The post title is the headline in the NYT, and I'm pleased to see that it does talk about the book:
One of the bibles of the FIRE movement, “Your Money or Your Life,” which teaches readers to reduce their spending and value time (or “life energy”) over material gain, was published in 1992.Millennials are more rational? That would make sense, given the depth of the bullshit that came from us Baby Boomers. I'm 67 and retired now, and I still think of what I'm doing in terms of (my own version of) hippiedom and revolution (even as I freely concede that's a lot of bullshit).
But Vicki Robin, who wrote that financial guide with Joe Dominguez, said the FIRE crowd is a different breed of dropout than those in the ’90s. “Our aim was not just to have a whole bunch of people quit their jobs,” Ms. Robin said. “Our aim was to lower consumption to save the planet. We attracted longtime simple-living people, religious people, environmentalists.”
The FIRE adherents are, by contrast, “very numbers oriented, fascinated by the minutiae of taxes and accounting,” Ms. Robin said.
[M]uch of the conversation around FIRE, on Reddit message boards or blogs like Mr. Money Mustache, revolves around hacking one’s finances: strategies for increasing your savings rate to the hallowed 70 percent, tips for cheap travel through airline rewards cards...Here's a tip: Don't travel.
... ways to save nickels and dimes at the grocery store."Your Money or Your Life" had the idea of becoming independent from paid work so you could pursue causes or art — some work that wouldn't pay a living. That made the book less hippie. The hippie idea that I think is still meaningful — and that I hear from Jensen — is freedom. Reclaim your time. Don't sell it so you can buy things. If you radically rethink what you need and what you want, you may want a lot more of your time and not very much more stuff.
Some practice “lean FIRE” (extreme frugality), others “fat FIRE” (maintaining a more typical standard of living while saving and investing), and still others “barista FIRE” (working part-time at Starbucks after retiring, for the company’s health insurance). To be “firing” is to slash one’s expenses to maximize saving while amassing income-generating investments sufficient to support oneself. To have “fired” is to have achieved that goal.
“A lot of people think you’re a new-age hippie,” said Mr. Jensen, who sold his four-bedroom, four-bathroom house, downsized to a more modest home and maxed-out retirement accounts while firing. “They can’t even wrap their minds around it.”... “People always assume there’s an external circumstance: ‘Oh, you must have received an inheritance,’” Mr. Jensen said. “We’ve just chosen to live far below our means. That itself is a radical idea.”...
[Taylor] Rieckens, who works in recruiting, was initially reluctant to give up her BMW and beachy life and the prestige that went with it, until she saw a retirement calculator that showed they could retire in 10 years if they adopted FIRE and moved, or when they are 90 if they continued their upscale lifestyle in Coronado....Notice how the NYT promotes real estate transactions but mutes and almost erases the option of giving up the dream of travel.
“The whole retire early thing is unimportant to me. It’s more about gaining control of your time,” [Scott] Rieckens said. “If you dive into the definition of retirement, what you’re retiring from is mandatory labor. It’s not necessarily about piña coladas on the beach.”
A lot of these FIRE people — or at least the ones the NYT found — seem to be using their free time to blog — to blog about FIRE. Well, I'm all for blogging, but why, upon escaping bondage to working for money, are you blogging about your money?!
The article ends with the story of Jason Long, who retired at 38:
... lost all interest in talk of FIRE now that he had achieved it, feared a looming stock market crash, had nightmares that “I’m back at work and arguing with morons,” finished a marathon in a personal best sub-three hours, felt moments of social isolation, took a two-week road trip across the heartland...Yeah, that's the right kind of travel.
... and went twice to the beach in Florida with his wife and watched their net reach its highest point, despite not working, which he attributed to “the passage of the tax cut for wealthy job creators like myself.”The link to the blog doesn't work right now, presumably because of all the NYT clickers, but I hope it's not a blog about his finances!
Oh, and he started a blog....
He had been watching the movies from They Shoot Pictures, Don’t They? a website that ranks what it calls the 1,000 greatest films. He’d watched 600 or so....I hope it's a blog about movies. But I'm just showing my interests. I have never been interested in finance. If FIRE is about watching the stock market, it's just another bad job. I am interested in frugality, however. Here's another old book, one that's not mentioned in the NYT article... "The Tightwad Gazette." I read those "Tightwad Gazette" books when they came out. I read them for sheer entertainment and also for inspiration. It's so obvious that not spending money is more effective than making more money.
Perhaps this — mentioned in the NYT article — is the modern equivalent, "Meet the Frugalwoods: Achieving Financial Independence Through Simple Living." But don't buy that book. You can read their blog.
पोस्ट्स
१५४ टिप्पण्या:
Cheap people are usually calculating selfish people. But it remains better to give than to recieve.
The one thing that is never mentioned is that people who retire that early will not have many years of retirement credits for Social Security purposes, which will deny them a potential lifeboat at retirement if their accumulated savings/investments are petering out.
There are many who believe Social Security won't be around any way.
Today's theme is obnoxious spoiled rotten brats?
We liked Amy Dacyscyn's "The Complete Tightwad Gazette." It came out as a newsletter in the '90s, then compiled into a book that's still in print.
She taught us not only the many ways to save money, but to distinguish between needs and wants. She was not against splurging, but to splurg on things that please you.
We "retired" when I was 53, with a paid-up house, and I'm writing the books I want to write and sell.
As to travel, I do not subscribe to the "have to see it all" theory that many people have and laugh at people and their grandiose bucket lists.
Yet another shiny repackaging of the bleeding obvious.
"The one thing that is never mentioned is that people who retire that early will not have many years of retirement credits for Social Security purposes, which will deny them a potential lifeboat at retirement if their accumulated savings/investments are petering out. There are many who believe Social Security won't be around any way."
Maybe the people who were so hot to announce SS won't be around for the millennials should have been more careful. They've removed a mental barrier to dropping out. If the future is bad, live for today. Sha la la la la la...
I like to work.
I know I couldn’t compose multiple posts on a blog. Now that’s TOO much work
"Some practice “lean FIRE” (extreme frugality), others “fat FIRE” (maintaining a more typical standard of living while saving and investing)..."
