20 years working is all you need

[BearlyWorking]

I agree that marriage can affect FIRE either way. I think that kids definitely slow things down, but do not make it impossible to do in 20 years. I seem to remember some surveys that reported couples without kids were financially wealthier than those with kids. I figure my kids put RE back about 5 years (but worth it!).

Also - I like the stories from people who have/are doing FIRE without taking large risks. It makes me more confidence that my 'blanket' statement might be closer to truth than I thought.

My new motto: 20 and Out!

 

[Jay_Gatsby]

I agree that marriage can affect FIRE either way.  I think that kids definitely slow things down, but do not make it impossible to do in 20 years.  I seem to remember some surveys that reported couples without kids were financially wealthier than those with kids.  I figure my kids put RE back about 5 years (but worth it!).

Also - I like the stories from people who have/are doing FIRE without taking large risks.  It makes me more confidence that my 'blanket' statement might be closer to truth than I thought.

My new motto: 20 and Out! 

I think it would be great to FIRE at 41 or so (i.e. 20 years after graduating college at 21). You would still have some youth left to go on crazy adventures (on the cheap, of course) and won't be worried about your retirement. Plus, if you have the right background, you can always go back to work after taking a few years off to satisfy your wanderlust.

Unfortunately, doing so isn't the fate of most people, or even most people on this board. The kind of sacrifices required to make FIRE in 20 years are more than 99% of us are willing to make.

 

[retire@40]

I think it would be great to FIRE at 41 or so (i.e. 20 years after graduating college at 21).  You would still have some youth left to go on crazy adventures (on the cheap, of course) and won't be worried about your retirement.  Plus, if you have the right background, you can always go back to work after taking a few years off to satisfy your wanderlust.

Unfortunately, doing so isn't the fate of most people, or even most people on this board.  The kind of sacrifices required to make FIRE in 20 years are more than 99% of us are willing to make.

If $1 mil is enough on which to retire, then it takes about $2K savings a month for 20 years, assuming a 7% return.

If people can only save $1K a month, then the next best thing would be to semi-retire.

If you can't save $1K a month, you may be doing something wrong, unless you have a large family or are sick.

 

[Jay_Gatsby]

If $1 mil is enough on which to retire, then it takes about $2K savings a month for 20 years, assuming a 7% return.

If people can only save $1K a month, then the next best thing would be to semi-retire.

If you can't save $1K a month, you may be doing something wrong, unless you have a large family or are sick.

I think it would be difficult for a fresh out of college 21-year old to save $2k a month on a starting salary of $25k-30k. This is why it would likely take more than 20 years to FIRE, even if a person started at 21 years old. With that said, I think it would be a safe assumption that a 21-year old could save at least enough in a 401(k) account to get an employer match, along with a $4k Roth IRA contribution. The problem is that neither of those accounts will be available for withdrawal for another 40 years. Mind you, the amounts deposited in such accounts will grow like crazy in the intervening period, but that's cold comfort to someone looking to FIRE in 20 years.

 

[SteveR]

If $1 mil is enough on which to retire, then it takes about $2K savings a month for 20 years, assuming a 7% return.

If people can only save $1K a month, then the next best thing would be to semi-retire.

If you can't save $1K a month, you may be doing something wrong, unless you have a large family or are sick.

I didn't even make $2k a month until I was almost 30.

 

[BearlyWorking]

Why not start work around 30-35 then retire at 50-55? You get a decade to goof off and take advantage of better early retirement deals that happen in your 50's.

 

[Martha]

I

If you can't save $1K a month, you may be doing something wrong, unless you have a large family or are sick.

Or make what a good portion of the population makes.

 

[retire@40]

I think it would be difficult for a fresh out of college 21-year old to save $2k a month on a starting salary of $25k-30k.  This is why it would likely take more than 20 years to FIRE, even if a person started at 21 years old.  With that said, I think it would be a safe assumption that a 21-year old could save at least enough in a 401(k) account to get an employer match, along with a $4k Roth IRA contribution.  The problem is that neither of those accounts will be available for withdrawal for another 40 years.  Mind you, the amounts deposited in such accounts will grow like crazy in the intervening period, but that's cold comfort to someone looking to FIRE in 20 years.

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.

 

[retire@40]

I didn't even make $2k a month until I was almost 30.   

Then you were not thinking ER when you stayed at the job making under $2K a month or at least didn't make ER a priority.

I also was making under $2K a month at my first job out of college, but after a few months, I knew it wasn't going to get me where I wanted to be, so I quit and did something where I could earn more money.

 

[retire@40]

Why not start work around 30-35 then retire at 50-55?  You get a decade to goof off and take advantage of better early retirement deals that happen in your 50's.

One word: COMPOUNDING

 

[retire@40]

Or make what a good portion of the population makes. 

The problem isn't what the general population makes, it's what the general population spends.

 

[BearlyWorking]

One word: COMPOUNDING

Good point, although I bet that I had more fun than you did in that decade!

 

[retire@40]

Good point, although I bet that I had more fun than you did in that decade!

I guess it depends on your definition of fun.

If it's goofing around like you say, then maybe you did have more fun.

I traveled within the USA, Europe, Canada, went on cruises to the Caribbean, fell in love, got married, had a kid, and started a successful business during my 20s and still managed to save some money, so my decade wasn't too shabby and I certainly don't have any regrets.

 

[BearlyWorking]

Sounds like you had a great time and made some great memories. I know I sure did during that decade. I never started a business, it always seemed like too much work. This discussion makes me want to do my 20's all over again. Be harder this time, I would probably have to cut down on some of the mountain and rock climbing, but I bet I could do the rest of it.

Bear

 

[BabyApe]

xx

 

[Jay_Gatsby]

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.

 

[retire@40]

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.

 

[Jay_Gatsby]

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.

 

[unclemick]

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.

heh heh heh heh

 

[retire@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.

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.

 

[Martha]

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.

 

[WRBT]

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.

 

[TomSimpsonAZ]

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

 

[BearlyWorking]

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.

 

[Jarhead*]

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.