Mr MM Explains the Why of FIRE

[clifp]

As I posted on the MMM forums.
I find it a bit disingenuous that he is talking about retiring in your 30s with only $500-$600K with a family to support, when his wife worked for most of it and he soon started a blog which turned out to be a gold mine.

I know we have a few forum members living on 24k a year, and fair number that have under million (although it seems most of these have a pension now or in their future.)

It's the combination of very young retirement age, and not particularly safe 4% withdrawal rate, and spending rate close to the poverty level which concerns me.

Now the forum as whole may be overly conservative which leads to OMY. However, with the challenge of finding a good paying job over 40 and especially 50 if your investment good south or your spending goes north, being conservative isn't too bad.

 

[LitGal]

I've followed extreme budget travelers for nearly a decade. These are people who hitchhike and couch surf or sleep in train stations if no other free accommodations are available. And they all evangelize about their superior way of travel. It gets them closer to the locals, they have more "real" experiences, etc. etc.

Over the years, though, as these folks' blogs take off and they start making some money the extreme nature of their budgets get noticeably less extreme. They move off the couches and out of hostel dorms into private rooms. They start dining out and even having some drinks with dinner rather than water. The hitchhiking stops. And so does exclusive travel to impoverished nations, with more stops in places like Europe and New Zealand.

Yeah, back in the '70's, fresh out of college, backpack crammed full (and Frommer's Europe on $10 a Day in hand), we found this a great way to travel. It was affordable; the bones didn't creak after sleeping on a train all night; and it didn't matter that we were living on bread/cheese/fruit from the markets. We could eat little and sleep little, but still put in 12 hours of hiking around cities every day. Then do it the next day.

Fast forward 40 years. Friends and I now want to sit down for meals, sleep in comfy beds, and have our own bathroom. We see a few places each day, then call it quits for a nice dinner with wine. We go to bed early, so we can do it again the next day.

The years catch up with us. With a few more funds in our pockets now, it is still nice to see the world. We are just slower at it now, and these aging bodies are more demanding than they used to be!

 

[Teacher Terry]

I absolutely agree that when older you want more creature comforts. I worry about the younger people over there that retire with so little. It is a foolish plan.

 

[Gone4Good]

I absolutely agree that when older you want more creature comforts. I worry about the younger people over there that retire with so little. It is a foolish plan.

It's also an inherently more risky plan (which us older folks might also confuse as foolish.)

One of the things that I draw comfort from is the fact that I haven't cut spending to the absolute bone. If my retirement plan goes tits up and I have to live like an ascetic monk to survive I still have that option. If, however, your plan requires you to live like an ascetic monk from the start and things go south from there, how exactly do you survive then?

 

[AnonEMouse]

If, however, your plan requires you to live like an ascetic monk from the start and things go south from there, how exactly do you survive then?

Sokushinbutsu

Not sure if that qualifies as "surviving" though.

 

[Gone4Good]

Sokushinbutsu

Not sure if that qualifies as "surviving" though.

 

[Teacher Terry]

WE could cut back if we wanted or needed too but I hope that is never the case. Everyone needs wiggle room.

 

[hnzw_rui]

It's also an inherently more risky plan (which us older folks might also confuse as foolish.)

One of the things that I draw comfort from is the fact that I haven't cut spending to the absolute bone. If my retirement plan goes tits up and I have to live like an ascetic monk to survive I still have that option. If, however, your plan requires you to live like an ascetic monk from the start and things go south from there, how exactly do you survive then?

+1. Of course, MMM followers are open to the idea of working again if their plan fails. Granted, that might be tough unless you have specialized skills (that have been kept current) and can work as a 1099 contractor since traditional employers tend to frown upon long periods of unemployment.

Personally, I'd rather stick with working until I save enough that I can stop work altogether.

 

[Gone4Good]

+1. Of course, MMM followers are open to the idea of working again if their plan fails. Granted, that might be tough unless you have specialized skills (that have been kept current) and can work as a 1099 contractor since traditional employers tend to frown upon long periods of unemployment.

I personally think going back to work is the most unworkable option in my disaster recovery plan. I assume the reason I'll need to go back to work is because the economy is crap, and probably has been for a while. So the time I'll need to go back to work is precisely the time I'll least likely be able to go back to work.

