8 ms·

How to Retire at 40

94 points by T-A 10y ago

davidf18 10y ago
On a related topic: This couple on a dentist's salary and after escaping Nazis and the holocaust saved with Warren Buffet and $400 million -- the largest single donation in Israel's history -- to the water research for Ben Gurion University. http://www.wsj.com/articles/after-fleeing-the-nazis-a-legacy-that-wont-run-dry-1466722996 http://www.wsj.com/articles/after-fleeing-the-nazis-a-legacy...
wmat 10y ago
Dammit, I just turned 46.
- aws_ls 10y ago
  Isn't it more fun reading these articles from the other side? I find reading such fun and interesting, and you always gain something from them, like the 4% rule in this one, which was new to me. Of course you can intuitively plan something which is similar. Retirement is not for me. Freedom to work on projects of choice is. Some financial independence or close to it, is needed for both, so this article and especially the story/plans of others were very illuminating. Although, my geography is different. So numbers change and I don't think its a linear on the cost of living scale, due to cultural reasons. In India for example, parents sometimes pay up to not just college, but also the marriage expense of their children. :-)
lets-tryagain 10y ago
It would be interesting to hear what these people are doing for health insurance.
monkmartinez 10y ago
Just skimmed the article for lack of time, I will give it a proper reading in a bit... I may have missed it, but I was fully expecting to see something about the Military here. At least for USA based persons. I have several friends that are beginning to retire or thinking about retirement in their mid to late 30's. Full health insurance, and a pension for the rest of their lives. It may not be a ton in all cases, but most of my friends are young enough to pursue whatever they want with a ton of financial security if they so desire. Or go chill in a van down by the river.... either way it's a decent option.
- showerst 10y ago
  Military pensions aren't super high, unless you're very high up. I picked 03 on the calculator (Army Captain, mid-level officer) and got < 40k before taxes. High enlisted ranks are looking at < 30k. The benefits are good though. http://militarypay.defense.gov/Calculators/Active-Duty-Retirement/High-36-Calculator/ http://militarypay.defense.gov/Calculators/Active-Duty-Retir... An extra 25k/year after taxes does give you a bunch of flexibility, but it's not really 'do nothing' retirement unless you live somewhere cheap, especially if there's a family to support.
  - maxehnert 10y ago
    You can't 'retire' in the sense that you receive a pension with less than 20 years. Which means you were at least an E5 (you had to mess up a lot to retire as an E5). You are certainly higher than an O3 if you were an officer. Presumably after 20 years you've also got other savings such as the TSP retirement account which the military matches 50% on (up to a certain amount only I believe). Your retirement payout can be based on your highest 3 years of service (you get to choose now), which are typically going to be the last few, which if much of that is spent overseas will significantly increase your retirement package. You still won't be living in SF but you should be able to live pretty comfortably in a normally priced city as long as the retirement package isn't your only form of savings. Bonus points if you'er now 20 years into paying off your house as well.
    - nommm-nommm 10y ago
      >Which means you were at least an E5 (you had to mess up a lot to retire as an E5) Looks like the high year tenure for an E5 is 14 years so you'd have to retire at least an E6. https://en.m.wikipedia.org/wiki/High_Year_Tenure https://en.m.wikipedia.org/wiki/High_Year_Tenure
  - rayiner 10y ago
    The median individual income is around $30k so it's definitely livable.
DrScump 10y ago
<He and his wife, who quit her back-office job at Credit Suisse in February, spend about 3 percent of their $1.5 million portfolio a year.> Yeah, the tricky part is accumulating the first $1.5 million in the first place. After that, it's a bit easier.
- mathgeek 10y ago
  Essentially, any "how to retire at age X" title can be rewritten as "how to budget $Y at age X."
- tylerhobbs 10y ago
  3% of $1.5m is only $45k. If you and your spouse can live off of $45k while you're still earning, you can save ~$100k per year and accumulate $1.5m by the time you're 40, easily. See Mr. Money Moustache for details on how this isn't as unreasonable to do as you would think: http://www.mrmoneymustache.com/ http://www.mrmoneymustache.com/
  - to3m 10y ago
    $145K take home pay is surely like $200+K/year? (In the UK, if you earn ~£110K+/year after tax, you're in the top 1% of taxpayers.) If your spouse is going to work too, I admit that is a lot more doable. If not, well... looks like the secret is, "be rich/well-paid, and don't piss it all away". Excellent advice, but I could have told you that already ;)
    - trprog 10y ago
      Although it is advice that an alarming number of people don't seem to follow. I have spent the last decade and a half working with plenty of reasonably high earning individuals. Although I have only occasionally got any insight into their personal financial situation the number of them still living pay to pay is mind blowing.
      - kowdermeister 10y ago
        How is that possible? Are they not saving up or the cash just goes down the drain here and there?
betaby 10y ago
TL;DR Have 1-2-N million US on you investment portfolio and live on %.
- vernie 10y ago
  Oh, easy!
- FuckOffNeemo 10y ago
  Haha, pretty much. Beat me to the point. 1) Have millions in the bank already. 2) ??? 3) Profit!
dennyis 10y ago
It's not difficult if you plan for it and make it a goal. Mine is to be financially independent by 40, so I could never work another day. Realistically I love working, and can't wait to be able to donate more, volunteer more, and help my children with education a starting businesses.
