Forbes Article: 28-Year-Old Retires in NYC With $2 Million

[mxisland]

Was reading this story in forbes today:

Forbes: How This 28-Year-Old retired In NYC With A Net Worth of More Than 2 Million


A 28 year old woman is retired in NYC. Had a career in finance for seven years, now lives on $33k per person/$65k per couple in Manhattan and they amassed over $2 million.

She talks about a 60-40 split of her nest egg coming from saving vs investing.

There are quite a few elements of the lean FIRE movement in the story (they live in a really small walk-up apartment, do their furniture shopping on Craigslist, etc.)

Not everything is applicable for me, but I thought there were some interesting ideas. I'm closing in on the million dollar mark, so I'm taking it as more encouragement to keep going. I'm also currently living in a major city in CA, so how they're navigating the HCOL element was intriguing. Anyone else here FIRE'd in a high cost of living city? Curious how you keep costs down.

 

[cathy63]

She says: "When was I going to go on the Europe river cruise with them we’d been talking about for years but which I kept pushing back because I couldn’t find four weeks of vacation time?"

I am not seeing how she's going to do that kind of travel and live for the other 11 months of the year on $32.5K. She's got a pretty frugal lifestyle going for NYC, and I hope she's thought carefully about whether she'll really be happy with it for the next 20 years (which seems like an awfully short planning horizon for a 28-year old, regardless of the family's longevity history.)

Aside from that, if she amassed 60% of her $2.25M nest egg by saving for 7 years, that's $193K/year in savings. Good for her for getting a job that pays over $200K/year straight out of college, but that's not something most new grads can count on. She had a fairly unique opportunity to amass a lot of money in a short amount of time and was able to turn it to her advantage.

As for FIRE in a high CoL area in CA -- yes, we are in that situation. Our strategy was to buy the smallest home that was comfortable in the place we wanted to live, even if it meant we had to work a few more years. We also purchased as early as we could in order to take advantage of the property tax breaks for long-time owners (prop 13). Otherwise, we just made it a point that savings came first. We maxed out our 401Ks and IRAs every year; never took out a loan for a car or took equity out of our home for a vacation. If we couldn't save up for it, we didn't buy it.

DH retired after being laid off at 52, and I retired this year at age 53, so it took us a lot longer than the woman in the article, but we like having a nicer lifestyle and we're satisfied with our situation.

 

[FIREmenow]

She says: "When was I going to go on the Europe river cruise with them we’d been talking about for years but which I kept pushing back because I couldn’t find four weeks of vacation time?"

I am not seeing how she's going to do that kind of travel and live for the other 11 months of the year on $32.5K. She's got a pretty frugal lifestyle going for NYC, and I hope she's thought carefully about whether she'll really be happy with it for the next 20 years (which seems like an awfully short planning horizon for a 28-year old, regardless of the family's longevity history.)

Aside from that, if she amassed 60% of her $2.25M nest egg by saving for 7 years, that's $193K/year in savings. Good for her for getting a job that pays over $200K/year straight out of college, but that's not something most new grads can count on. She had a fairly unique opportunity to amass a lot of money in a short amount of time and was able to turn it to her advantage.

As for FIRE in a high CoL area in CA -- yes, we are in that situation. Our strategy was to buy the smallest home that was comfortable in the place we wanted to live, even if it meant we had to work a few more years. We also purchased as early as we could in order to take advantage of the property tax breaks for long-time owners (prop 13). Otherwise, we just made it a point that savings came first. We maxed out our 401Ks and IRAs every year; never took out a loan for a car or took equity out of our home for a vacation. If we couldn't save up for it, we didn't buy it.

DH retired after being laid off at 52, and I retired this year at age 53, so it took us a lot longer than the woman in the article, but we like having a nicer lifestyle and we're satisfied with our situation.

"they amassed over $2 million".

If there were two of them, then $100K each, no?

 

[Teacher Terry]

Since her DH still works although they don't need the $ to pay the bills they will probably use some of the $ he earns for vacations.

 

[aaronc879]

She writes successful blog. She probably makes more money in "retirement" than 10's of millions make working a full time job. Not that she/they need that income but they do have it and that makes a big difference.

 

[Teacher Terry]

I did not realize she had a blog.

 

[growing_older]

Yes. It sounded like a publicity push for the blog. Either there was a really really big bonus, an astoundingly high salary for a new grad, an inheritance, or some other unusual circumstance to amass $2 million in 7 years. Details are not given, but they clearly want you to infer it's due to the frugal lifestyle. That likely helps, but it cannot be the whole story.

 

[aaronc879]

Yes. It sounded like a publicity push for the blog. Either there was a really really big bonus, an astoundingly high salary for a new grad, an inheritance, or some other unusual circumstance to amass $2 million in 7 years. Details are not given, but they clearly want you to infer it's due to the frugal lifestyle. That likely helps, but it cannot be the whole story.