And I don't think freelance gigs are any more likely. We know from experience that they're the first things to get the ax when times are tough. It's far easier for an employer to load up the people they're already paying with extra work than pay some guy who's not on salary. It's an easy expense to cut.

We also know that a book of freelance business takes years to build. Unless you're in the market, making contacts, building a reputation day after day you can pretty much forget about flipping a switch and having cash roll in.

I'm certainly open to going back to work if I need to. But I don't have any expectation that I'll actually be able to go back to work when I need to.

 

[FUEGO]

+1. Of course, MMM followers are open to the idea of working again if their plan fails. Granted, that might be tough unless you have specialized skills (that have been kept current) and can work as a 1099 contractor since traditional employers tend to frown upon long periods of unemployment.

Personally, I'd rather stick with working until I save enough that I can stop work altogether.

For those MMM followers planning on low budgets, they won't need a huge salary to support their living expenses. How hard do you have to work to earn $15-30k/yr for example? Starbucks or an admin in an office can easily earn that. If we're talking a couple that spends $30k, they just need a minimum wage job.

There's always odd jobs for those with some skills. Even flipping stuff on craigslist/ebay could net $15-30k/yr. And you don't really need to generate your full budget each year - just earn enough to supplement your dwindling portfolio.

 

[haha]

For a person with a bit of an experimental mind, this is a wonderful time to live, and to participate at the edges of these gonzo plans. This is my second go-round. The summer of love 1967 had to end by totally destroying a lot of helpless children. And it did. In the early 70s everybody was leaving Berkeley or San Francisco or West LA or wherever and heading to a rural commune where they were going to grow carrots and be done with the man. Turns out that a lot of hard working skilled people are needed to grow anywhere near enough to keep from fading away. And you still have to have...welfare! to buy flour and sugar and medicine, and doctors to diagnose and cure your wife's clap and your baby's pneumonia.

Pretty soon anyone who had an education took advantage of what that education gave them- a way out of the boring rural slavery that they had gotten themselves into.

Who knows how today's Gonzo crew will make out? But I hope to be around, and solvent, to once again see it unfold. Natural social experiments are a gift to those who observe and feel no need to try to direct the path that these lives may take. They may be developing a whole new improved society, or not.

Ha

 

[CaliforniaMan]

For a person with a bit of an experimental mind, this is a wonderful time to live, and to participate at the edges of these gonzo plans. This is my second go-round. The summer of love 1967 had to end by totally destroying a lot of helpless children. And it did. In the early 70s everybody was leaving Berkeley or San Francisco or West LA or wherever and heading to a rural commune where they were going to grow carrots and be done with the man. Turns out that a lot of hard working skilled people are needed to grow anywhere near enough to keep from fading away. And you still have to have...welfare! to buy flour and sugar and medicine, and doctors to diagnose and cure your wife's clap and your baby's pneumonia.

Pretty soon anyone who had an education took advantage of what that education gave them- a way out of the boring rural slavery that they had gotten themselves into.

Who knows how today's Gonzo crew will make out? But I hope to be around, and solvent, to once again see it unfold. Natural social experiments are a gift to those who observe and feel no need to try to direct the path that these lives may take. They may be developing a whole new improved society, or not.

Ha

+1 Well said!

A "back to garden" extremely low cost rural life looks much different at age 65 than it did at 25, when you realize you no longer have those same 25 year old joints and back. Twenty and broke is not in the same universe as sixty and broke.

 

[karen1972]

+1 Well said!

A "back to garden" extremely low cost rural life looks much different at age 65 than it did at 25, when you realize you no longer have those same 25 year old joints and back. Twenty and broke is not in the same universe as sixty and broke.

true but plenty of people in their 80s still gardening or if your my father still actually doing manual labor at a JOB every day because he's afraid if he quits he'll die (because that's what happened to everyone else he knew).

You'd hope if someone was going to retire early they would at least give a minimum of XYZ in their nest egg they don't plan to touch until 65+ so they would always have that to live on when they couldn't actually go back to work even if they needed to... at least that's my plan, if I start running short, to do something about it way before you run out.