The fat is in the fire: A course of action with inevitable bad consequences has begun; there's trouble ahead. For example, Now the fat's in the fire—the boss arrived early and will see we haven't even started work. This expression, with its allusion to fat dropping into a fire and causing a burst of flames, was already a proverb in John Heywood's 1546 collection.
Americans spend to much. Private debt is a huge problem that will bite us in the ass in the long run. Watching your money, saving up to buy something instead of buying on credit now, investing for the long run, and making sure that you have a safety net against any misfortune are all proper behaviors for adults.
That said, there's a point where extreme frugality becomes something... sinful. Avarice, pride, gluttony, I'm not sure which best applies, but something does. It also seems like a lot of the people pushing this went from high-paying upper-middle class white people jobs. They could afford to do what was necessary to retire in their late thirties/early forties, and I suspect that bragging rights among their peers played an unspoken influence in their decision.
Loved the Tightwad Gazette; read everything available by Amy. Also liked Your Money or Your Life. I made life-long internet friends from frequenting an old AOL Message Board started by by people interested in being frugal, it was called the Tightwads but was not about being miserly and ungenerous, it was about maximizing your money in everyday life decisions. I could have done a lot better at being frugal---but I took the lessons to heart and could have done a lot worse. For us, the key has been to have money saved out of paychecks before we even see it. Yes, we should be disciplined enough to have a completely planned, mindful budget, but that's not been our style so I went with what worked for us consistently: savings deducted from paychecks for retirement, and minimizing debt. We've got a mortgage and no other debt, and I made the tough call to refinance our mortgage 7 years ago for 15 years (instead of 30)at a fantastic interest rate, and also to have it deducted bi-weekly to coincide with husband's paydays. That's more "enforced" savings, which is again what works for us. I know that if we'd gone with a 30 year mortgage, the extra money in the checking account would somehow drain away every month with nothing in particular to show for it. Same with the aggressive retirement savings through payroll deductions.
Obamacare doesn't care if your income is from dividends or wages, the subsidy is the same.
The reason the standard of living is high is specialization and trade. To be able to specialize takes a large market and property rights.
Keep both of those working and people are free to decide how and when to spend their surplus earnings.
technique for retiring early with a MILLION Dollars
A) get a million dollars
This is an obsession at Mr Money Moustache and somewhat at Bogleheads. Typical is a physician who puts in all those years, decides he hates practice and is talking about getting out at 33. Sheesh.
Anyway, I managed to do what I want, or at least try, before I retired. In my 50s I was sure there was so much to do and that work was just interfering, but now not so much. The day I looked forward to is here. I miss...something, not sure what.
It seems like one could choose better work in the first place, but that takes planning and intuition. Or does everyone get burned out, even rock stars and super scientists?
Early retirement tip: Don't have kids.
tcrosse said...
Early retirement tip: Don't have kids.
LOL. That's what my brother did. Mr. Money Mustache has one kid, who was born after he retired.
"We liked Amy Dacyscyn's "The Complete Tightwad Gazette." It came out as a newsletter in the '90s, then compiled into a book that's still in print. She taught us not only the many ways to save money, but to distinguish between needs and wants. She was not against splurging, but to splurg on things that please you."
What I liked, and what I wish I had seen in the early 1970s, is the idea that she and her husband put first the thing they wanted most: a big house, with lots of kids, and a stay-at-home parent. She made it believable that you can do that if you put it first and arrange everything else around that. Most people think they have to just work more and more and get more and more money, but if they do that, they can't have the thing that if they'd thought it through early, they'd have put first.
40 years of max social security is a plus, if you want insurance against outliving your income. Then start taking it out at 70 1/2.
There are two ways to die and be judged successful: have a million dollars or owe a million dollars.
There are two ways to die and be judged successful: have a million dollars or owe a million dollars.
When I die I want my funeral packed full of people who are saddened by my death because a) they didn't get the chance to kill me first or b) they'll never get repaid.
Also, strippers and a motorcycle stunt. But that's for another blog post.
"There are many who believe Social Security won't be around any way."
It will be there if we want it to be there, to the extent that we block any in Washington who try to dismantle it.
If we can squander trillions of dollars on war and the machineries of war, we have money that can be applied to Social Security.
All government programs and expenditures are choices, and Social Security will live or die by the choices we allow our purported representatives to make. Social Security will not just die, but will only be murdered.
"...revolves around hacking one’s finances..."
That word, "hacking". It used to mean something. Now it just means "generic action verb". (Also serves as an indicator that the writer/speaker is an idiot.)
The problem with this attitude is selfishness.
It assumes a goal of personal liberty.
But that is a personal goal.
But we are, each of us, nothing, and our purpose cannot be personal.
We are communal creatures born with duties.
There is to begin with the duty of family, and a duty to provide them a legacy.
Early retirement tip: Don't have kids.
last year (when i was 55) people asked how i could be retiring, i said
i don't have kids
i don't have college loans
i don't have a mortgage (own my house)
i don't have any debt
and Then people asked: Why are you still working?
Other 'financial planners' would talk about How Important it would be for me to make sure that i'd be able to have plenty of money in my estate for my heirs; What heirs?
I saved my ass off with the goal of retiring by 50, but when I reached 50 I was so wrapped up in my work I’m not sure if, left to my own devices, I would have ever retired. Then, at 54, I got a cancer diagnosis, looked at my finances and said, “Retire, idiot!” I did spend two more years winding down my obligations, but as it turns out that diagnosis may have done me a favor. My advice is save your ass off if you can, because options are always a good thing.
Mr Cook -
Over the past two centuries, if we hadn't spent "trillions of dollars on war and the machineries of war" we wouldn't have a country that provides social security.
AA--
I'll bet a lot of these folks are talking the talk, not walking the walk. You're right to question how travel figures into this. How many of these FIREed up people are simply replacing conspicuous consumption of goods with with conspicuous consumption of travel? And sometimes forgoing investments in necessities (like a home) in favor of racking up Instagram posts from Angkor Wat?
I read ‘Your Money or Your Life” in the bookstore. I wasn’t going to pay for it!
Move out of high cost areas like NYC.
After four decades of business travel, I’ve had enough (although I probably still have another decade or so to go). Not that I want to stay home, I just want to limit my travel to where I can get by car and do things I’m interested in.
I'm unretired. I retired from the union and got bored. I drove the wife crazy being home all the time.
So I bought myself a little backhoe and now I work when I want, where I want.
