I guess as I have been approaching early middle age, I have gone through various what-if's concerning financial and career decisions I have made earlier in life. It seems that if someone can claim a wage average of about $50K/yr for 22 years between the ages of 23 and 45, he should have no problem being able to retire early, especially now that there will no longer be an issue with health care (i.e., the new law that goes fully into effect in 2014.)
Someone making $50K/yr would be able to sock away 15% into his 401K, plus typically an employer match of 5%, so there would be $10K/yr invested right off the bat. Then, he can sock away another $5K/yr in a Roth. Over a 22 year period of equal yearly contributions, presuming a return of 8%, the total grows to about 55 times that yearly contribution, which would mean about $550K in the 401K and $275K in the Roth. Then when he becomes obsolescent labor, he would be able to keep his standard of living without resorting to bankruptcy, etc. (and with the beauty of bankruptcy laws, even if he were to file bankruptcy, the 401K & IRA would be exempt from liquidation.)
That my friends is FIRE! Of course, a conscious decision would need to be made to forgo buying the McMansion, SUV, high maintenance spouse, etc. instead of socking it away.
And another thing going forward is that as the labor value of the American worker is tending toward that of China & India, it would behoove a person to be forward thinking enough to have a family nest egg so that his progeny would not need to be subject to a brutish existence, but could live decently on the proceeds of the nest egg; all that would need to be passed down is thrift and the knowledge of Einstein's personal wonder of the world - the power of compounding!
Someone making $50K/yr would be able to sock away 15% into his 401K, plus typically an employer match of 5%, so there would be $10K/yr invested right off the bat. Then, he can sock away another $5K/yr in a Roth. Over a 22 year period of equal yearly contributions, presuming a return of 8%, the total grows to about 55 times that yearly contribution, which would mean about $550K in the 401K and $275K in the Roth. Then when he becomes obsolescent labor, he would be able to keep his standard of living without resorting to bankruptcy, etc. (and with the beauty of bankruptcy laws, even if he were to file bankruptcy, the 401K & IRA would be exempt from liquidation.)
That my friends is FIRE! Of course, a conscious decision would need to be made to forgo buying the McMansion, SUV, high maintenance spouse, etc. instead of socking it away.
And another thing going forward is that as the labor value of the American worker is tending toward that of China & India, it would behoove a person to be forward thinking enough to have a family nest egg so that his progeny would not need to be subject to a brutish existence, but could live decently on the proceeds of the nest egg; all that would need to be passed down is thrift and the knowledge of Einstein's personal wonder of the world - the power of compounding!