is some endeavor that is both interesting and brings in some cash. But if they manage their expenses well, have a realistic frugal lifestyle, and have some paid for shelter (home, RV, boat, whatever...) why not quit the job and LIVE life.

Personally, I like a few things that make my budget slightly less than frugal... I like to travel, I like to have my kids have piano lessons, as well as rec center sports (little league, basketball, etc). I like the occasional splurge for an expensive cooking ingredient (just ordered "fiori di Sicilia" extract off amazon for some cookies I want to make.) Living on $30k/year would be too tight for my *preferred* budget. But if they are happy on $30k/year - why not!!!

 

[Andre1969]

I wouldn't retire at the age of 30 with $1M, but I say that with the experience of a 45 year old, looking back on where my life went after the age of 30. But, I could see my 30 year old self thinking that, if I had $1M, wild horses couldn't keep me from retiring.


When I turned 30, I had about $60,000 saved up, and was still working two jobs, so fantasizing about having $1M seemed like being on top of the world. But, as time goes by, you discover that the market doesn't always go up, but prices usually do, and accidents and unexpected bills happen, and things don't always work out the way you want them to.


I guess though, if I had managed to save $1M by the time I was 30, I might be tempted to give retirement a try, and if I started burning through the money too quickly, I could always go back to work. It's not hard to do that in your 30's. But in your 40's or 50's, probably not as easy.

 

[brewer12345]

I think there are a lot of ways to skin the cat. The classic method is to [-]nail the tail to a board and...[/-] make sure you have a gigantic pile of money accumulated over a few decades and never work again afterwards. Not the only way. Call it what you like (semi retirement, dropping out, being a bum, following your calling, remaining employed), but for those under 50 it is probably safer to periodically earn some income to supplement whatever assets have been accumulated. Play with firecalc: earning 20k a year one or 2 years out of 3 makes a massive difference in survivability rates with a 4% or higher % draw, or with an extended draw period. When I bailed on the career job in early 2014 I had marginally enough assets to make it work as a completely retire, never work again scenario (although probably not enough to make a lot of forumites comfy). To hedge our bets, DW is maintaining her part time business and I remain open to work on my terms. 8 months after I bailed, it found me. I was able to name my terms and price, and since this is a contract gig it will go away after a year or 15 months. I never would have been able to do that if I stayed on the career job treadmill.

 

[cooch96]

OP, if you didn't know the couple personally, then I would say that calling them crazy is way out of line. 4% withdrawal gives decent odds of success; I believe over 80% historically. If excrement hits the fan, then they can adjust. I think a lot of folks get caught up in striving for approximating guaranteed success but life can end so quickly and unexpectedly. Trying to maximize the prime of your life with darn good gambling odds seems the opposite of crazy to me.

 

[Evergreen]

No way.

 

[brewer12345]

OP, if you didn't know the couple personally, then I would say that calling them crazy is way out of line. 4% withdrawal gives decent odds of success; I believe over 80% historically. If excrement hits the fan, then they can adjust. I think a lot of folks get caught up in striving for approximating guaranteed success but life can end so quickly and unexpectedly. Trying to maximize the prime of your life with darn good gambling odds seems the opposite of crazy to me.

+1. Doing so while you are still young enough to roll with the punches and being able to get out of the "fog of work" also improves your chances of a successful outcome.

 

[daylatedollarshort]

I think it is hard to retire with $1M at a relatively early age, especially with kids, count on 4%+ return (assume no sequence of returns risk?), assume life won't throw you any financial curveballs (over 60 years? not likely), not have a lot in SS and pensions income down the road, and plan to 100% retire - never work again until maybe age 100. Downshifting is a lot easier, and it helps if there are two wage earners.

With low expenses, ACA for guaranteed health insurance and tax credits to replace employer subsidized group insurance, it is not too hard to have two tech workers here working part-time or doing contract work and cover middle - upper middle class type annual expenses. More free time also allows for significantly lower annual expenses - DIY around the house, cooking more from scratch, analyzing and lowering energy bills, keeping a price spreadsheet, putting in a permaculture yard that doesn't need mowing or watering, using the library, etc.

If the ACA had been in place we could have easily done this years earlier. We still just keep chipping away at recurring expenses and increasing low risk, passive and semi-passive income like the crossover chart in The Money or Your Life book.

For the people saying no way - do you still have lawns, use the average of 909 kw of electricity a month, not buy mostly single ingredient foods, not shop second hand? There are many ways to save living a less mainstream, less consumer oriented lifestyle. Maybe not everyone would be happy living like this, but some families would rather live more simply than have both parents work and commute 120 hours a week combined. The day care at our local school had to put limits on how many hours kids could be there total time in a week, because some of the kids were either there or at school from 6 am to 6 pm every week day.

 

[imoldernu]

Hmm. Interesting question...
At age 30 we had 4 sons, and I was earning $14,500/yr. before taxes as a store manager. We owned our house, (with the bank)... and felt we were doing quite well. (The house that we bought for $11,800 recently sold for $281K... Falmouth MA.)

Marriage and children definitely puts a different face on retirement plans, but back to the age 30 bit... Thinking it through, with a what if... If I were age 30 and single... I would definitely consider leaving the working world to explore life in total freedom, and security, 50 years hence, would be the last of my priorities.

No regrets, but tickling the imagination for an enjoyable mental exercise... Wow... Hike the Appalachians, surfing Hawaii, a few weeks in the Boundary Waters, a month in Japan and back to Nikko... skiing the Alps, and bumming my way through Europe... and then living on my boat, sailing the Bahamas, with a trip over to Cuba to bike the Island with my BIL who owns the bike tour business there.

After that, I'd do some of the missionary work with my cousin in S.A. countries, then come back to spend two or three years becoming a 46er in the Adirondaks and spending a summer canoeing the chain of lakes.

Then maybe a summer back near my old home on the vineyard to bike all the roads I missed when I lived there. And at least a week to explore what I never had time to do at the WHOI.

And then I'd go to.... uh oh... getting carried away. Even with all of what I might have missed, wouldn't change the past 50 years for all of that..

Life is good!

 

[Independent]

Depends on one's definition of retirement. If that means, "I will never work again," its not a good idea. If it means, "I will work from time to time when I feel like it and on my own terms," it could very well work out just fine.

+1

I would have loved to take a sabbatical of a few years when we had small children.

But, I wouldn't do it unless I was very confident that I could walk back into a good job when I wanted to. I'd recognize that the time I "wanted" to go back to work might coincide with a time when the economy was in the dumps.

 

[dallas27]

If 1 million at thirty, i would continue to work(how i choose) but devote very little to savings and most to enjoyment. And pretty much that is my plan for 40.


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