That usually means about 1 month of traveling, 1 month working around the house and 1 month working.
It's a good balance.
Maybe the people who were so hot to announce SS won't be around for the millennials should have been more careful. They've removed a mental barrier to dropping out. If the future is bad, live for today. Sha la la la la la...
What about the 1983? Tax reform?
We still aren’t expecting full payment.
we love the Money Mustache blog. They retired to spend time with their child.
They both kept working. Mr. Mustache with houses and Mrs. selling houses. But had the $$ to make choices of when & how much to work.
Pack away as much money as possible, retire at 38, then spend the next 50 (probably closer to 60 since we're talking about Millennials) years with nothing to do; cause doing things cost money and your funds are limited. Hoping and praying* the whole time that nothing upsets the economic apple cart. Yeah, that sounds like a plan!
*I know....
necessities (like a home)
Maybe they feel that’s not a necessity. No responsibility.
Early retirement tip 2: Don't get sick.
How is a cool million enough to retire on at 38 years old?
FTR: The best money that I ever spent was on tuition at a top private school, college, and graduate school for my children. The best minds still need a challenge and an environment of intelligent people around them. They are a magnificent return on my investment...and their children are even better, if that is possible.
Via Drudge:
Don’t go to the South of France:
Richard Hammond and his wife were gassed and robbed in holiday villa in France
I don't see any mention of children in this entire piece. Are they considered an encumbrance now? Is there no sense of family or anything else beyond an individual or couple?
Blogger tcrosse said...
Early retirement tip: Don't have kids.
That was my first thought as well.
Bill Peschel said...
"We liked Amy Dacyscyn's "The Complete Tightwad Gazette."
My mother-in-law liked the Tightwad Gazette and used to pass on advice. I read some of the newsletters. It was a refreshingly blunt call to avoid wasteful spending.
But ... in the wrong hands it was a feeder for hoarding and OCD behaviors. A lot of Dacyscyn's money-saving tips are explicitly about trading time to save money. Washing plastic bags wastes time and hot water -- if you're into saving the planet, it's probably less damage to just throw the things away. Shopping at thrift stores and yard sales is a hugely time-consuming way to acquire basic goods. You have to like yard sales and thrift stores. And admittedly, yard sales and thrift stores can be a lot of fun.
I don't like trading time to save money. I prefer to save money by avoiding status symbols and big ticket expenses -- new cars, resort vacations, expensive hobbies.
I've been talking retirement with my wife. She said she didn't mind if she saw me hanging around the house during the day. It's the idea that I might come inside that bothered her.
"Over the past two centuries, if we hadn't spent 'trillions of dollars on war and the machineries of war' we wouldn't have a country that provides social security."
Bullshit. How many wars have we fought in these past two centuries that have had any actual defensive purpose, that have been necessary in any way? The claims that "rough men fight to let the rest of us sleep peacefully at night" is a lie meant to subvert our suspicion of expenditures of money and lives on military adventuring...all for the purpose of extending our political power in the world. The founders knew that maintaining standing armies were the ruination of nations, politically and economically. James Madison wrote:
"In time of actual war, great discretionary powers are constantly given to the Executive Magistrate. Constant apprehension of War, has the same tendency to render the head too large for the body. A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence against foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people."
And, also this, which is pertinent to our nation's treasure and expenditures:
"Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied: and all the means of seducing the minds, are added to those of subduing the force, of the people. The same malignant aspect in republicanism may be traced in the inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and in the degeneracy of manners and of morals, engendered by both. No nation could preserve its freedom in the midst of continual warfare."
Gee...it's as if he could see the future!
How is a cool million enough to retire on at 38 years old?
Even if you suck at investing, you could make about $30K a year off that million. In the Trump economy, a reasonable investor could make $100K, and consider to get that million at 38 years of age; you learned a bit about investing. Also, I expect these people learned about staying out of debt. When you don't have debt, even $30K can go a long way. I suspect these people are doing far better than average with investing that million.
Early retirement tip 3: Don't get old.
Here’s a guy who got it wrong
http://www.dailymail.co.uk/news/article-6116357/The-Cosby-star-Geoffrey-Owens-spotted-working-cashier-Trader-Joes-New-Jersey.html?ito=social-twitter_dailymailus
A $1,000,000 ain’t what it used to be.
It will be worth a lot less if you retire in your thirties.
The average home in the US with mortgage, utilities and insurance is $1494. (Motley Fool.)
One bedroom apartments in San Francisco rent for $3340 a month on average; studios, $2500 a month.
So I guess you really pay for the job opportunities in San Fran because you can't enter the housing market early on as you could elsewhere. It would be much cheaper to live elsewhere but I understand that young people are trying to break into the IT job market. So IT people get sucked into huge expenses and huge commutes which are life destroying in my opinion. The same is true of all these other hubs like Boston, Austin, Seattle etc. But I wonder how else young adults could gain first-hand experience at the cutting edge of IT innovation or any other kind of innovation? Innovation tends to be centered on an area, crowds the area and raises all prices in the area. I believe that is an absolute social law.
I wonder if Geoffrey Owens income dried up when Cosby was un-personed by #metoo.
.
gilbar said...Early retirement tip: Don't have kids.
Don't have ex-wives either.
Here is my question about taking SS at 70 1/2, assuming you stopped working in your 50s, like I did, aren’t you spending your own money, which could go to your heirs stocking up SS “in the bank” which simply disappears like a soap bubble the day you croak?
I need a way to look at it that will let me do the math.
I guess if you don’t need the money, why not wait and have some coverage for back end risk should something happen in the future.
BTW, I love retirement, but I am not sure I would love it if I couldn’t afford to put gas in my boat, or greens fees, or updated clothes or gym memberships, or good food. Plus I liked my job, it gave my life a lot of meaning.
I love the stock market, I love trading stocks which causes me to maybe trade too much but I don't care, making money is fun. I've been retired 21 years at the end of next month. GE offered early retirement to those of us who had at least 30 years of GE employment and were fifty or older. I was 52 years old at the time but 30 years of repetitive factory work had done a number on my aging arthritic body. Retirement came at a good time for me and the time in retirement has ameliorated my arthritis. So far, so good.
”Don't have ex-wives either.”
As a general rule, making bad decisions is expensive.
