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Quite a Few Years to go
Old 12-02-2006, 01:18 PM   #1
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Quite a Few Years to go

Hello Everyone,

I've been reading this board for a few weeks now and I really like the way you people think.

I believe that my situation is somewhat unique here, since I'm only 21. And while I want and intend to actually enjoy my job, whatever it might be, it would be foolish to not have a contingency plan for early retirement. Besides, I find planning, especially long term planning, to be inherently fun.

If this contingency is to happen, I intend to retire no later than the age of 45.

So, what's your advice? Luckily, I meet the first condition for saving: Books are the only non-essential commodities that I willingly spend money on.
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Re: Quite a Few Years to go
Old 12-02-2006, 02:29 PM   #2
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Re: Quite a Few Years to go

Welcome! This site is a great reference for long term planning.
At your age you got plenty of time to get your plan together.

I'm curious. How rich do you want to be? Do you want to be a multi-millionaire?
Or a comfortable middle-class life style? Why did you choose 45 as your intended age to retire?
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Re: Quite a Few Years to go
Old 12-02-2006, 10:01 PM   #3
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Re: Quite a Few Years to go

Here's my priceless advice: Quit buying books. Get them for free from the public library. If your library doesn't have the title you want, usually they can get it via interlibrary loan for free or for much less than the price of a new paperback.

Now that I've given you the benefit of my expert knowledge (I work in a library), I have to admit ... buying books is my chief vice. If I didn't take sacks full to the used bookstore periodically, we'd be up to our necks in them. Sigh.
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Re: Quite a Few Years to go
Old 12-04-2006, 09:05 AM   #4
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Re: Quite a Few Years to go

Quote:
Originally Posted by Tawny Dangle
Here's my priceless advice: Quit buying books. Get them for free from the public library. If your library doesn't have the title you want, usually they can get it via interlibrary loan for free or for much less than the price of a new paperback.

Now that I've given you the benefit of my expert knowledge (I work in a library), I have to admit ... buying books is my chief vice. If I didn't take sacks full to the used bookstore periodically, we'd be up to our necks in them. Sigh.
No can do. Gotta own them.

dmpi:

How rich? Well, a comfortable middle class will be just fine. Though I won't object to more money. Why 45? It's really the earliest age at which I think it would be practical to retire.
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Re: Quite a Few Years to go
Old 12-04-2006, 09:37 AM   #5
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Re: Quite a Few Years to go

You don't have to decide on a retirement date now. These factors will control when you can retire:

1) How much you spend
2) How much you save
3) Investment returns
4) Inflation

You have no control over items 3 and 4, so it would be frustrating to try to predict when you will retire. Items 1 and 2 are easy - for a given income, 1 is inversely proportional to 2! The challenge is to balance item 1 against item 2. That's where your planning comes in. By altering the ratio of savings to spending, you can influence how early you can retire. Good luck!
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Re: Quite a Few Years to go
Old 12-04-2006, 11:09 AM   #6
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Re: Quite a Few Years to go

Quote:
Originally Posted by dmpi
Do you want to be a multi-millionaire? Or a comfortable middle-class life style?
Since early retirement would happen in 24 years, I would assume you would have to be a multi-millonaire just to have a "comfortable middle-class life style"

Additionally, since from age 21 till "normal retirement" (mid-60's a/o today) would mean you have to plan for a period of two generations (40+ years, which will include among marriage, kids, "health challanges", economy, jobs, etc, etc, etc) I think the goal is good, but the detail planning is a "bit away" for you.

LYBM, contribute to the max (in whatever plans you are eligible for), make sure the person you "set up housekeeping with" views your financial goals in the same manner, and a host of other things. In other words, learn to crawl before you walk (you're there already, if you are reading this), walk before you run, and run before you're ready to FIRE...

- Ron
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Re: Quite a Few Years to go
Old 12-04-2006, 03:18 PM   #7
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Re: Quite a Few Years to go

Hey there - you're probably 90% of the way there just by the fact you're on this forum at age 21. There really is no secret - max out as much as you can (401k, IRA, after-tax), don't spend too much, get a good job, make wise decisions with marriage and buying a home ( if you do ).

I'm 28, so not terribly older and I can say 45 is a realistic target. I'm currently aiming for 37-ish. Your best friend can be a simple spreadsheet, where you can calculate projections, given certain assumptions ( savings rate %, investment performance %, annual raise %, etc. ). Then, you adjust your totals as you go, and you can see when you'll reach your goals.

