20 years working is all you need

[BearlyWorking]

I was reading the average joe thread and it got me wondering about how long it should take until you can RE. Now anyone can FIRE if they make 200k per year, but I am thinking about the rest of us. Those that make a median salary in a median cost of living location. My thinking is that by starting with a good plan, in average market conditions it should not take anymore that 20 years to FIRE. Maybe even less. Average joes may not have 2 million in savings, but they can still have a still have a high quality retirement life.

Bear

 

[tryan]

in average market conditions it should not take anymore that 20 years to FIRE.

That's what it took me (20 years 10 months). No big salary either ... started at 27k ended at 107k; pretty much slow linear growth.

I think it's more a function of risk - taken EARLY in the portfolio. For us it was leveraged real estate; but it could be anything (owning a pizza shop or dot com stock ...). The important thing is to take the risk while you have nothing to loose. It'll get a lot harder to "jump" later in life.

 

[maddythebeagle]

Those that make a median salary in a median cost of living location.

good thread. I think 15-20 years is reasonable if you can keep your costs down and invest wisely and start early. Mileage varies as with everything

 

[Gone4Good]

From another thread . . . For a 20 year old if we assume 3% inflation, 4% spending growth, 5% wage growth, and 8% market returns an initial savings rate of 15% of income will result in a 4% SWR situation by his/her 55th birthday.

Mathematically it is possible, but very difficult, to achieve in 20 years (well done tryan).  Either you need to experience above average wage growth (tryan's 7% CAGR is probably above average, but not too much so), have extraordinary market returns (also true over the past 20 years) or be an exceptional saver.  Most likely you need some combination of all three.  Certainly not impossible, but not easy either.

The good news is that for most people it is entirely achievable over a 30 year (+/-) time horizon.  

 

[brewer12345]

Depending on how things shake out, it looks an awful lot like I will be done after 15 to 20 years, so that definately jibes with my experience. I have had far above average wage growth and a fair bit of portfolio risk, especially in the early years.

 

[retire@40]

Even less than 20 years if you plan on semi-retiring. More like 10 to 15 years.

 

[Arif]

Even less than 20 years if you plan on semi-retiring. More like 10 to 15 years.

Yep, I semi-retired in 10 years and that was including surviving a business that went belly up.

 

[BearlyWorking]

It will be 20 years next August and I can RE anytime after. I started at 21k and have not yet broken 100k in annual salary. I only worked part time for 5 years and I am not a good saver either. I did it with real estate and luck.

Tyran - I agree about taking risk early. Nothing to loose and plenty of time to recover if it goes south.

Bear

 

[Repairmanjack]

I did it in 25 years by stupidly investing a lot in company stock. I made a lot of other mistakes out of ignorance, too. Took out a 30 year mortgage when I should have taken out a 15. But the house has greatly appreciated. It's worth $650,000 now. I think luck and/or just putting that money in investments at a young age. I started investing when I was 23.

My starting salary in 1975 was $14,000. My ending salary in 2000 was $80,000. No pension.

 

[Skylark]

Plan ahead, work the plan
Aggressively seek better wages
Live frugally
Invest correctly
Stay the course
Continue to live frugally in retirement

After you do your savings time of about 20 years, the decision to ER will be one of "how much do I want/need to retire on", rather than "how many years did it take me to retire?".

 

[tryan]

4% spending growth, 5% wage growth,

Spending - nearly - what you make is always a FIRE killer. I banked my first 5 or 6 years raises (maxing out the 401k then via a company stock purchase plan) then it was auto-pilot.

You never miss what you never had.

 

[Lusitan]

I've set a target of 10 years from now, which would put me at 19 years working before FIRE. But I could deal with 20 if it works out that way.

In my case, the biggest factors have been (1) earning a good income and (2) LBYM.

I haven't taken any big risks - no leveraged real estate (other than a modest home), no entrepreneurial endeavors, etc. One thought that comes to mind is a theme from the book Earn More, Sleep Better, that if you start saving enough, early enough, and allocate your investments wisely, you don't need to take on too much risk in order to be successful at reaching your savings goals.

Just another way of looking at it for those who don't relish the idea of taking a big financial risk when you're just starting out.

I have worked hard to keep the means up, and always strive to keep the cost of living down, ala LBYM.

 

[SteveR]

I've set a target of 10 years from now, which would put me at 19 years working before FIRE. But I could deal with 20 if it works out that way.

In my case, the biggest factors have been (1) earning a good income and (2) LBYM.

I haven't taken any big risks - no leveraged real estate (other than a modest home), no entrepreneurial endeavors, etc. One thought that comes to mind is a theme from the book Earn More, Sleep Better, that if you start saving enough, early enough, and allocate your investments wisely, you don't need to take on too much risk in order to be successful at reaching your savings goals.

Just another way of looking at it for those who don't relish the idea of taking a big financial risk when you're just starting out.

I have worked hard to keep the means up, and always strive to keep the cost of living down, ala LBYM.

One does not need a massive 6 figure income (but it helps) or lots of RE wheeler-deals (but it helps) or several "hot" stocks where you bought low and sold high (but it helps).

