4 ms·

> but good luck trying to retire as a welder or car mechanic making $50k Retiring at 30 while earning $50k would be difficult. But retiring at 40 or even 50 is

> but good luck trying to retire as a welder or car mechanic making $50k Retiring at 30 while earning $50k would be difficult. But retiring at 40 or even 50 is still relatively easy on such a salary.

jrochkind1 9y ago
Really? In the U.S.? Case study? Without kids and if you don't really spend any money on recreation or vacations (before or after retirement), maybe. Or if you somehow have a job that will give you a pension (with health insurance?) at 50, sure!
- the_gastropod 9y ago
  I suggest just reading MMM. It's all about savings rate. As an example, I live in Brooklyn, NY (one of the most expensive places to live in the U.S.) In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assume someone making $50k lives in not NYC, I imagine this scenario could be a lot better. For a more extreme version of MMM, read http://earlyretirementextreme.com/ http://earlyretirementextreme.com/. This guy (Jacob, who MMM mentioned in this interview) never earned much money (never over $50k prior to becoming financially independent), and retired after working 5 years. With a little creativity, most people can retire far sooner than standard retirement age.
  - cheetos 9y ago
    > In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assuming a $50k income post-tax
    - froindt 9y ago
      Knocking off 18k for 401k and 5.5k for a Traditional IRA dramatically reduces the tax liability. I recognize 50k-32k = 18k (so the full 23.5k can't be executed in this case), but it makes a significant difference regardless. And there are methods to pull this money out well before the standard ages without penalty, such as Substantially Equal Periodic Payments (SEPP).
  - davis_m 9y ago
    You are forgetting taxes (FICA, state and federal income taxes, etc), which would eat up a significant portion of those savings.
GiorgioG 9y ago
Assuming you decide to not to have kids ;)
- garettmd 9y ago
  And assuming there are no bad events in your life which drain your savings, like health issues
  - the_gastropod 9y ago
    Best thing you can do to protect yourself from bad events like health issues is to have a cushion of cash! The strategy is the same: spend less, so you can save more money.
    - GiorgioG 9y ago
      You can't protect yourself from bad events like health issues with a cushion of cash. I mean not unless you have hundreds of thousands of dollars in the bank. My son was diagnosed with Type 1 Diabetes at 19 months old (4+ years ago) and with what we spend on hospital, health insurance, supplies, etc we could buy a new Toyota Camry every single year. Let that sink in for a minute. I have been a contractor for quite a while so we've been able to weather it, but if I was making a 'normal' salary (I'm in the Southeast US) we'd be drowning in credit card bills to pay for our son's care.
jacquesm 9y ago
That depends greatly on where you are living and on whether or not you have kids or student debt. In plenty of places a 40 or 50K salary would be burned up every month even if you never did anything crazy.
- falcolas 9y ago
  This is more important than a lot of people realize. "Just move somewhere cheaper!" is the battle cry which ignores "It's cheaper because there's no real jobs there." Few industries are as flexible about working from home as the software development industry.
ramphastidae 9y ago
That's an exaggeration, even for frugal people. Retiring at 50 means ~30 years of working life finished and ~30 years of retirement remaining. At $50k per year * 30, that's $1.5m. Spread out over 60 years that's $25k per year before tax. I wouldn't say it's "relatively easy" to save for retirement, pay for healthcare, live somewhere safe, have children, etc. on that, even with investment returns over that time frame.
- the_gastropod 9y ago
  You're ignoring investment income. I suggest reading MMM. It's a trove of great information.
  - dceddia 9y ago
    I second this. He has a ton of blog posts though, so it can be like drinking from a firehose. Start with this one: The Shockingly Simple Math Behind Early Retirement - http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

> but good luck trying to retire as a welder or car mechanic making $50k Retiring at 30 while earning $50k would be difficult. But retiring at 40 or even 50 is still relatively easy on such a salary.

jrochkind1 9y ago

Really? In the U.S.? Case study? Without kids and if you don't really spend any money on recreation or vacations (before or after retirement), maybe. Or if you somehow have a job that will give you a pension (with health insurance?) at 50, sure!

the_gastropod 9y ago
I suggest just reading MMM. It's all about savings rate. As an example, I live in Brooklyn, NY (one of the most expensive places to live in the U.S.) In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assume someone making $50k lives in not NYC, I imagine this scenario could be a lot better. For a more extreme version of MMM, read http://earlyretirementextreme.com/ http://earlyretirementextreme.com/. This guy (Jacob, who MMM mentioned in this interview) never earned much money (never over $50k prior to becoming financially independent), and retired after working 5 years. With a little creativity, most people can retire far sooner than standard retirement age.
- cheetos 9y ago
  > In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career. Assuming a $50k income post-tax
  - froindt 9y ago
    Knocking off 18k for 401k and 5.5k for a Traditional IRA dramatically reduces the tax liability. I recognize 50k-32k = 18k (so the full 23.5k can't be executed in this case), but it makes a significant difference regardless. And there are methods to pull this money out well before the standard ages without penalty, such as Substantially Equal Periodic Payments (SEPP).
- davis_m 9y ago
  You are forgetting taxes (FICA, state and federal income taxes, etc), which would eat up a significant portion of those savings.

GiorgioG 9y ago

Assuming you decide to not to have kids ;)

garettmd 9y ago
And assuming there are no bad events in your life which drain your savings, like health issues
- the_gastropod 9y ago
  Best thing you can do to protect yourself from bad events like health issues is to have a cushion of cash! The strategy is the same: spend less, so you can save more money.
  - GiorgioG 9y ago
    You can't protect yourself from bad events like health issues with a cushion of cash. I mean not unless you have hundreds of thousands of dollars in the bank. My son was diagnosed with Type 1 Diabetes at 19 months old (4+ years ago) and with what we spend on hospital, health insurance, supplies, etc we could buy a new Toyota Camry every single year. Let that sink in for a minute. I have been a contractor for quite a while so we've been able to weather it, but if I was making a 'normal' salary (I'm in the Southeast US) we'd be drowning in credit card bills to pay for our son's care.

jacquesm 9y ago

That depends greatly on where you are living and on whether or not you have kids or student debt. In plenty of places a 40 or 50K salary would be burned up every month even if you never did anything crazy.

falcolas 9y ago
This is more important than a lot of people realize. "Just move somewhere cheaper!" is the battle cry which ignores "It's cheaper because there's no real jobs there." Few industries are as flexible about working from home as the software development industry.

ramphastidae 9y ago

That's an exaggeration, even for frugal people. Retiring at 50 means ~30 years of working life finished and ~30 years of retirement remaining. At $50k per year * 30, that's $1.5m. Spread out over 60 years that's $25k per year before tax. I wouldn't say it's "relatively easy" to save for retirement, pay for healthcare, live somewhere safe, have children, etc. on that, even with investment returns over that time frame.

the_gastropod 9y ago
You're ignoring investment income. I suggest reading MMM. It's a trove of great information.
- dceddia 9y ago
  I second this. He has a ton of blog posts though, so it can be like drinking from a firehose. Start with this one: The Shockingly Simple Math Behind Early Retirement - http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...