poopsintub 10y ago
I have seen a couple of examples like this but what happens when the market falls out of the sky again? My understanding is rental property income will drop and the 4% in investments becomes what, negative 40-50,60%?
kowdermeister 10y ago
Or alternatively have 500k in the bank and move to a cheap European city where you can live off 14k per year. I'm actually more of a fan of Stefan Sagmeister's method of retirement, where he split up his retirement years and moved it to in between his productive years. https://www.ted.com/talks/stefan_sagmeister_the_power_of_time_off https://www.ted.com/talks/stefan_sagmeister_the_power_of_tim... I could earn in a year enough cash to take the next year off, do fun things, learn new things and then spend the next few on what I figured out in that one "retired" year.
- incompatible 10y ago
  I'm sure there are cheap places in the US too. I live in a cheap place in Australia, which has the advantage of a government-provided health system and qualification for an age pension at 67. So only household expenses between age ~40 and 67 need to be budgeted for, and with a frugal lifestyle without kids that's not much.
  - mmerlin 10y ago
    Except land prices are crazy here in Australian cities
    - incompatible 10y ago
      There are still places, if you avoid the larger cities.
  - ux-app 10y ago
    > qualification for an age pension at 67 >only household expenses between age ~40 and 67 need to be budgeted for Pension is $20k/year. You're an Aussie, so you know how incredibly high our cost of living is. 35cents/kWh for electricity (!!) 3x what some places in the US pay + the insane prices we pay for groceries, gas, entertainment, vice taxes etc. Unless you have supplemental income from investments you will be straddling the poverty line on the Australian pension. I've seen pensioners mend shoes with gaffer tape. This all assumes that the pension system stays solvent which is not guaranteed. Already there is talk of lifting retirement age to 70+ > I live in a cheap place in Australia You're probably comparing to other places in Australia (east coast?). Relative to other countries, unfortunately, there is no cheap place in Australia.
deleted 10y ago
[deleted]
deleted 10y ago
[deleted]
applecore 10y ago
> We asked three people who retired in their 30s and 40s to explain how they’ve made it pay off. Alright. Let's see how they do it... 1. "a blog where he chronicles his retirement experience" 2. "writing a book about retirement" 3. "blogging about financial independence" The trick to early retirement is blogging about early retirement.
- betaby 10y ago
  Quickest path to get rich is to write a book "How to get rich"
  - bbcbasic 10y ago
    On the Warrior Forum they do deeper depths of recursion on that. I.e. guys making money selling products about how to make money by selling products on how to make money. Seriously.
    - theoh 10y ago
      There's a guy who wrote a "How to Write a How to Write Book" book: http://www.brianpiddock.co.uk/home.htm http://www.brianpiddock.co.uk/home.htm
  - ukoki 10y ago
    You should check out the "digital nomad" communities in SE Asia. The only thing anyone is selling is marketing courses/seminars/ebooks
- driverdan 10y ago
  Except they all have significant savings they could live off of if they didn't have those other sources of income.
- laretluval 10y ago
  Alternatively this is just the subset of early retiring people who are vocal and visible about it.
branchless 10y ago
Knew they wouldn't let me down: "rental income,". So can everyone live off a big chunk of another families labour? "The equity in their home—worth about 21 times their annual expenses". And what about now where the average first time buyer age is near 40! Last one is a banker. Just need to work in an industry secretly building massive debt and take your bonus each year and you are golden. Money moustache man all over again.
- econner 10y ago
  Having a place to live is one of the primary needs people have. Why shouldn't you be able to make an income off of that? Everyone lives off of other people's labor...unless you're subsistence farming or something. I'll give you the banker one though.
  - branchless 10y ago
    Housing is a basic need and western finance and govt structures work to skim off labour through land. If you are borrowing to rent out you are simply a debt collector for the banks. We used to have decent manufacturing jobs where the other half didn't have to work who could run a car, had good hours and enough money. Now land is the primary cost for every family. The same pile of bricks for more of your labour. You happy with that? It's the system not the cost of building or materials. Think of the advances since the 1960s in materials and construction.
    - ap3 10y ago
      Yes, but they are not making more land
      - branchless 10y ago
        That is the exact reason why these vultures should be curtailed.
- xref 10y ago
  Could you expand on the Money Mustache comment? From what I can gather he currently makes quite a bit of income from putting his followers into bad products he promotes and advertises on his site, such as Geico (premiums going towards massive marketing campaigns, not keeping costs low) and Betterment (layering fees on top of index funds which you could buy directly for no extra fee)
applecore 10y ago
Dupe: https://news.ycombinator.com/item?id=12605680 https://news.ycombinator.com/item?id=12605680
overcast 10y ago
Having money, makes money. What a revelation.
Prad 10y ago
Probably isn't difficult once you get started and have goals set in place to do so. I'm only in my early 20's I haven't even thought about retirement. However, I am saving all my money at the moment. Hopefully that helps me out later when I really need it.
- akg_67 10y ago