One thing that we boomers had that I’m uncertain those behind us will is a robust stock market. The next 10 years don’t look like they’ll be good earning years, though if you extend your horizons out 30 years (which is how you have to play this game) there’s no reason to be pessimistic.
As a general rule, making bad decisions is expensive.
I've long held that the show Shameless is the most conservative show on television. The Gallaghers routinely make bad decisions which are shown to negatively affect their lives, and keep them in poverty. It's not some conspiracy, or society as a whole, it's their inability to not lie, cheat, steal, do drugs, refuse to take their meds, engage in risky sexual behavior, etc.
I agree to some extent with Robert Cook's sentiments. I wonder how he feels about the Spanish Republicans taking up arms against the fascists. What about the Sandinistas against the contras? I fear Cook is only opposed to certain types of wars and warriors,.......Napoleon was exiled to Elba because he lost the Napoleonic Wars. He, nonetheless, escaped from Elba and marched to Waterloo. This campaign caused 100,000 needless deaths and casualties. His campaign was not perceived as futile nor as a wanton waste of human life, but as a glorious last call of the trumpet. Napoleon was celebrated not just by French writers like Hugo and Stendhal but by Goethe, Kant, Heine and even English writers like Byron and Carlyle......Leftists like Cook are utterly unwilling to face the logical and moral flaws in their opposition to war and support of mass murderers like Napoleon, Lenin, Mao, Ho Chi Minh, and, just now, Daniel Ortega.
"BTW, I love retirement, but I am not sure I would love it if I couldn’t afford to put gas in my boat, or greens fees, or updated clothes or gym memberships, or good food."
What are "updated clothes"? New clothes to replace worn out things or are you actually seeing new fashion trends and wanting to follow them? If the latter, what fashion trends for men are entrancing you? I can't imagine — a suit with shorts??
the idea that she and her husband put first the thing they wanted most: a big house, with lots of kids, and a stay-at-home parent
Parents used to parent. Now they organize and chauffer. Line up babysitters, and AAU coaches, and trainers.
My parents had a constant thread through discussions about prioritizing. First, time, then money. I told my dad I wanted to retire at 40. He said if I continue to spend $ on stuff like a massive sound system for my car, and the new chrome wheels? Not conducive to early retirement. In short, he called bullshit on me. He said until I act like early retirement is important instead of wish about it, I would more likely end up in the county home.
But in the end, Dad an Mom, and Grandparents and older siblings, taught and showed through their own example that honest work was its own reward. Why would I want to "retire" from something I enjoy?
But I did, at 60. (I made a decision to stay working for a company with a pension, instead of chase hire pay at other companies.) After searching for 4 years looking for that partime job that would allow me to set my own work schedule, in work I enjoy.
Prioritize.
What are "updated clothes"? New clothes to replace worn out things or are you actually seeing new fashion trends and wanting to follow them? If the latter, what fashion trends for men are entrancing you?
I like to dress nice, shorts I mostly buy at Walmart or Pennies, but other clothes, I like to have new and fresh, I look around at what Nordstroms or Dillards has, or little mens shops. Even golf shirts change a little over time, improve, to my eye. I like to wear nice shoes. I don’t read GQ or anything to see what I should wear, but I like what I like, even if its Carhartt from Tractor Supply. I gotta be me, and that’s my rule for “fashion trends.” Hopefully I keep from slipping over the edge to histrionic personality disorder.
I fear Cook is only opposed to certain types of wars and warriors,.
He’s on the other side, but he doesn’t look like that because he thinks that if these totalitarians took over, it would be better for America if we finally put the delusion of the value of personal freedom to rest.
One of the “problems” I’m having in retirement is shifting out of the deferred gratification mindset I’ve had my entire life. It is true that one of the benefits of frugality during the accumulation phase is that you get used to frugality, so your imagined needs are less in the withdrawal phase (a point I think I remember from ‘Your Money or Your Life, BTW), but it can be hard to loosen up. One thing that, ironically, is helping me with this is travel (e.g. don’t be afraid of business class.)
Ann wrote, "If the latter, what fashion trends for men are entrancing you? I can't imagine — a suit with shorts??"
I love that Ann's mind went there. In 1984, they tortured Winston with his greatest fear, of being gnawed by rats. To torture Ann, and to continue the Orwell theme, imagine a man in shorts repeating the word "garner"--forever.
Note to Althouse: stay away from Bermuda.
We retired at 62. Two homes, no mortgages. No car loans, no credit card bills. Two grown children who had a SAHM until they went to school full-time. Neither of the kids had any school loans. We paid most, and they worked. Our "nest" was empty when we were 49. It stayed empty. Not frugal, but not extravagant. Boston area for most of our marriage so not a cheap place to live. Started out right. Graduated from school. Got married before we had kids. Stayed married. Financial security doesn't just happen. You have to work at it everyday until you can relax and enjoy it.
We prioritized having a stay at home parent. So far, it's worked out. There's no desire for early retirement because my husband's job is to do what he would want to do if he were retired.
Kids can be incredibly expensive. It's not particularly impressive for someone to have saved a lot and retired early without kids. Before we had kids, we made a small fraction of what we make now, and it felt like money was practically limitless. In our experience though, kids are well worth the expense.
”You have to work at it everyday until you can relax and enjoy it.”
“Live like no one else so you can live like no one else.”
> In our experience though, kids are well worth the expense.
YES.
Even if you suck at investing, you could make about $30K a year off that million. In the Trump economy, a reasonable investor could make $100K, and consider to get that million at 38 years of age; you learned a bit about investing.
People who managed to save up $1 million aren't going to enjoy living on $30K/year, or even $50K/year, especially as inflation erodes that. $100k/year is not sustainable--there will be down years if you're investing in the stock market to make that kind of return.
And then there's the matter of expenses from declining health. With this retirement strategy you can look forward to a nursing home that takes Medicaid. Check them out if you dare. No home health aides, no doctors other than those taking Medicare, forget about the latest drugs.
I'd say you need at least $5 million for a reasonable middle-class lifestyle if you retire at 40, depending where you live.
I suppose if I were going to a business meeting in Hamilton, I might wear a suit with shorts.
https://www.esquire.com/style/mens-fashion/g1761/the-short-suit-isnt-a-new-thing-061914/?slide=1
Then again, probably not.