She was a Harvard grad working as an investment banker in Manhattan. I don't think it's unreasonable to assume she averaged over $200K/yr income for those 7 years. She was saving loads of money during one of the biggest bull markets ever and only spending around $24K/yr. Seems very doable to me.

 

[bclover]

She was a Harvard grad working as an investment banker in Manhattan. I don't think it's unreasonable to assume she averaged over $200K/yr income for those 7 years. She was saving loads of money during one of the biggest bull markets ever and only spending around $24K/yr. Seems very doable to me.

LOL, but a whole lot of "Ifs".

Does the average college grad get a job making 200K? I don't know grown adults making that salary.

These articles are so unrealistic to me, reminds me of a tongue in cheek article I saw in a sports magazine about how your kid also could be like Steph Curry.
the article was basically saying about only 1.3% of NCAA seniors are drafted by the NBA. so have a backup plan.

these "you can do it too" articles are the same IMO. sure you could retire in Manhattan at 28....IF.......

 

[aaronc879]

Does the average college grad get a job making 200K? I don't know grown adults making that salary.

The average college grad does not get $200K right out of college. This person was a Harvard grad who went into one of the highest paying jobs in the highest paying city. Her job should have paid her $100-150K her first year out of school and as much as $350K/yr by the time she was a third year analyst. She estimates 60% of her $2M came from savings(the rest from investment returns) so she only had to save $1.2M or around $170K/yr on avaerage. With her profession and willingness to live frugally, it is very doable. Considering the years in which she was investing(2009-2015), she was probably underestimating the amount of her investment returns. She probably didn't even save $1.2M of her own money to reach $2M.

 

[bclover]

The average college grad does not get $200K right out of college. This person was a Harvard grad who went into one of the highest paying jobs in the highest paying city. Her job should have paid her $100-150K her first year out of school and as much as $350K/yr by the time she was a third year analyst. She estimates 60% of her $2M came from savings(the rest from investment returns) so she only had to save $1.2M or around $170K/yr on avaerage. With her profession and willingness to live frugally, it is very doable. Considering the years in which she was investing(2009-2015), she was probably underestimating the amount of her investment returns. She probably didn't even save $1.2M of her own money to reach $2M.

Definitely but I think that's my point living off a 100k while saving 170 is very doable BUT a world away from the typical college grad. My niece is a teacher, makes about 45k. So yeah write an article about the 28 year old teacher who lived off of 17k a year in NYC. THAT'S the kid who'd impress me.

 

[mystang52]

I agree with others that there's quite a few information gaps here. Kudos to her for amassing that nest egg, and living frugally. But with a full-time working husband (not knowing his salary), it's much more comforting to "retire." She also mentioned she is not averse to returning to work at the right job; I think this is a significant comment and implies she is actually on some sort of sabbatical vs actual retirement.

 

[aaronc879]

I agree with others that there's quite a few information gaps here. Kudos to her for amassing that nest egg, and living frugally. But with a full-time working husband (not knowing his salary), it's much more comforting to "retire." She also mentioned she is not averse to returning to work at the right job; I think this is a significant comment and implies she is actually on some sort of sabbatical vs actual retirement.

Seems to me she simply quite working full time and now is self employed as a writer. Call it a career change or semi-retired. She must be spending at least 8-10 hours a week on writing the blog.

 

[athena53]

If you've ever read "Bonfire of the Vanities", which describes how most investment bankers live (spend it all, including the bonus you USUALLY get except they can take it away in bad years), she's done an admirable job of LBYM. I'd be shaky about a $2 million nest egg at age 28 in a very HCOL area, but if her husband is still working they don't have to depend on that alone.

ETA: in the first sentence, "her and her husband and dog share..."should be "she and her husband and dog share...". Ack! Don't they have editors anymore?

 

[harley]

ETA: in the first sentence, "her and her husband and dog share..."should be "she and her husband and dog share...". Ack! Don't they have editors anymore?

I think that should be "don't they teach English anymore?" DW likes to watch those Ghost Hunter-type shows, and almost without fail every one of them uses "Joe and myself did this or that." Drives me nuts! One of my old teachers told me the easy way to figure out the right usage is to try it singularly instead of plural. So it's easy to see that no one would say "myself went upstairs." I can understand it once or twice, but every single show in the entire genre? Aargh!

 

[bclover]

I have to confess the language arts were my weakness. Through college and grad school, writing did me in. I still can't remember when to use affect or effects
I usually ended up paying someone to help me with papers

 

[ponyboy]

Just another fluff article by forbes. Absolutely no details how she made her money. For nyc those expenses are really low. Im not buying it.