  In addition to what you are doing in your 20s, One favor you can do to your future yourself is to learn about investing and finance. Recipe is simple. * Maximize your income * Minimize your expenses * Save the difference * Grow your savings.
mcguire 10y ago
How to retire at 40...if you're a financial blogger.
ryuker16 10y ago
This pretty easy if you start off with a public sector job right after school. Go work a government job for 20 years and rock that sweet pension.
- dragonwriter 10y ago
  This works in the military and some public safety positions, but most civilian public pensions, while they might (e.g.) vest retiree health benefits after 20 years regardless of age, have a minimum age to start drawing benefits, and an even later age to draw maximum benefits. For example, one common California state (and local) arrangement, the CalPERS "2% at 55" formula, gives 1.1% × (highest annual salary) × (years of service) at 50, 2% at 55 (hence the name) and 2.5% at 63, but below 50 you aren't eligible to retire.
xref 10y ago
"He’s “hoarding cash” on the chance he can buy stocks when prices dip, as he expects they will" That's called market timing, and it does. not. work. It doesn't work for professional traders, it doesn't work for algorithms, and it will not work for you. Don't. Do. It.
- throwaway_xx9 10y ago
  1) No, it's not market timing. It's crash timing, and it works great. 2) Buy low, sell high - never goes out of style.
- koonsolo 10y ago
  Strange you got downvoted for this. So I will enforce you stance. Suppose you have $50.000 to invest, what is the best strategy to invest it? If you run over the history of stocks, the best strategy is to invest it all at once, now. Not wait until you THINK the market is low, not splitting it up and buying in smaller chunks to spread your risk.
  - harperlee 10y ago
    ...but the history of stocks is sufficiently short and localized as to have weak predictive power over what's going to happen in the future.
  - bryanbuckley 10y ago
    well.. it depends. You didn't really specify goals, which is the most important thing. In many cases you are correct. Somewhat related see Vanguard's research "Dollar-cost averaging just means taking risk later" [1] which finds lump sum investing is better in ~2/3 of the cases they considered. They had a specific time horizon. Individual's have unique situations and goals and should consider those instead of just dumping everything into an s&p index fund asap. Maybe an individual is more sensitive to sequence risk at different points in his life? There is an entire profession (financial planners) which allows you to outsource these decisions to if you want. Same for the spending part of retirement (hint: most common advice (bond/stock mix) is exactly the opposite of what it should be e.g. "Rising Equity Glidepath" [2]) [1] https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-c... [2] https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/ https://www.kitces.com/blog/should-equity-exposure-decrease-...
sparky_ 10y ago
Late 20s here, in a more advantageous financial situation than the folks in the article. I honestly don't know what I'd do with myself. I'd be lying if I said early retirement hadn't crossed my mind, but just from the experience of taking a month or two off work between jobs, I'm 100% certain I'd be bored out of my mind. If one were to retire at 40, then what? Even spending a full 5 years traveling the world and screwing around, that leaves you another 40 or 45 years of idleness. Maybe I'm just not the type for this, but I'd have to do _something_ productive.
- yaegers 10y ago
  I never really got the "wouldn't know what to do with myself" argument. Especially with people who work in IT. First, I would occupy my time with hobbies. With all that time I could try anything I wanted that looks interesting. And if I really had to do something, as a programmer, I could contribute to open source projects. Being retired would give me enough time to help out in these projects or simply further educate myself in new technologies that I find interesting. There is no much to do. But I can't get myself to do most of these things because after a full work day I am exhausted and don't have the drive to do much besides surfing the net while the TV is on in the background.
- nathan_f77 10y ago
  The scary thing is that some people have all these plans for their retirement, like working on their hobbies, or getting back into something creative. But once you finally get there, you might realize that you've lost whatever you had. Either you forgot how to do everything, or the field has moved on without you, or you lost the passion itself, which is the saddest thing. I recently experienced some form of that. I just got back into things like music, acting, writing, and filmmaking after a very long hiatus. I was never really that good at anything, but now I feel very rusty. And everything I do is bad. And somehow I don't feel quite as creative as I used to be. But I'm going to keep working on it, because I feel like I need to have a change from software development. But if you asked me what I would do if I could retire right now and not have to worry about money, then it would be this, as well as working on electronics and software projects, maybe learning how to weld or do woodworking. There's a lot of fun things to do, and cool things to make. I guess that's not for everyone, though. Even if you decide to pursue a fulfilling career where you enjoy everything about your job, don't let that be the only thing in your life. The world is much bigger than that.
krapp 10y ago
How not to retire at 40, if you're an American - go back to school after 30 and try to turn your hobby interest in programming into a second career.
paulryanrogers 10y ago
Medical care, children, and less fortunate family members would likely make this impractical for many--if not most.