Blogger tcrosse said...
Early retirement tip: Don't have kids.
Again back to priorities.
We just laid to rest my MIL. Surrounded by great grandkids, grandkids. kids, and friends. That crowd is very sparse for a great lady in her nineties, with out kids. But YMMV
Best advice I got from a surgeon in med school was to not move into an expensive neighborhood and try to keep up with the "Jonses", rather get an Oldsmobile and get a nice house in a middle class neighborhood and "be the Jonses."
Started out right. Graduated from school. Got married before we had kids. Stayed married.
This. Shhh, quite, very secret clue to success, shhhhh.
Go to school everyday, graduate, get a job. Go to your job, everyday, don't get married until you have a job, don't have children until after your married. Stay married.
That's the secret, don't let it out, if everyone did this, your piece of the pie becomes very small. {sarcasm}
"I'd say you need at least $5 million for a reasonable middle-class lifestyle if you retire at 40, depending where you live."
That's nuts. It's a free country. You don't have to live in Silicon Valley or Manhattan.
First of all, Mr. Mustache & his lady have paid off their house. This assumes you're not paying a mortgage.
Second of all, they've bought the car outright. No Car Payment.
No house payment. No car payment. Get your monthly payments down. Cut off your cable bill. You don't need it. Go to the library for entertainment. Go walking or hiking outside. You don't need to spend a lot of $$ for fun and healthy activities.
Get your food bill down. Mustache talks about how to do that and eat healthier. Optimize your calorie consumption. Complex nutrition.
It's about optimizing your life. How to eat healthy nutritious food in a optimal way. How to optimize entertainment.
Saving half your salary is a lot easier when you make six figures.
Blogger Ralph L said...Obamacare doesn't care if your income is from dividends or wages, the subsidy is the same.
True. But I have never had the subsidies since my early retirement at age 60 in 2014. My income has always been above the applicable annual subsidy limits (reflecting family size) and my dividend aristocrats keep increasing their dividends year after year. It won't even be close after I start claiming Social Security.
Husband and I retired at 55,but because my husband planned it from his first day of working. We sold our house, bought an RV and hit the road. Never looked back.
richlb said...How is a cool million enough to retire on at 38 years old?
You can invest the million in a diverse and relatively safe stock portfolio that will create $30 to $40 thousand per year (and growing) without touching any principle. That's how.
I have managed to score a job that is an absolute dream in many ways: 3 days a week with high enough hourly rate that less than full time is enough $ plus killer benefits. You can put up with almost anything for 25 hours a week. I hope to drag this out as long as I can. Considering how slow Big Law moves, I could probably die at my desk and I'd draw checks for months afterwards.
My work includes an important mission: taking Silicon Valley VC money (the resource most of our clients survive on) so I can buy work from starving artists so they starve a little less. These days, buying lots of glass jewelry. Instagram makes it easy to find people starting out that need a little nudge of encouragement or haven't had a sale in some time. I'll admit it is a little decadent, playing 'small time Patron' - but I have fun and I make someone's day once in a while.
Was always a fan of EF Schumacher's "Small is Beautiful" where I believe he advocated for a 30 hour work week. Hope that book finds a new generation of readers.
"I'd say you need at least $5 million for a reasonable middle-class lifestyle if you retire at 40, depending where you live."
I have a couple of brothers scraping by on what I think is about 3 million, and you would be hard pressed to fault their lifestyle. But they are in their sixties, own their homes, and don’t buy new cars ever. One of them doesn’t know what he will do with the windfall when he finally takes SS.
That's nuts. It's a free country. You don't have to live in Silicon Valley or Manhattan.
Not talking about that. But you also need to leave aside enough to pay for old age expenses, which are not trivial unless you want to live your last years out in misery. Then there's inflation, which really eats into your earnings power over 30+ years.
The people who say you can live on $30,000/year just fine don't seem to understand that $30,000 will be more like $15,000 after 30 years of 2 percent inflation.
My father has had the good fortune to make it to 96. He lives in Michigan, in a middle class retirement community. His expenses (he needs home health aides) run to around $100,000/year. Not a fancy lifestyle at all. But he'd almost certainly be dead by now if he had gone to live in a Medicaid nursing home.
Blogger James K said..."People who managed to save up $1 million aren't going to enjoy living on $30K/year, or even $50K/year, especially as inflation erodes that. $100k/year is not sustainable--there will be down years if you're investing in the stock market to make that kind of return. And then there's the matter of expenses from declining health. With this retirement strategy you can look forward to a nursing home that takes Medicaid. Check them out if you dare. No home health aides, no doctors other than those taking Medicare, forget about the latest drugs.
I'd say you need at least $5 million for a reasonable middle-class lifestyle if you retire at 40, depending where you live."
If you can't live for less than the conservative $150,000 the $5 million could easily earn, you aren't really trying to save to retire early. Not everyone can/should try to accomplish this by age 40, but it works at 50, 55 or 60 as well. Like wwww said, you don't have to live in Manhattan or Silicon Valley. You have sentenced yourself to being a loser for thinking like this.
James K. - See dividend aristocrats for making the #30,000 grow at a pace faster than inflation.
When I retired, it was with a couple of pensions and an IRA. I have a 401K from one job, but there's only about $3k in it, and moving it to my IRA has proved more trouble than I can stand.
The thing is, I have enough money because the home and cars are paid for, so I just find it fun to save. If I want some mad money, I know how to generate about $400 a week very quickly.
I take my truck through the neighborhoods and with four loads of scrap metal, I can do alright. I don't even get dirty.
For me, $400 is $100 a week mad money. You can only eat so many Taco's...
For a couple of hundred thousand dollars, you can buy insurance against nursing care. Even if you are sixty, as long as you are in good health.
I take my truck through the neighborhoods and with four loads of scrap metal, I can do alright. I don’t even get dirty.
That’s you?
”You can only eat so many Taco's...”
“You can only drink 30 or 40 glasses of beer a day, no matter how rich you are.”
— Adolphus Busch
"I agree to some extent with Robert Cook's sentiments. I wonder how he feels about the Spanish Republicans taking up arms against the fascists. What about the Sandinistas against the contras?"
????
