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I've been telling this to anybody who'd listen ever since I started doing it myself: Continue living like a college student for 5 years after you leave college

I've been telling this to anybody who'd listen ever since I started doing it myself: Continue living like a college student for 5 years after you leave college and you'll never need to worry about saving for retirement. It really is that easy. You're going from a state where you have $500/month in expenses and zero income to a state where you have $5,000/month in income. It's trivial to save $10k/year at that point unless you go out of your way not to. Even at 10% returns (which you can pretty much always get), your money will double every five years. Don't touch it 30 years, and that's a lot of doubling. And speaking of 30, that's when you can stop. I essentially retired when I was 30 years old, and now just work the occasional short contract to pay the rent. Meanwhile the stack keeps growing in the background, waiting for grey-haired Jason to retire on it 20 years from now.

bengebre 16y ago
Living like a student for 5 (or more) years is a great strategy, but I just wanted to correct the doubling time math you presented. To double every 5 years you need a 15% annual return (1.15^5 = 2.011). A 10% annual return doubles every 7.2 years, thus the rule of 72: http://en.wikipedia.org/wiki/Rule_of_72 http://en.wikipedia.org/wiki/Rule_of_72
smackfu 16y ago
Of course you need no college debt for this plan. I don't really see how it's so easy to get 10% returns as well. Stocks may average 10% long-term but for the last five years you certainly didn't double your money.
- jasonkester 16y ago
  That's exactly what you need them to do: 10% average long term. And they always have.
roadnottaken 16y ago
What planet are you on where 10% returns are easy to get? Interest rates are about 1% right now for fixed-return investments. It seems to me that there's no such thing as a safe investment these days and there hasn't been one for a while. Please advise!
- jasonkester 16y ago
  This one. Here's the S&P 500 since 1950 (as far back as Yahoo has data, but the stock market as a whole looks pretty much like that back to 1800): http://is.gd/dWQmU http://is.gd/dWQmU See if you can find a 30 year slice of that chart where it doesn't average 10% annual returns. If you're investing for retirement, that's how much time you have. Patience...

bengebre 16y ago

Living like a student for 5 (or more) years is a great strategy, but I just wanted to correct the doubling time math you presented. To double every 5 years you need a 15% annual return (1.15^5 = 2.011). A 10% annual return doubles every 7.2 years, thus the rule of 72: http://en.wikipedia.org/wiki/Rule_of_72 http://en.wikipedia.org/wiki/Rule_of_72

smackfu 16y ago

Of course you need no college debt for this plan. I don't really see how it's so easy to get 10% returns as well. Stocks may average 10% long-term but for the last five years you certainly didn't double your money.

jasonkester 16y ago
That's exactly what you need them to do: 10% average long term. And they always have.

roadnottaken 16y ago

What planet are you on where 10% returns are easy to get? Interest rates are about 1% right now for fixed-return investments. It seems to me that there's no such thing as a safe investment these days and there hasn't been one for a while. Please advise!

jasonkester 16y ago
This one. Here's the S&P 500 since 1950 (as far back as Yahoo has data, but the stock market as a whole looks pretty much like that back to 1800): http://is.gd/dWQmU http://is.gd/dWQmU See if you can find a 30 year slice of that chart where it doesn't average 10% annual returns. If you're investing for retirement, that's how much time you have. Patience...