94 points by T-A 10y ago

On a related topic: This couple on a dentist's salary and after escaping Nazis and the holocaust saved with Warren Buffet and $400 million -- the largest single donation in Israel's history -- to the water research for Ben Gurion University. http://www.wsj.com/articles/after-fleeing-the-nazis-a-legacy-that-wont-run-dry-1466722996 http://www.wsj.com/articles/after-fleeing-the-nazis-a-legacy...

wmat 10y ago

Dammit, I just turned 46.

aws_ls 10y ago
Isn't it more fun reading these articles from the other side? I find reading such fun and interesting, and you always gain something from them, like the 4% rule in this one, which was new to me. Of course you can intuitively plan something which is similar. Retirement is not for me. Freedom to work on projects of choice is. Some financial independence or close to it, is needed for both, so this article and especially the story/plans of others were very illuminating. Although, my geography is different. So numbers change and I don't think its a linear on the cost of living scale, due to cultural reasons. In India for example, parents sometimes pay up to not just college, but also the marriage expense of their children. :-)

lets-tryagain 10y ago

It would be interesting to hear what these people are doing for health insurance.

monkmartinez 10y ago

Just skimmed the article for lack of time, I will give it a proper reading in a bit... I may have missed it, but I was fully expecting to see something about the Military here. At least for USA based persons. I have several friends that are beginning to retire or thinking about retirement in their mid to late 30's. Full health insurance, and a pension for the rest of their lives. It may not be a ton in all cases, but most of my friends are young enough to pursue whatever they want with a ton of financial security if they so desire. Or go chill in a van down by the river.... either way it's a decent option.

