4 ms·

> It shouldn't be called retirement. In personal finance it's called, "Financial Independence." Which basically means you aren't necessarily done working for t

> It shouldn't be called retirement. In personal finance it's called, "Financial Independence." Which basically means you aren't necessarily done working for the rest of your life, just that working has become completely optional. more info: https://www.reddit.com/r/financialindependence https://www.reddit.com/r/financialindependence

jazzyk 11y ago
"...you aren't necessarily done working for the rest of your life, just that working has become completely optional" Optional - as long as you live in your parents' basement and don't want to start a family. :-)
- krisdol 11y ago
  Dependence is the new independence!
  - lfam 11y ago
    My friends called it "pretirement".
- geodel 11y ago
  Sometimes I wonder whether the next generation will even have parents who have houses with basements available for free/cheap. Maybe basements would be rented out to support family expenses. Or their parents could be living in much smaller places with no basements. Lately I have seen a few ads where owners are looking to rent out basements to families as cheaper alternative to apartments rather than as something where single folks would stay for short durations.
- toomuchtodo 11y ago
  > Optional - as long as you live in your parents' basement and don't want to start a family. :-) I think this is where there's a fundamental disconnect in cultures. I'm 33, my wife 31. We're about to have kids, and we've strongly considered moving in with my parents, not only to spend more time with them, but also to provide care when necessary as well as have their help watching and raising our children. Just because we're well off (we're financially independent) doesn't mean we need an expensive mortgage in the suburbs to raise our family, nor does it mean we can't live with family or have them live with us. America is far more broken than I expected.
  - jazzyk 11y ago
    I come from a culture with close multi-generational ties, so I don't think there is anything wrong with your potential decision at all - if it is your _choice_, not _necessity_
    - toomuchtodo 11y ago
      I definitely agree it should be by choice, but that's only going to change in the US if workers start fighting for higher wages, more labor regulation, and other initiatives that value labor above capital. Otherwise, prepare to move to the basement.
  - snowwrestler 11y ago
    No one needs to move to the suburbs and take on an expensive mortgage to raise a family. An apartment or small condo is a fine place to raise a family, and millions of Americans do just that. It's just a cultural thing: many Americans prize their independence and privacy, so grown kids want to get away from their parents. And vice versa, by the way! My parents definitely would not want me to move my family to their house--they love us and enjoy visits, but are enjoying their own independent lives too.
- a-priori 11y ago
  The premise of "financial independence" is that you save enough enough money and reduce your expenses enough that you can live for the rest of your life on your investments. Whether you choose to retire or not is up to you, but the point is that you are 'independent' of sources of income to fund your lifestyle. For example, you could reduce your working hours to spend more time on family or hobbies, or take long unpaid sabbaticals, or bootstrap a business, or just quit working entirely. It turns out that you can safely withdraw 3% a year indefinitely (from a portfolio composed of a mix of stocks and bonds in low-fee index funds) without reducing the the value of the investments in the long run. A higher rate of 4% will decline on average over time but can be enough to survive multi-decade retirements, so that's often a more realistic target. There are tools (e.g. http://www.firecalc.com/ http://www.firecalc.com/, http://www.cfiresim.com/ http://www.cfiresim.com/) to run simulations based on historical market data. At 4% you need a portfolio equal to 25 years worth of expenses. Let's say you spend $60k a year in today's dollars. This works out to a monthly budget of $5k. If you can save $1.5M then that will pay your expenses for 30 years, without any other income, with a 94% chance of success. At 3% you need 33 years of expenses, or $2.0M, and that has a 100% chance of success. This is all based on past data of course (past performance does not imply future performance and all that). These are large sums of money, but it's possible for most professional workers, and especially couples, to accumulate them if they are fairly frugal and make a decent income. The time required entirely depends on what portion of your income you can save (see http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...). Assuming a constant income, as well as constant expenses while working and after, if you save 50% of your household income it will take 17 years to reach the 4% level. So start at age 30 and you'll be done by 47.

jazzyk 11y ago

"...you aren't necessarily done working for the rest of your life, just that working has become completely optional" Optional - as long as you live in your parents' basement and don't want to start a family. :-)

krisdol 11y ago
Dependence is the new independence!
- lfam 11y ago
  My friends called it "pretirement".
geodel 11y ago
Sometimes I wonder whether the next generation will even have parents who have houses with basements available for free/cheap. Maybe basements would be rented out to support family expenses. Or their parents could be living in much smaller places with no basements. Lately I have seen a few ads where owners are looking to rent out basements to families as cheaper alternative to apartments rather than as something where single folks would stay for short durations.
toomuchtodo 11y ago
> Optional - as long as you live in your parents' basement and don't want to start a family. :-) I think this is where there's a fundamental disconnect in cultures. I'm 33, my wife 31. We're about to have kids, and we've strongly considered moving in with my parents, not only to spend more time with them, but also to provide care when necessary as well as have their help watching and raising our children. Just because we're well off (we're financially independent) doesn't mean we need an expensive mortgage in the suburbs to raise our family, nor does it mean we can't live with family or have them live with us. America is far more broken than I expected.
- jazzyk 11y ago
  I come from a culture with close multi-generational ties, so I don't think there is anything wrong with your potential decision at all - if it is your _choice_, not _necessity_
  - toomuchtodo 11y ago
    I definitely agree it should be by choice, but that's only going to change in the US if workers start fighting for higher wages, more labor regulation, and other initiatives that value labor above capital. Otherwise, prepare to move to the basement.
- snowwrestler 11y ago
  No one needs to move to the suburbs and take on an expensive mortgage to raise a family. An apartment or small condo is a fine place to raise a family, and millions of Americans do just that. It's just a cultural thing: many Americans prize their independence and privacy, so grown kids want to get away from their parents. And vice versa, by the way! My parents definitely would not want me to move my family to their house--they love us and enjoy visits, but are enjoying their own independent lives too.
a-priori 11y ago
The premise of "financial independence" is that you save enough enough money and reduce your expenses enough that you can live for the rest of your life on your investments. Whether you choose to retire or not is up to you, but the point is that you are 'independent' of sources of income to fund your lifestyle. For example, you could reduce your working hours to spend more time on family or hobbies, or take long unpaid sabbaticals, or bootstrap a business, or just quit working entirely. It turns out that you can safely withdraw 3% a year indefinitely (from a portfolio composed of a mix of stocks and bonds in low-fee index funds) without reducing the the value of the investments in the long run. A higher rate of 4% will decline on average over time but can be enough to survive multi-decade retirements, so that's often a more realistic target. There are tools (e.g. http://www.firecalc.com/ http://www.firecalc.com/, http://www.cfiresim.com/ http://www.cfiresim.com/) to run simulations based on historical market data. At 4% you need a portfolio equal to 25 years worth of expenses. Let's say you spend $60k a year in today's dollars. This works out to a monthly budget of $5k. If you can save $1.5M then that will pay your expenses for 30 years, without any other income, with a 94% chance of success. At 3% you need 33 years of expenses, or $2.0M, and that has a 100% chance of success. This is all based on past data of course (past performance does not imply future performance and all that). These are large sums of money, but it's possible for most professional workers, and especially couples, to accumulate them if they are fairly frugal and make a decent income. The time required entirely depends on what portion of your income you can save (see http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...). Assuming a constant income, as well as constant expenses while working and after, if you save 50% of your household income it will take 17 years to reach the 4% level. So start at age 30 and you'll be done by 47.