These are not equivalent to our situation or to what I said. We are a secure, powerful nation in no danger from an invading enemy. We have engaged in constant warring from the beginning of our nation, most of them wars of aggression and interference into the affairs of others. We have the highest military budget of any nation in the world, and it grows every year. We could cut our military budget in half and still be overspending relative to our defense needs. We have greater need for those funds to be spent on other budget items, not least of them, Social Security and Medicare.
If you can't live for less than the conservative $150,000 the $5 million could easily earn, you aren't really trying to save to retire early.
Again you're ignoring the point that expenses rise when you get older, and inflation eats away at that $150,000 over decades. But go ahead and dismiss this as "wanting to live in Manhattan." Good luck ignoring the effects of aging and inflation.
"For a couple of hundred thousand dollars, you can buy insurance against nursing care. Even if you are sixty, as long as you are in good health."
Plenty of people don't have a couple of hundred thousand dollars.
Priorities after you retire. My first Social Security check was used to buy a brand new 35 ton log splitter. Took a lot of wear and tear off of my back and shoulders.
It will be there if we want it to be there, to the extent that we block any in Washington who try to dismantle it.
If we can squander trillions of dollars on war and the machineries of war, we have money that can be applied to Social Security.
Defense vs Social Security is a false choice. Cookie is one of those ugly people who shuffle around the upper west side thinking they have the world figured out but have no clue what the value of defense is or what the cost tradeoffs of SS are. It's that kind of shit thinking that prevents us from making the hard but proper choices...
It's an actuarial certainty Social Security in its current form will inevitably collapse. It will take some combination of higher contributions and lower benefits to keep it solvent. Unfortunately the cost benefit tradeoff will be too hard for most people to handle- the tax increase would have to be too large and the benefit cuts too large. Of course the Cookie would insist the prohibitive taxes go to everyone else and anything else would be 'dismantling' Social Security. Rational people, however are willing to consider an investment program instead of the Ponzi style wealth transfer scheme we have now.
I'm a little troubled by this movement. Its goal seems to be "stop working as soon as possible." If you can get a million by age 40, great! Keep going and your retirement will be even better. You'll be able to do things most people can't, and give tons of money away, and leave an inheritance to your kids (if you have any, or to someone/something else deserving if you don't).
Work provides meaning to life. That's a reality Jordan Peterson is opening eyes to, and is part of what Dave Ramsey teaches (DR would have you pursue the "fire" lifestyle only temporarily, to get out of debt and build up emergency savings). Those who retire at 38 and do nothing productive will likely get bored and depressed. And while you can live on the growth from a million dollars easily now -- $80k or so a year -- that won't be the case in 30-40 years.
The millennials and whoever else are following this program may be commended for their self-control and dedication in pursuit of a goal, but it seems a bad and short-sighted goal.
If they retire early, they will be in the ACA Marketplace. They better check what happens when they pass 60, and earn above 400% of FPL. In my state, a 60-year-old couple earning $65,000 will have a premium over $26,000 (with a $5,200 deductible).
Plenty of people don’t have a couple of hundred thousand dollars.
We were talking about insisting that one needs 5 million to retire out of fear of costs for nursing care. In that context, a couple of hundred thousand dollars to cover that contingency is not a lot of money. But never miss an opportunity to climb on your high horse.
It's lovely your father is alive at 96. That's not an average life-span. But I understand the fear that one will not have enough $$ for geriatric care.
Leaving aside extra-ordinary, old age health-care needs, I don't get why someone would need 100,000$ a year when retired if the house & car are paid off?
Unless you're paying tuition for kids, where is all the $$ going?
James K said..."Again you're ignoring the point that expenses rise when you get older, and inflation eats away at that $150,000 over decades. But go ahead and dismiss this as "wanting to live in Manhattan." Good luck ignoring the effects of aging and inflation."
If you invest in dividend aristocrats and the like, the $150,000 is not static. My portfolio has dividend increases that average 5 to 10% per year, which is probably better than the merit increase of most working people. My stocks include 3M, Abbott Laboratories, Johnson & Johnson, Hormel, as well as Realty Income and many others to add diversification.
Leaving aside extra-ordinary, old age health-care needs,
You don't get to do that.
tim in vermont said......That’s you?
I have no pride. To me, a washer and dryer sitting at the curb are like candy in a general store.
Plus you can open the doors on them and throw in more metal!
Truth is, my wife throws me out of the house on weekends, as she has a fetish with the vacuum cleaner and duster.
The Mr. Money Mustache blog is not about retiring & sitting around. The couple brings in $$, but they do it working for themselves, on their own time.
The blog talks about how to optimize. It's engineer type-thinking. How do you optimize food budget, nutrition, entertainment, housing, vehicle choice?
How do you get the best value? Where can you cut waste?
In that context, a couple of hundred thousand dollars to cover that contingency is not a lot of money.
Agreed, but (a) you have to be careful about exactly what those policies cover and don't cover, and (b) you have to subtract that $200,000 from the $1 million and its earning power. So now it's $800,000, and your down to about $25,000/year. And I would say to keep up with inflation, you'd need to add about $15,000/year to the savings so your income keeps up with inflation. Suddenly you're down to about $10,000/year. Maybe $20,000 if you invest wisely.
At least Geoffrey Owens is doing better than Cosby.
James K; I understand what you are saying, but I don't think you have the same mindset of the person retiring by age 40 with $1 million.
First, it is mentioned in Althouse's links that FIRE starts with living a bit minimalist. $150,000 a year is not living like a minimalist. Second, these people are doing much better than 3% return on investment, because they learned how to make good investments. And they also learned not to spend all their money, so the nest egg continues to grow. These people had to live on less to be able to set aside a million that quick. It's not like they are benefitting from decades of compound interest when retiring that early.
I do agree that too many don't recognize the health costs they will have later in life, compared to their 30's and planning such an early retirement. I also don't think everyone trying to live the "FIRE" lifestyle will be good at it. But those who are can make $1 million go along way. You only need to consider how many people in the US aren't retired and think they can make a living if minimum wage was at $15/hr (which at 2080 hrs a year, is just slightly more than $30K/yr).
Unless you're paying for tuition for kids, you don't need 150,000$/ or 100,000K/ year year to live a great lifestyle. Not for monthly expenses.
Not if the house & vehicle are paid off, you don't have debt, and your stache is built up.