showerst 10y ago
Military pensions aren't super high, unless you're very high up. I picked 03 on the calculator (Army Captain, mid-level officer) and got < 40k before taxes. High enlisted ranks are looking at < 30k. The benefits are good though. http://militarypay.defense.gov/Calculators/Active-Duty-Retirement/High-36-Calculator/ http://militarypay.defense.gov/Calculators/Active-Duty-Retir... An extra 25k/year after taxes does give you a bunch of flexibility, but it's not really 'do nothing' retirement unless you live somewhere cheap, especially if there's a family to support.
- maxehnert 10y ago
  You can't 'retire' in the sense that you receive a pension with less than 20 years. Which means you were at least an E5 (you had to mess up a lot to retire as an E5). You are certainly higher than an O3 if you were an officer. Presumably after 20 years you've also got other savings such as the TSP retirement account which the military matches 50% on (up to a certain amount only I believe). Your retirement payout can be based on your highest 3 years of service (you get to choose now), which are typically going to be the last few, which if much of that is spent overseas will significantly increase your retirement package. You still won't be living in SF but you should be able to live pretty comfortably in a normally priced city as long as the retirement package isn't your only form of savings. Bonus points if you'er now 20 years into paying off your house as well.
  - nommm-nommm 10y ago
    >Which means you were at least an E5 (you had to mess up a lot to retire as an E5) Looks like the high year tenure for an E5 is 14 years so you'd have to retire at least an E6. https://en.m.wikipedia.org/wiki/High_Year_Tenure https://en.m.wikipedia.org/wiki/High_Year_Tenure
- rayiner 10y ago
  The median individual income is around $30k so it's definitely livable.

DrScump 10y ago

<He and his wife, who quit her back-office job at Credit Suisse in February, spend about 3 percent of their $1.5 million portfolio a year.> Yeah, the tricky part is accumulating the first $1.5 million in the first place. After that, it's a bit easier.

mathgeek 10y ago
Essentially, any "how to retire at age X" title can be rewritten as "how to budget $Y at age X."
tylerhobbs 10y ago
3% of $1.5m is only $45k. If you and your spouse can live off of $45k while you're still earning, you can save ~$100k per year and accumulate $1.5m by the time you're 40, easily. See Mr. Money Moustache for details on how this isn't as unreasonable to do as you would think: http://www.mrmoneymustache.com/ http://www.mrmoneymustache.com/
- to3m 10y ago
  $145K take home pay is surely like $200+K/year? (In the UK, if you earn ~£110K+/year after tax, you're in the top 1% of taxpayers.) If your spouse is going to work too, I admit that is a lot more doable. If not, well... looks like the secret is, "be rich/well-paid, and don't piss it all away". Excellent advice, but I could have told you that already ;)
  - trprog 10y ago
    Although it is advice that an alarming number of people don't seem to follow. I have spent the last decade and a half working with plenty of reasonably high earning individuals. Although I have only occasionally got any insight into their personal financial situation the number of them still living pay to pay is mind blowing.
    - kowdermeister 10y ago
      How is that possible? Are they not saving up or the cash just goes down the drain here and there?

betaby 10y ago

TL;DR Have 1-2-N million US on you investment portfolio and live on %.

vernie 10y ago
Oh, easy!
FuckOffNeemo 10y ago
Haha, pretty much. Beat me to the point. 1) Have millions in the bank already. 2) ??? 3) Profit!

dennyis 10y ago

It's not difficult if you plan for it and make it a goal. Mine is to be financially independent by 40, so I could never work another day. Realistically I love working, and can't wait to be able to donate more, volunteer more, and help my children with education a starting businesses.

poopsintub 10y ago

I have seen a couple of examples like this but what happens when the market falls out of the sky again? My understanding is rental property income will drop and the 4% in investments becomes what, negative 40-50,60%?

kowdermeister 10y ago

Or alternatively have 500k in the bank and move to a cheap European city where you can live off 14k per year. I'm actually more of a fan of Stefan Sagmeister's method of retirement, where he split up his retirement years and moved it to in between his productive years. https://www.ted.com/talks/stefan_sagmeister_the_power_of_time_off https://www.ted.com/talks/stefan_sagmeister_the_power_of_tim... I could earn in a year enough cash to take the next year off, do fun things, learn new things and then spend the next few on what I figured out in that one "retired" year.

