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Re: 20 years working is all you need
Old 01-10-2006, 07:14 AM   #41
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Re: 20 years working is all you need

Quote:
Originally Posted by retire@40
Regarding the difficulties of saving $2K a month for a 21-year old, it may be harder, but not impossible, depending on the profession.* For example, starting salaries for pharmacists are in the $80K range last I checked.* Also, even if you could only save $1K a month for a portion of the 20 years, most likely you can catch up by adding more than $2K a month for the remaining portion as your income increases and you don't use that increase to buy fancy cars and McMansions.

Regarding the retirement funds not being available for 40 years, not true.* SEPP from a rolled over 401(k) and/or take out your Roth IRA contributions whenever you want.
That's great if you want to be a pharmacist. Otherwise, you're likely to be one of the typical 21-year old college graduates starting somewhere around $25k-30k, maybe a little more if you graduated with an engineering or other high-demand degree.

I don't disagree that someone earning $25k-30k a year could start saving and probably have somewhere in the neighborhood of $150k+ by age 30. Unfortunately, most 20-somethings would prefer to buy their first car, house, new wardrobe, pay off their student loans, go to graduate school, get married, etc... and allocate a substantial portion of their savings (or use credit cards) towards such expenditures rather than retirement. Retirement, even early retirement, is a lifetime away for the average 20-something, which explains why many don't get serious about saving for retirement until their 30s.
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Re: 20 years working is all you need
Old 01-10-2006, 08:43 AM   #42
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Re: 20 years working is all you need

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Originally Posted by Jay_Gatsby
I don't disagree that someone earning $25k-30k a year could start saving and probably have somewhere in the neighborhood of $150k+ by age 30....Retirement, even early retirement, is a lifetime away for the average 20-something, which explains why many don't get serious about saving for retirement until their 30s.
Taking your assumptions as is, you agree that the average college grad could have $150K by age 30. To get there, that person needs to save $1200 a month for 8 years at 6.5%, or by any other similar permutation.

That $150K grows to $281K by age 40, using the same growth rate of 6.5%. If the person "gets serious about saving" at age 30 and can triple their monthly savings, that person could have in the vicinity of $900K by age 40.
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Re: 20 years working is all you need
Old 01-10-2006, 09:40 AM   #43
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Re: 20 years working is all you need

Quote:
Originally Posted by retire@40
Taking your assumptions as is, you agree that the average college grad could have $150K by age 30.* To get there, that person needs to save $1200 a month for 8 years at 6.5%, or by any other similar permutation.

That $150K grows to $281K by age 40, using the same growth rate of 6.5%.* If the person "gets serious about saving" at age 30 and can triple their monthly savings, that person could have in the vicinity of $900K by age 40.
I think tripling one's saving rate at age 30 from $1,200 to $3,600 a month is rather ambitious.* If you assume reasonable raises of 5% a year, at age 30 he'll be earning in the high-30s or low-40s per year.* Perhaps he'll get a job paying more than that by age 30, but even then saving $3,600 a month would still be tough. Also, you need to factor inflation into the equation (which I don't know whether your calculations do).

Likewise, there are various expenditures that will affect one's ability to save (e.g., buying a house, replacing a car, etc...) at a consistently high rate for years on end.
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Re: 20 years working is all you need
Old 01-10-2006, 10:56 AM   #44
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Re: 20 years working is all you need

Hmmm

Here's some random non math thought's. Coming up on 63 this year with hindsight being 20/20, I would like to think I made every investment mistake in the book - except perhaps commodities contracts and never did try puts and calls.

Ala POGO - I met the enemy and he was me. Salaries and numbers were lower in 1966 - 1993 so I won't use them.

I gave my money to a stranger - maxed IRA/401k and lived paycheck to paycheck on the rest. Some of that paycheck to paycheck went to attacks of investment brilliance from time to time - raw land, timberland, gold/silver/platinium coins/warrants/penny and go go stocks/rental RE/international stocks and perhaps some things I forgot. By age 30 - I had an ISP, single page engineering graph paper showing my Ben Graham 50/50 S&P 500/GIC plus individual efforts - da plan was to be 1.3 mil in 2006/2008 area at 63-65 retirement.

Meanwhile - back at the ranch - bon temps rolliere - in and out of debt with CC, car payments, vacations, chasing girls, the usual suspects. Age 30 - picked up a SO settled down a tad - still enjoyed New Orleans living but on a more frugal scale.

Derailed at 49 via layoff - collectively maybe 300k plus a then 50k paid off duplex in 1993 $. House aka fish camp was paid off.

Sooo - absolutely no wisdom here - just my two cents.