There's a woman who calls herself FIRECracker. She and her husband blog about the FIRE lifestyle while traveling the world.
Its goal seems to be "stop working as soon as possible."
I think the goal is more "Financial Independence" with "Retire Early" being an option. I'll mention the idea of "Going Galt", but that's probably a bit too ideological. I think a better analogy is John Goodman's monologue in "The Gambler". He puts the value at $2.5million, but he also says "any idiot". The people trying it at a lower number are usually a bit smarter. That said, in less than a minute, he covers the minimal aspect, the financial independence and, in a colorful way, the retire early.
When Dave Ramsey gives this sort of advice, people don’t mention it in tony newspapers.
But, then, Dave Ramsey is talking to the squares and mentions God.
Agreed, but (a) you have to be careful about exactly what those policies cover and don’t cover, and (b) you have to subtract that $200,000 from the $1 million and its earning power.
You didn’t hear me say a million was enough for a ‘middle class lifestyle” but five million as a minimum? Nope. Not unless you insist on living in Boston or NYC or the like.
I am trying to think of presidents since. WWII who would qualify as not war mongers. Nixon ended the Viet Nam War,
Carter was OK, but he all but invited the Soviet Union into Afghanistan with his fecklessness. Had he shown a little backbone, he could have saved us a lot of heartache.
Eisenhower was pretty good, as far as I recall.
Trump so far has been trying to wind down the wars we have gotten into without starting any new ones.
The rest of them were all war mongers. I don’t see how anybody who claims to be for peace could possibly have voted in such a. way as to make it more likely that Hillary would become POTUS.
Unless you're paying for tuition for kids, you don't need 150,000$/ or 100,000K/ year year to live a great lifestyle.
I don't think people seem to understand the inflation point. If you have 2 percent inflation, you need to set aside 2% of your earnings just to keep your purchasing power flat.
So if you take my $5 million, assume a 3% safe rate of return (it hasn't been that high the last 10 years), that's $150,000 year. But you need to save $100,000 of that to get your income to grow by 2%/year just to keep up with inflation. So now that $5 million gives you $50,000. Then $51,000 next year, etc.
If you can get 4% or 5%, you're doing better of course, but then you're making risky investments. And inflation could end up being more than 2%, as the people who put away money for retirement in the 1960s found out the hard way.
Believe it or not, Millennials are becoming interested in small farm homesteading for a better quality lifestyle.
As a gardener with a large year-around veggie garden and a small orchard, I follow homesteaders (not preppers) on YouTube. It's very reassuring watching these young couples/families learn the ropes and earn the rewards of self-sufficiency.
So in short.... Work hard, live below your means, and save your money. And use it up, wear it out, make it do, or do without.... etc.
Duh...
Kind of like dieting. Eat less, exercise more.
James K,
Mr. Money Mustache isn't retired in the sense that he's loosing money. His stache is growing.
We all have different understandings of risk & you might not feel comfortable with less then 5 mill. That's great, and that's what you're comfortable with. My DH & I have done the Mustache lifestyle before kids & we saved a lot in a few years. We don't need anything close to 150K to have a nice middle-class lifestyle for living expenses. & we were paying a house mortgage at the time.
Middle class lifestyle, going in with house & vehicle in good condition, paid off, and no debt? If you have 150K/ year, there's a lot left over to invest on a monthly basis.
Anybody should be able to make 5% a year in tax free munis.
I think 1.5 million is a workable number.
That should produce $75k per year and will build principle without mortgage/credit accounts/new cars.
Plus buy insurance for private long-term care facilities.
Please stop denigrating Boomers. It's insulting to a class of people. I am 71 and sick of being constantly criticized for nothing but my age. All sorts of people exist in all sorts of age groups. Please discontinue the class warfare.
James K: I don't think people seem to understand the inflation point.
It's not that they're incapable of understanding, it's just that understanding and engaging with your point isn't what they're here for.
Blowhards gonna blow hard on the point they blew in to blow hard on.
E.g., "I can live a perfectly decent life on 30K/year, and anybody who can't is a poopy-head". Or "my investment model can infallibly provide a satisfactory return on a borderline-adequate nest egg over your lifetime, regardless of inflation, the market going tits-up in unexpected ways, and health debacles as one ages."
Your comment is just a place for them to hang their hat on, on the way in to the bloviatin' bar.
Chuck Mayhew: Please stop denigrating Boomers. It's insulting to a class of people. I am 71 and sick of being constantly criticized for nothing but my age. All sorts of people exist in all sorts of age groups. Please discontinue the class warfare.
I'm a (tail-end) Boomer and it doesn't bother me at all, because I know that:
1) Stereotypes do, too, mirror real-life statistical distributions of traits, and
2) Anybody with half a brain knows perfectly well that "not all X", so why are you taking this so personally?, and
3) Acceding to your demands about what we mustn't criticize people for would kill all the jokes in the world, gramps.
"these people are doing much better than 3% return on investment, because they learned how to make good investments"
We're at that stage in the market cycle where people start to confuse being fortunate with being smart.
Seriously, Mr. B., if you know of tax free municipal bonds with 5% returns, do us all a favor and spread the word. (And no Puerto Rico bonds, please.)
From “Pippin”
It’s smarter to be lucky than its lucky to be smart
I have a brainy older brother - grad school at Harvard and Berkeley, professor at famous privileged college in Midwest.
His oldest boy, my nephew, started rebelling in high school - naw I don't wanna read books or do my homework or go to college. His friends go to Ohio State, he gets his real estate license. 7 years later - he's driving a Mercedes, married, owns 3 houses, rents 2 out. His young wife doesn't have to work. His college grad friends are struggling to find jobs and pay their student loans.
At 25, he's already cruising through life.
“That would make sense, given the depth of the bullshit that came from us Baby Boomers.”
Thanks for admitting that, few in your generation will. Truly an abysmal generation that took a lot and gave very little. Content to just sit back and suck up resources, making them the first generation to leave their kids worse off than themselves. Disgusting. And look how stupidly addicted so many of them have become to social media. So pathetic.
Municipal Bond Yields, averages.
https://www.thebalance.com/municipal-bonds-historical-calendar-year-returns-417161
What do I win?
Squat, I'm afraid. I was looking for CUSIPs, not historical averages. If I look on Schwab's website right now, I can't find any muni's returning 5%, though they do have 3 that return about 4%, if you don't mind waiting until 2050 for the bonds to become due.