incompatible 10y ago
I'm sure there are cheap places in the US too. I live in a cheap place in Australia, which has the advantage of a government-provided health system and qualification for an age pension at 67. So only household expenses between age ~40 and 67 need to be budgeted for, and with a frugal lifestyle without kids that's not much.
- mmerlin 10y ago
  Except land prices are crazy here in Australian cities
  - incompatible 10y ago
    There are still places, if you avoid the larger cities.
- ux-app 10y ago
  > qualification for an age pension at 67 >only household expenses between age ~40 and 67 need to be budgeted for Pension is $20k/year. You're an Aussie, so you know how incredibly high our cost of living is. 35cents/kWh for electricity (!!) 3x what some places in the US pay + the insane prices we pay for groceries, gas, entertainment, vice taxes etc. Unless you have supplemental income from investments you will be straddling the poverty line on the Australian pension. I've seen pensioners mend shoes with gaffer tape. This all assumes that the pension system stays solvent which is not guaranteed. Already there is talk of lifting retirement age to 70+ > I live in a cheap place in Australia You're probably comparing to other places in Australia (east coast?). Relative to other countries, unfortunately, there is no cheap place in Australia.

deleted 10y ago

[deleted]

deleted 10y ago

[deleted]

applecore 10y ago

> We asked three people who retired in their 30s and 40s to explain how they’ve made it pay off. Alright. Let's see how they do it... 1. "a blog where he chronicles his retirement experience" 2. "writing a book about retirement" 3. "blogging about financial independence" The trick to early retirement is blogging about early retirement.

betaby 10y ago
Quickest path to get rich is to write a book "How to get rich"
- bbcbasic 10y ago
  On the Warrior Forum they do deeper depths of recursion on that. I.e. guys making money selling products about how to make money by selling products on how to make money. Seriously.
  - theoh 10y ago
    There's a guy who wrote a "How to Write a How to Write Book" book: http://www.brianpiddock.co.uk/home.htm http://www.brianpiddock.co.uk/home.htm
- ukoki 10y ago
  You should check out the "digital nomad" communities in SE Asia. The only thing anyone is selling is marketing courses/seminars/ebooks
driverdan 10y ago
Except they all have significant savings they could live off of if they didn't have those other sources of income.
laretluval 10y ago
Alternatively this is just the subset of early retiring people who are vocal and visible about it.

branchless 10y ago

Knew they wouldn't let me down: "rental income,". So can everyone live off a big chunk of another families labour? "The equity in their home—worth about 21 times their annual expenses". And what about now where the average first time buyer age is near 40! Last one is a banker. Just need to work in an industry secretly building massive debt and take your bonus each year and you are golden. Money moustache man all over again.

econner 10y ago
Having a place to live is one of the primary needs people have. Why shouldn't you be able to make an income off of that? Everyone lives off of other people's labor...unless you're subsistence farming or something. I'll give you the banker one though.
- branchless 10y ago
  Housing is a basic need and western finance and govt structures work to skim off labour through land. If you are borrowing to rent out you are simply a debt collector for the banks. We used to have decent manufacturing jobs where the other half didn't have to work who could run a car, had good hours and enough money. Now land is the primary cost for every family. The same pile of bricks for more of your labour. You happy with that? It's the system not the cost of building or materials. Think of the advances since the 1960s in materials and construction.
  - ap3 10y ago
    Yes, but they are not making more land
    - branchless 10y ago
      That is the exact reason why these vultures should be curtailed.
xref 10y ago
Could you expand on the Money Mustache comment? From what I can gather he currently makes quite a bit of income from putting his followers into bad products he promotes and advertises on his site, such as Geico (premiums going towards massive marketing campaigns, not keeping costs low) and Betterment (layering fees on top of index funds which you could buy directly for no extra fee)

applecore 10y ago

Dupe: https://news.ycombinator.com/item?id=12605680 https://news.ycombinator.com/item?id=12605680

overcast 10y ago

Having money, makes money. What a revelation.

Prad 10y ago

Probably isn't difficult once you get started and have goals set in place to do so. I'm only in my early 20's I haven't even thought about retirement. However, I am saving all my money at the moment. Hopefully that helps me out later when I really need it.

akg_67 10y ago
In addition to what you are doing in your 20s, One favor you can do to your future yourself is to learn about investing and finance. Recipe is simple. * Maximize your income * Minimize your expenses * Save the difference * Grow your savings.

mcguire 10y ago

How to retire at 40...if you're a financial blogger.

ryuker16 10y ago

This pretty easy if you start off with a public sector job right after school. Go work a government job for 20 years and rock that sweet pension.