1. Live now - BUT try to develop habit patterns you enjoy.

2. Time in the market - not market timing is an old saw -but a good one. The earliest $ are the best $.

3. Keep it simple, plug away, make it as automatic as possible and let the numbers follow instead of vice versa.

4. POGO was right!

Being a truly cheap bastard can be a lot of fun - if you can step 'out of the box' and really experiment with it.

Each ER has to work out the paradoxes in this post to their own satisfaction.

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Re: 20 years working is all you need
Old 01-10-2006, 11:03 AM   #45
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Re: 20 years working is all you need

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Originally Posted by Jay_Gatsby
I think tripling one's saving rate at age 30 from $1,200 to $3,600 a month is rather ambitious.* If you assume reasonable raises of 5% a year, at age 30 he'll be earning in the high-30s or low-40s per year.* Perhaps he'll get a job paying more than that by age 30, but even then saving $3,600 a month would still be tough.* Also, you need to factor inflation into the equation (which I don't know whether your calculations do).

Likewise, there are various expenditures that will affect one's ability to save (e.g., buying a house, replacing a car, etc...) at a consistently high rate for years on end.
All true, but if one wishes to be FI and/or RE, one must find ways of earning more money (and spending less too, of course). *Saving may be possible, but FIRE may not be possible if one is stuck in a low-paying job and either can't or won't look to better themselves. *This is why FIRE is only for those with enough intestinal fortitude and discipline to make it happen.

I would think a college grad could make more than the low 40s by the time he is 30 in most lines of work and in most urban and suburban parts of the country in today's dollars.

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Re: 20 years working is all you need
Old 01-10-2006, 11:14 AM   #46
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Re: 20 years working is all you need

Quote:
Originally Posted by retire@40
Taking your assumptions as is, you agree that the average college grad could have $150K by age 30. To get there, that person needs to save $1200 a month for 8 years at 6.5%, or by any other similar permutation.

That $150K grows to $281K by age 40, using the same growth rate of 6.5%. If the person "gets serious about saving" at age 30 and can triple their monthly savings, that person could have in the vicinity of $900K by age 40.
I think that the average college grad cannot save $150,000 by the time they are 30. Certainly not the college grads in the part of the country where I live. My office employs a number of college grads who are not lawyers. We pay them very competitvely for our market. Nevertheless, they don't make near enough to start saving $3600 a month at thirty. Or even at age 40. They are lucky if they can save $1000 a month after 30. Certainly would be very tough if they had a family to support. So they won't retire early and won't be financially independent for a long long time, if ever. And they do have discipline and they do have intestinal fortitude. And they do better themselves. One of our accountants at work not only works hard in her job, but she spent a considerable time caring for her aging father who lived with her until he died recently. FI and RE are not on the top of her list. Family is at the top of her list.

This is back to the "I did it so anyone can" attitude I see here a lot of the time. I just don't buy it.

Frankly, I think selfishness ranks higher than a desire to better yourself on the list of characteristics needed to retire after 20 years of work.
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Re: 20 years working is all you need
Old 01-10-2006, 11:17 AM   #47
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Re: 20 years working is all you need

I believe marriage is definitely bringing ER in our direction faster than it would alone, although it's surely because of some factors, or would that be luck:

- Engineer + attorney = two solid incomes that give us a lot of flexibility in what we do financially.

- Neither is a spender. She digs finding the cool retro shirt at Goodwill, is fine with a cheapo Ikea bedroom set, and enjoys driving her 99 Honda.

- Both are down with the plan. Shared goals of financial independence, willingness to try overseas living, etc.

I could easily imagine how frustrating it would be having disparate financial goals, especially if you were the frugal one would probably be making the sacrifices.
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Re: 20 years working is all you need
Old 01-10-2006, 12:56 PM   #48
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Re: 20 years working is all you need

If marriage leads to buying a house that forces some savings via equity, tax savings, and appreciates......then it has definitely helped.....especially if these two people were renting.

It really is all situational. Not to mention the requirements for FIRE are different for everyone because we all want/need different things.