It's hard to take this seriously.
I appreciate this post and the comments, as I'm retiring in the next 6 months. From what I've read here, and other places, I can do it and I am aware of the risks and pitfalls.
The main uncertainty I have is health care, I've always had an employer plan, and even though I rarely used it, it was great for raising my now-grown children. What are we talking for two mid-50ish with no health issues?
Paco Wové,
I am sorry to read that your time horizon is one year.
I am planning for longer.
Also, you do know you can sell the bonds at any time before maturity, right?
It is an active secondary market.
”If I look on Schwab's website right now, I can't find any muni's returning 5%, though they do have 3 that return about 4%,”
With their total return probably going lower as interest rates rise.
The CUSIPs Birk, the CUSIPs.
You said, "Anybody should be able to make 5% a year in tax free munis". Not "based on historical performance, it's probable that there will be tax free munis available that will provide an investor with an average return of at least 5% over the course of his investing lifetime" or "people who invested in tax-free munis X years ago should be seeing returns that average at least 5%."
And "anybody" would include new investors looking for long-term tax-free muni-bonds, as well as older medium-term investors. That "I am sorry to read that your time horizon is one year" is a lame dodge - Paco said nothing about "one year", and none of those bonds were returning at least 5%, held to maturity or otherwise.
A-D, SB,
It is no dodge. Time frame matters. Rates of return always vary, over time. If forced to type all the addenda you now demand, why would I type anything? Unless you are investing for one year, the range of rates over time is what matters.
If you want an expansive post filling in gaps for others, I will never be that poster.
"It's an actuarial certainty Social Security in its current form will inevitably collapse. It will take some combination of higher contributions and lower benefits to keep it solvent."
OR...the government can simply transfer more of our tax dollars OUT of the War Department budget and INTO the Social Security funds.
AND/OR...it can increase the amount of income that can be taxed for SS, so people making above $128,700 will pay more in SS taxes. There's where the increase in contributions can come from.
"'Plenty of people don’t have a couple of hundred thousand dollars.'
"We were talking about insisting that one needs 5 million to retire out of fear of costs for nursing care. In that context, a couple of hundred thousand dollars to cover that contingency is not a lot of money. But never miss an opportunity to climb on your high horse."
No high horse, just fact.
5 million, 3% safe investments, 150K per year, reinvest 100K of it, live on 50K.
It's one way to go. Low risk & it emphasizes capitol preservation. There are other ways to do it & live a comfortable middle-class lifestyle.
Some people enjoy optimizing. Some people don't like shelling out lots of $$ for consumption. Some people are comfortable with more stocks vs. bonds in their portfolio. There's more then 1 way to do it, which is the point of those other lifestyle choices.
A-D,
You would not like Mr. Money Mustache's blog.
tcrosse,
Couldn't disagree more. To retire safely, you need a backup plan, and kids are the best backup plan. They are the only ones who are going to put up with you when you get old and cranky, and they are essential to make sure that the hospital/nursing home/mental care facility takes good care of you.
Plus, the experience you have raising kids is great for that second/retirement career. My mom always said that everything she needed to know to manage engineers, she learned being a Cub Scout Den Leader.
Couldn't disagree more. To retire safely, you need a backup plan, and kids are the best backup plan.
There's a difference between retiring safely and retiring early, which was the subject of the post. Retiring early is a risky business, all the riskier if you have kids.
The other key requirement of retiring is a set of marketable skills that are:
--Reasonably age-proof (Medical and Law are very good)
--Keep you involved with others
--Provide flexibility
--Unique enough to differentiate you and pay you more
--Enjoyable enough that you wouldn't mind doing them for free
Bottom line: You are what you can contribute to others, even in retirement.
If you retire early, you still need a plan for when you get old. Thus, kids.
When you jump out of an airplane, you only really need a parachute for the last five hundred feet.
OR...the government can simply transfer more of our tax dollars OUT of the War Department budget and INTO the Social Security funds.
Why think so small?
Audit every department, consolidate programs, change limits and cut personnel.
If you retire early, you still need a plan for when you get old. Thus, kids.
It's good manners not to be a burden on the kids.
”It's good manners not to be a burden on the kids.”
I learned my frugality and sense of responsibility from my Dad. His last lesson was, though of modest means, he made sure he and my Mom were taken care of.
he made sure he and my Mom were taken care of
You never know if the kids may decide to retire in their 30's, and depend on their kids in their dotage.
I expected an NYT tag.
Prepare financially for your retirement, but still...have kids. Because:
1) Things may fall apart
2) Even if things are perfect, you need an advocate, who loves you and has your best interest in mind, or things WILL fall apart.
I've posted comments on this blog before about this very subject.
I could tell you stories. The problem is, you don't start accumulating these stories until your own folks are in their eighties, which means you are in your fifties or sixties, and by then it is too late to go back and have kids of your own.
I'm glad I have two kids. I wish I had more. And I am going to be real, real sweet to my kid's spouses so that they love me too.
That, and I plan to start BASE jumping and flying gyrocopters once I hit 70.
Like I said...
"1) Things may fall apart"
Re Will But or Chin?
wwww said...
5 million, 3% safe investments, 150K per year, reinvest 100K of it, live on 50K. "
You and the others posting on this thread seem to overlook that the money isn't income or capitals gains tax free. So its earn the $150 grand, pay the taxes on the $150 grand then put back the net into the pot so you can grow it so more because otherwise its purchasing power will diminish due to inflation. No one will beat out inflation over the long run unless the pot grows. And if you plan to live a reasonably long life you're going to need decent long term care insurance and that is going to cost several hundred thousand dollars if purchased while relatively young, more if you are older. Best to get a hybrid LTC-life insurance policy. Also max out the most you can while you are young into a ROTH IRA.
Kids are worth it, but I count on them far more for filial love for its own sake, and possibly, God willing, grandchildren, than for any kind of financial support they may provide.
There's a financial difference between retiring at 30 and retiring at retirement age. Two different goals.
Also, someone who has a million at 30 is probably used to actually living comfortably on $30k. The problem, I think, is if you aren't earning money you are spending money. 5-6 days at work you are earning. what are you going to do now that you aren't working? We all probably spend more on our days off than our days at work.
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