dragonwriter 10y ago
This works in the military and some public safety positions, but most civilian public pensions, while they might (e.g.) vest retiree health benefits after 20 years regardless of age, have a minimum age to start drawing benefits, and an even later age to draw maximum benefits. For example, one common California state (and local) arrangement, the CalPERS "2% at 55" formula, gives 1.1% × (highest annual salary) × (years of service) at 50, 2% at 55 (hence the name) and 2.5% at 63, but below 50 you aren't eligible to retire.

xref 10y ago

"He’s “hoarding cash” on the chance he can buy stocks when prices dip, as he expects they will" That's called market timing, and it does. not. work. It doesn't work for professional traders, it doesn't work for algorithms, and it will not work for you. Don't. Do. It.

throwaway_xx9 10y ago
1) No, it's not market timing. It's crash timing, and it works great. 2) Buy low, sell high - never goes out of style.
koonsolo 10y ago
Strange you got downvoted for this. So I will enforce you stance. Suppose you have $50.000 to invest, what is the best strategy to invest it? If you run over the history of stocks, the best strategy is to invest it all at once, now. Not wait until you THINK the market is low, not splitting it up and buying in smaller chunks to spread your risk.
- harperlee 10y ago
  ...but the history of stocks is sufficiently short and localized as to have weak predictive power over what's going to happen in the future.
- bryanbuckley 10y ago
  well.. it depends. You didn't really specify goals, which is the most important thing. In many cases you are correct. Somewhat related see Vanguard's research "Dollar-cost averaging just means taking risk later" [1] which finds lump sum investing is better in ~2/3 of the cases they considered. They had a specific time horizon. Individual's have unique situations and goals and should consider those instead of just dumping everything into an s&p index fund asap. Maybe an individual is more sensitive to sequence risk at different points in his life? There is an entire profession (financial planners) which allows you to outsource these decisions to if you want. Same for the spending part of retirement (hint: most common advice (bond/stock mix) is exactly the opposite of what it should be e.g. "Rising Equity Glidepath" [2]) [1] https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-c... [2] https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/ https://www.kitces.com/blog/should-equity-exposure-decrease-...

sparky_ 10y ago

Late 20s here, in a more advantageous financial situation than the folks in the article. I honestly don't know what I'd do with myself. I'd be lying if I said early retirement hadn't crossed my mind, but just from the experience of taking a month or two off work between jobs, I'm 100% certain I'd be bored out of my mind. If one were to retire at 40, then what? Even spending a full 5 years traveling the world and screwing around, that leaves you another 40 or 45 years of idleness. Maybe I'm just not the type for this, but I'd have to do _something_ productive.

yaegers 10y ago
I never really got the "wouldn't know what to do with myself" argument. Especially with people who work in IT. First, I would occupy my time with hobbies. With all that time I could try anything I wanted that looks interesting. And if I really had to do something, as a programmer, I could contribute to open source projects. Being retired would give me enough time to help out in these projects or simply further educate myself in new technologies that I find interesting. There is no much to do. But I can't get myself to do most of these things because after a full work day I am exhausted and don't have the drive to do much besides surfing the net while the TV is on in the background.
nathan_f77 10y ago
The scary thing is that some people have all these plans for their retirement, like working on their hobbies, or getting back into something creative. But once you finally get there, you might realize that you've lost whatever you had. Either you forgot how to do everything, or the field has moved on without you, or you lost the passion itself, which is the saddest thing. I recently experienced some form of that. I just got back into things like music, acting, writing, and filmmaking after a very long hiatus. I was never really that good at anything, but now I feel very rusty. And everything I do is bad. And somehow I don't feel quite as creative as I used to be. But I'm going to keep working on it, because I feel like I need to have a change from software development. But if you asked me what I would do if I could retire right now and not have to worry about money, then it would be this, as well as working on electronics and software projects, maybe learning how to weld or do woodworking. There's a lot of fun things to do, and cool things to make. I guess that's not for everyone, though. Even if you decide to pursue a fulfilling career where you enjoy everything about your job, don't let that be the only thing in your life. The world is much bigger than that.

krapp 10y ago

How not to retire at 40, if you're an American - go back to school after 30 and try to turn your hobby interest in programming into a second career.

paulryanrogers 10y ago

Medical care, children, and less fortunate family members would likely make this impractical for many--if not most.