I think 20 years is doable for folks from 21 to 41. It certainly is if they make 30-50k for 20 years and are investing in some real estate or rental properties that basically require a lot of time, but don't cost them any money as they break even every month......etc etc etc

Please God let it be doable.....I die a little more everyday I'm in the office
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Re: 20 years working is all you need
Old 01-10-2006, 01:15 PM   #49
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Re: 20 years working is all you need

I think that in some ways it is easier to save when you are young. When I came out of college I was used to living on a budget I could not even imagine now. You have good health, are used to a thrifty lifestyle and most friends are in the same place. The important thing is the desire to retirement early and resisting the draw of a consumptive lifestyle.
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Re: 20 years working is all you need
Old 01-10-2006, 01:24 PM   #50
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Re: 20 years working is all you need

Quote:
Originally Posted by Martha
I think that the average college grad cannot save $150,000 by the time they are 30.* Certainly not the college grads in the part of the country where I live. My office employs a number of college grads who are not lawyers.* We pay them very competitvely for our market.* Nevertheless, they don't make near enough to start saving $3600 a month at thirty. Or even at age 40.* They are lucky if they can save $1000 a month after 30.* *Certainly would be very tough if they had a family to support. So they won't retire early and won't be financially independent for a long long time, if ever.* *And they do have discipline and they do have intestinal fortitude. And they do better themselves.* *One of our accountants at work not only works hard in her job, but she spent a considerable time caring for her aging father who lived with her until he died recently.* FI and RE are not on the top of her list.* Family is at the top of her list.

This is back to the "I did it so anyone can" attitude I see here a lot of the time.* I just don't buy it.*

Frankly, I think selfishness ranks higher than a desire to better yourself on the list of characteristics needed to retire after 20 years of work.*
Martha: Your experience and common sense in the above post caused a standing ovation on my part.

Jarhead, who agrees with ReWahoo, that Texas is the best college team in the country.
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Re: 20 years working is all you need
Old 01-10-2006, 01:32 PM   #51
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Re: 20 years working is all you need

Quote:
Originally Posted by Martha
I think that the average college grad cannot save $150,000 by the time they are 30.* Certainly not the college grads in the part of the country where I live. My office employs a number of college grads who are not lawyers.* We pay them very competitvely for our market.* Nevertheless, they don't make near enough to start saving $3600 a month at thirty. Or even at age 40.* They are lucky if they can save $1000 a month after 30.* *Certainly would be very tough if they had a family to support. So they won't retire early and won't be financially independent for a long long time, if ever.* *And they do have discipline and they do have intestinal fortitude. And they do better themselves.* *One of our accountants at work not only works hard in her job, but she spent a considerable time caring for her aging father who lived with her until he died recently.* FI and RE are not on the top of her list.* Family is at the top of her list.

This is back to the "I did it so anyone can" attitude I see here a lot of the time.* I just don't buy it.*

Frankly, I think selfishness ranks higher than a desire to better yourself on the list of characteristics needed to retire after 20 years of work.*
Well Said!

I have several 30 and 40 year olds working for me now. *These are educated highly techincal jobs in an exclusive field that requires years of experience in the field to qualify for these jobs. *They are making from mid $40 to mid $70k per year before taxes. *There are no other jobs like these within a 800 mile radius from here. *The people could make more back East but the like the life style here and are willing to take a small cut in wages to live like they want. *That is want life is all about; living life as you want while working in a field you like and making a difference in the world at the same time. *I don't see many here that would want to work in a job they hate for 20 years to ER. *

As for someone just going out and finding a higher paying job...that sounds like speculation based on very little experience in the work world. *Doing a job for someone else is a lot different from running your own business. *If you are in a specialized area this is more of a challenge due to the inavailability of jobs in a down economy. *Just jumping to a new higher paying job is not that simple. *You have to actually be qualified for it and the employer has to be willing to pay you for your value. *If you don't have experience it is pretty hard to demand a higher wage than someone who has been in the job for several years. *Most careers are built on moving up a career path based on experience and education (and luck). *Experience and job history create value to an employer and they pay for that in wages and bonuses. * *

Can anyone FIRE in 20 years. *No, not unless they are willing to live a very frugal existence. *If you are willing to do that then go for it. *There is no award for getting there in 20 years. *If it take you 30 then so what? *The point is to do what is comfortable to you. *If you can find a career path that will get you $150k at age 30 then go for it but those jobs are few and far between and the stress that goes with these kinds of jobs will eat you up over time. *My may not live 20 years to cash in. *
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Re: 20 years working is all you need
Old 01-10-2006, 01:34 PM   #52
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Re: 20 years working is all you need

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Frankly, I think selfishness ranks higher than a desire to better yourself on the list of characteristics needed to retire after 20 years of work.
OUCH Is this Greg using martha's computer again?
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Re: 20 years working is all you need
Old 01-10-2006, 01:41 PM   #53
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Re: 20 years working is all you need

Quote:
Originally Posted by Martha
Frankly, I think selfishness ranks higher than a desire to better yourself on the list of characteristics needed to retire after 20 years of work.
Martha, you are absolutely correct. I was unable to retire until I had worked 35 years due to my highly undisciplined unselfish nature.