In my case, I managed to move my net worth from a serious negative number to a low 7 fingure one in about 15 years. I did it by saving a big chunk of my salary; having a working wife who would save a respectable chunk of her salary, making a mixture of investment choices; some good some not so good and by moving up in housing over many years. I lost it all a couple of times but managed to climb back on the horse and am essentially FI now but choose to continue to work a couple more years (or not) until DW retires. We both make a decent salary for our respective jobs but neither are all that high. We don't own a business, don't dabble in RE and have a pretty conservative (now) portfolio. Our spending is higher than I would like but with a kid in college, house remodeling, cabin remodeling, some personal family loans, and just plain over spending we still manage to sock away the max on each of our 401(k)s and some after tax too.

FI in 20 years on a modest to average wage with no other major income sources?...Yes you can.

 

[Texas Proud]

I have a problem with a blanket statement like this... there are some who want to have a big family and kids cost a lot... others like a medium lifestyle and it will take longer... some, well, they do not care and can do it...

I was watching 60 Minutes last night and they had a segment about Bode Miller. He is one of the best skiers today. His parents are (were) hippies and when he was young they made almost nothing... the news guy asked.. was there one year when your parents made $600. Bode's answer was, yes, if you put it in todays dollars!!! So, if you REALLY want to live cheap... you can do so on less than $600....

 

[Jay_Gatsby]

It seems like it's doable if you're married. If you're not married, it's more likely going to take you 25 years to FIRE.

 

[brewer12345]

It seems like it's doable if you're married.  If you're not married, it's more likely going to take you 25 years to FIRE.

I beg to differ. If I were single, I would be FIREd today. As it is, I can see 5 to 10 more yearrs working.

 

[Jay_Gatsby]

I beg to differ.  If I were single, I would be FIREd today.  As it is, I can see 5 to 10 more yearrs working.

Are you factoring kids or a spendthrift spouse into the marriage equation? Both will definitely delay FIRE by a few years.

 

[brewer12345]

Are you factoring kids or a spendthrift spouse into the marriage equation?  Both will definitely delay FIRE by a few years.

Kids, yes. Spendthrift spouse, no. However, if I weren't married, I might choose a very different lifestyle than the suburban colonial on a cul-de-sac complete with minivan and station wagon.

 

[Lusitan]

Yeah I'd consider marriage a wash in terms of its affect on FIRE.

There are some aspects of marriage that will put upward pressure on the cost of living.

For example, sharing a home with roommates is no longer a realistic option given the dynamics of the relationship. And for us guys, you might think twice about living in lower-cost fringe neighborhoods out of concern for the safety of your partner (there are some crime risks that are higher for females, obviously). Just two thoughts that came to mind from my own life changes after getting married.

But there are savings as well. Besides the obvious "buy in bulk" savings you can obtain, married couples have less pressure to go out and spend money socially (in the time-honored search for ... well, you know ... a mate ) and by dividing the household labor we end up saving money (e.g. no more paying for oil changes for her, no more paying for lunches for me).

Marriage is therefore probably a non-factor in FIRE. Having kids, well, I don't have any yet but I'd venture to say that would increase the length of time it would take to reach FIRE ...

 

[Jay_Gatsby]

Kids, yes.  Spendthrift spouse, no.  However, if I weren't married, I might choose a very different lifestyle than the suburban colonial on a cul-de-sac complete with minivan and station wagon.

As I think any guy would under those circumstances. But, marriage and kids are things (experiences?) many men and women want (or think they want). I assume that once you have kids, FIRE is probably put on the mental back burner.

 

[justin]

I assume that once you have kids, FIRE is probably put on the mental back burner.

Bad assumption! Dropping the kid off at Grandma's house for daycare every morning and picking her up after dark every night makes me want to FIRE even more. We only get to see our little one for a few hours a night during the week.

 

[SteveR]

Are you factoring kids or a spendthrift spouse into the marriage equation?  Both will definitely delay FIRE by a few years.

You got that one right!!!

I could have been ER by now if not for the 15 years of high debt and no savings.

You don't have to be single; you just need a cooperative marrige partner and a goal you both believe in. My second marriage was just that way. It made all the difference in the world. Kids are really only a small factor unless you spoil them with cars, expensive toys, and fund a Harvard education.

It all comes down to what you want to do in life and how much you want it.

 

[brewer12345]

As I think any guy would under those circumstances.  But, marriage and kids are things (experiences?) many men and women want (or think they want).  I assume that once you have kids, FIRE is probably put on the mental back burner.

I never said that I was unhappy about the trade-off; quite the contrary. However, it is unlikely that marriage is a big boost to the ability to fire unless we are talking about a very frugal DINK couple.

Kids make me want to retire even more.

 

[Mountain_Mike]

I think marriage can definitely be a factor in the ER equation. If two people are totally committed to FIRE, it can be done much earlier...but if one is committed and the other is not, it can have the reverse affect.

In my own case, it is kind of neutral but leaning against FIRE. Since we make plenty, DW spends pretty freely. We save quite a bit, but we could save much more. Kids are also pretty much of a bottomless pit where money is concerned.

If I were single, I'd RE today (on about $40K per year) but as it is, I'll work a few more years.

 

[bongo2]

You may need to add "limit children" to Skylark's list (0-1 seems to be a popular range here). Or maybe that's under "live frugally." I don't follow that advice myself, BTW. Like Brewer, if I was on my own I wouldn't need my job today, but as it stands I'll be there for a good while.