 

[Big_Hitter]

FERB

 

[Bestwifeever]

I take anonymous subjects with a little bigger grain of salt.

 

[bigcmagor]

I used to subscribe to Forbes. That is until one issue a few years ago had two articles that made me reconsider. One was on the "somewhat rich" at $40mm net worth and the other was on a couple graduating from college with $1.6mm in net worth, wondering how to invest. I told them by letter that the issue made me realize as a mere millionaire, they were catering to people out of my league and to cancel my subscription.

 

[daylatedollarshort]

Anyone else here FIRE'd in a high cost of living city? Curious how you keep costs down.

The main difference in cost of living between areas in the U.S. is often in housing costs. So if you have a paid off house or rent controlled apartment I think sometimes other expenses may often be cheaper if you to live in a walkable urban area with lots of discount stores, public transportation and many free and cheap events. Our library has free passes to 50 or so cultural attractions, most of the museums and gardens all have free days and nights, the parks in our county alone have 50 or so classes, hikes or events every week so if you like those kind of things to do life can be relatively inexpensive. And in rich areas the upscale thrift shops often have really nice goods.

 

[harley]

FERB

Failure Evaluation Review Board?

 

[Big_Hitter]

Failure Evaluation Review Board?

Fake Early Retirement Blogger

 

[MooreBonds]

Aside from that, if she amassed 60% of her $2.25M nest egg by saving for 7 years, that's $193K/year in savings. Good for her for getting a job that pays over $200K/year straight out of college, but that's not something most new grads can count on. She had a fairly unique opportunity to amass a lot of money in a short amount of time and was able to turn it to her advantage.

Quoting from the article:

JP ... graduated Harvard in 2009...For JP’s first couple years of working at the investment firm, she focused on cutting her expenses so she could save the bulk of what she brought in. She lived off $24k

JP’s first job out of college was actually serving as a horse-trekking assistant to nomads in Mongolia. After that, she came back to the U.S. with plans to start her own business.

I had my first million by the time I was 26.

Let's say she saved 85% of that "first million" - which means $150k in growth as she saved up to $850k.

It doesn't say she was a child prodigy that graduated from Harvard at age 18, so let's assume she was 22 when she graduated. She apparently had no student loans.

And it says she went overseas to work in Mongolia, for an unspecified length of time. Assume 6 months? So she was late 22/early 23 when she somehow landed this amazing IB job in 2010 with just a bachelors degree.

Then she says she amassed her first million by age 26. So she saved up, say, $850k from early 23 to age 26. In 3 years or less. Or about $283k/year in savings, on average.

It says she allowed herself to spend 24k/year. Add in her savings of $283k, and that is $307k/year net after-taxes. Which means working in Manhattan, she was earning, what, maybe close to $500k/year for 3 years (before taxes). All this as a new graduate with just a bachelors, after working in Mongolia for 6 months straight out of college, just as the country is coming out of the worst recession since the Great Depression, competing against her peers, who were slightly older, and had far more experience (and MBAs from top-tier business schools) and were laid off by the droves from Lehman and other downsizing moves.

Doesn't quite pass the smell test to me. Unless she conveniently leaves out that maybe her husband contributed $200k/year in savings? But she clearly says that she saved up her first million by 26.

Forgive me if my BS meter flares up just a little bit....

ETA: Also curious with these notes:

She spent one of her summers at a Buddhist monastery in Taiwan. When JP reflects on her time there, you can see how she started to find a minimalist lifestyle appealing, and why she doesn’t equate spending to happiness.

Well, someone obviously wasn't working their summers to pay for college. Sounds like mummy and daddy gave her one heck of an advantage starting out. Not only did she make nothing, but even just flying over there is several grand round trip.

Of course, then there's this seemingly paradoxical statement:

When I was 12, my dad gave me a copy of Rich Dad, Poor Dad. It ignited my interest in money management (I consider investing just one part of money management),” says JP. “It made me want to start my own business. I also got really interested in real estate investing and would sit at Barnes & Noble reading through everything I could get my hands on.

So let me get this straight: at age 12, you were very into money management...made you want to start your own business that continued even after you returned from herding goats or whatever the hell it was in Mongolia after graduation. You even "got really interested" and "sat at B&N reading everything you could get your hands on" regarding real estate investing....but then, during her summers (studying business at Harvard, mind you), she went off to a Buddhist monastery, and other untold adventures.

Do you see someone who is so hyped up about money management, and starting their own business, and sitting at B&N reading everything they can get their hands on for investing, to then spend a summer (possibly more) doing this, and then spending their first job after college herding livestock in Mongolia

Sorry....while her story is mathematically feasible, definitely doesn't add up, or fit what she claims.

 

[ls99]

Can't decide if the clickbait is for Fobes or her blog.