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Re: 20 years working is all you need
Old 01-10-2006, 01:47 PM   #54
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Re: 20 years working is all you need

Nobody seems to have brought up the military as being a way to reach FIRE (or at least semi-FIRE) in 20 years. Any ex-military folks here want to provide some insight?
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Re: 20 years working is all you need
Old 01-10-2006, 01:50 PM   #55
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Re: 20 years working is all you need

Interesting factiod from US Census -

for year 2000, median income of workers with a bachelor's degree:

Age 21-24
$27,074/yr

Age 25-34
$37,233/yr

Age 35-44
$49,197/yr

I'm guessing these numbers don't include 401k matches given by employers. And this data is 5 years old, so the numbers should be a tiny amount higher, in real terms, today.

Using rough calculations, a person making the median income during these periods, saving 10% of their income, with a 4% company match and earning 7%/yr would have $323,000 by age 44 (I know, that is 24 years of working).

Same parameters, except saving 25% of income = $669,000 by age 44.

Same parameters, except saving 50% of income = $1,246,000 by age 44.

If you assume a dual income household, and the earnings+savings double, it looks like it may be possible to FIRE at 44 with over a good bit over $1000000 if they can save 25%+ of their gross income (plus the 4% match).

Of course that is the median income, so the lower half of the population wouldn't have as much income or savings.

Is 20 years working "enough"? - a definite maybe if you can save enough, are frugal and earn the median income or more and have market returns at the historical average.

Personally, I'm in a dual income household living a moderately LBYM lifestyle in a moderate cost of living area with above median incomes for both spouses given our ages. The combination of these factors will enable us to FIRE after a total of 8-23 more years, based on current projections. That is still a long time, and I know we aren't the "average" or "median" family by any means.

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Re: 20 years working is all you need
Old 01-10-2006, 01:54 PM   #56
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Re: 20 years working is all you need

Quote:
Originally Posted by Jay_Gatsby
Nobody seems to have brought up the military as being a way to reach FIRE (or at least semi-FIRE) in 20 years. Any ex-military folks here want to provide some insight?
My advice is you shouldn't seek a career in the military to reach FIRE unless you understand and accept the possibility of being FIREd upon.


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Re: 20 years working is all you need
Old 01-10-2006, 02:41 PM   #57
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Re: 20 years working is all you need

I think we're confusing whether we're talking about (1) whether everyone SHOULD aim for FIRE after 20 years or (2) whether most people have the ABILITY to aim for FIRE after 20 years.

I disagree with the posts about inherent selfishness and inability to FIRE after 20 years working without (a) a "very frugal existence" or (b) working yourself to death.

I don't consider myself selfish for having a goal of working for 20 years. I don't necessarily want to "better myself" after FIRE either. I just want to be myself, spend my time with my loved ones, and have some new experiences. If I need to work longer to help out someone I care about, I'm sure I will.

And I don't consider our existence very frugal, although that would be a compliment! I'm always looking for ways to trim our footprint here on planet Earth, but I still realize what a privileged existence I lead ... regardless of whether I re-use ZipLoc bags or go without cable TV.

Some of the sacrifice that comes with a higher-than-average wage is working harder-than-average, doing work that is overall less-pleasant-than-average, or living in a part of the country that is less-desireable-than-average for a period of time; you'll also want to spend less than average to increase your savings.

Average gets you a "C", and you probably want to get an "A" if you're looking to FIRE.
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Re: 20 years working is all you need
Old 01-10-2006, 02:48 PM   #58
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Re: 20 years working is all you need

Quote:
Originally Posted by Jay_Gatsby
Nobody seems to have brought up the military as being a way to reach FIRE (or at least semi-FIRE) in 20 years. Any ex-military folks here want to provide some insight?
Police and fire fighters also have 20 year careers. The fire fighters I know tend to be workaholics though. They just move on to a different career.

Martha - I consider myself to be lazy rather than selfish. A highly underappreciated quality in my view.
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Re: 20 years working is all you need
Old 01-10-2006, 03:22 PM   #59
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Re: 20 years working is all you need

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Originally Posted by justin
Of course that is the median income, so the lower half of the population wouldn't have as much income or savings.
And the upper half would have more.

I was making $45k in my first job after grad school. A 2003 article states, "and the average offer to electrical engineering graduates fell less than 1 percent to $50,615."

So FIRE depends on what you study in college, too, and of course on your student loans.
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Re: 20 years working is all you need
Old 01-10-2006, 03:33 PM   #60
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Re: 20 years working is all you need

I was going to add that the typical engineering grad's salary is way higher than the median for bachelor's holders in general. Maybe 70% higher. With certain degrees, it is much easier to FIRE. Thank you, engineering degree!
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