Also - don't forget to have a little fun along the way. I'm taking a trip to Brazil here in a couple weeks. Sure - that money could be invested and maybe I could retire a couple weeks or months sooner, but you only live once.



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Re: Quite a Few Years to go
Old 12-04-2006, 08:02 PM   #8
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Re: Quite a Few Years to go

Quote:
Originally Posted by Tawny Dangle
Here's my priceless advice: Quit buying books.
TD, give the guy a break! You admit to bookbuying yourself. Reading is fun, safe, and can facilitate a sound financial education. There is nothing like the smell and feel of a good book that's mine, all mine. 

Meadbh
(addicted to bookstores with armchairs and unable to leave without a purchase)  :
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Re: Quite a Few Years to go
Old 12-04-2006, 09:11 PM   #9
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Re: Quite a Few Years to go

I'll echo what dunc said, just being here and thinking about it this early puts you way ahead of a lot of other people at your age (man, it sounds like my grandpa saying that when I read it back to myself - feel like I should add whippersnapper in there somewhere).

Anyway, I was 20 when I started my career and I left the place when I was 45. Unlike you, I had just a vague idea that I was in a career that allowed me to retire early. Luckily for me, being a member of the pension system was not an option, they just took the money out of my paycheck. That, and a little luck and a hell of a run in the stock market, made it all golden for me in the end.

The key, the kernel of it all, was starting early and doing it regularly.

If you're not already taking advantage of whatever retirement savings opportunities are available to you, do it tomorrow morning. If you can make it a payroll deduction that's great. I think the quote by Einstein about the power of compound interest is probably an urban legend, but that doesn't take anything away from how powerful investing over a long period of time can be. Saving and investing early and regularly has a power and velocity that is amazing. LBYM never hurts, but the real key is to start socking away money right now.

If you start now, in 20-25 years your co-workers will be stuck in cubicle land wondering "how the hell did hanno manage to retire so early?", and all kinds of people will be asking you "so, what do you do all day?"
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Re: Quite a Few Years to go
Old 12-05-2006, 07:15 PM   #10
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Re: Quite a Few Years to go

Hanno,

Much like you, I became aware of the ER option around age 21 or so. Unfortunately, my initial income was horribly low and things were pretty tough for a while. Luckily, once the career got rolling, so did the ER saving.

Ten years from now it will be great to know that you have managed to save MUCH more than your counterparts. Twenty years from now, it will feel even better to know that you're able to continue to work or hang it up whenever you want.

Best of luck to you. Don't give up, and don't obsess... you have to enjoy life, too, or you won't make it the 20 years.

Take care.
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Re: Quite a Few Years to go
Old 12-06-2006, 11:54 AM   #11
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Re: Quite a Few Years to go

Quote:
Originally Posted by Hanno
Hello Everyone,

I've been reading this board for a few weeks now and I really like the way you people think.

I believe that my situation is somewhat unique here, since I'm only 21. And while I want and intend to actually enjoy my job, whatever it might be, it would be foolish to not have a contingency plan for early retirement. Besides, I find planning, especially long term planning, to be inherently fun.

If this contingency is to happen, I intend to retire no later than the age of 45.

So, what's your advice? Luckily, I meet the first condition for saving: Books are the only non-essential commodities that I willingly spend money on.
Hanno, welcome to the ER forums. You will gain a wealth of knowledge if you stick around theses forums. I was 22 when I first started planning for the long term. Coincidentally, it was around the same time that I got married. I do agree with you that long term planning has been fun.

I plan on retiring around 45 as well. The advice that I've received from others has been the following:

Life is all about balance. Balance out your spending and balance out your savings. Enjoy life along the way.

If you have a 401k-type plan at work, max it out to the company match. Then max out your ROTH IRA. If you still have funds left over, max out the 401k. Put some funds away for a downpayment on a house. Put some funds away into a taxable brokerage account (preferably mutual funds). If you do this, you'll be well on your way and that much closer towards your goal @45.

Good Luck!
eddie
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Re: Quite a Few Years to go
Old 12-06-2006, 12:26 PM   #12
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Re: Quite a Few Years to go

One more piece of advice, Hanno:

Save while you are young (early 20s). It is hard to do, especially when everyone else seems so free with their money, but the early savings gives you options in just a few years. If you have a decent nest egg by the time you are in your mid 20s, you can:

- Take a risk on a new job that might be a bust or a big payoff
- Start a business
- Take a few months off between jobs
- Not sweat a layoff
- Buy a house
- Pay for grad school

and lots of other things. But if you don't save when you are younger, family responsibilities start to crop up (especially if you have kids) and it gets tougher and tougher.
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