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Ask HN: Can you still achieve FIRE if you start planning at 40?

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Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#11

Post by Oneiros512 »

One think I like to keep in mind with this sort of situation is that building retirement savings and an emergency fund can have immediate benefits of the added security blanket they provide, aside from the long-term goal of retirement.

Even if someone got a late start or has a high amount of debt and retirement isn't looking so possible, building a safety net and improving your financial situation is never a bad idea.

I just got laid off myself, and while I'm many years away from any kind of potential retirement, my savings over the last several years put my mind at ease because I know I can easily go a year if I have to without any additional employment, even though hopefully I'll have a new job much sooner than that.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#12

Post by smcphile »

There’s no “one size fits all” answer to the question. Some people certainly have started from zero at age 40 and have happily retired before the legal retirement age. Whether or not it’s possible for you depends. Life situations vary enormously.

Two suggestions:

Read Rolf Dobelli’s “The art of the good life” to get a realistic idea of how the world works, and how both character and the fates have a role in how your life plays out.

Set up a spreadsheet to model earnings and expenses from age 40 to age 90 and see what the model tells you. Play with the numbers to develop a strategy that works for you and your situation.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#13

Post by maximente »

FIRE is about reducing spending.

if you're breaking even on unemployment - say $500/wk post-tax (???), then you just have to be disciplined enough to not inflate your lifestyle wildly when you land FTE.

if you make $1000 post-tax a week with a job and no spending increases, you immediately have a savings rate of 50%, which translates into working about 17 years. so you'd retire at 57.

here's the calculator i use: https://networthify.com/calculator/earlyretirement?income=50...

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#14

Post by sloaken »

Do you own your house? Depending on what you think you need verses what you want. If you are willing to live in a country where the typical standard of living is lower than what you are use to. You will probably not speak the language.

Are you willing to live in a mobile home? If you are flexible and self reliant then definitely yes. If you need luxury, meals delivered, swimming pool, etc then probably not, well not in 10 to 15 years, maybe 25 to 30. But it depends how much you make.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#15

Post by sloaken »

Oneiros512 wrote: post #11

One think I like to keep in mind with this sort of situation is that building retirement savings and an emergency fund can have immediate benefits of the added security blanket they provide, aside from the long-term goal of retirement. Even if someone got a late start or has a high amount of debt and retirement isn't looking so possible, building a safety net and improving your financial situation is never a bad idea…

Great advise!

Sorry to hear you are laid off. I have been there twice. Short advice: 1) make a schedule so you do not spend ALL day troweling for a job (it gets depressing), 2) schedule in time to exercise 3) if you can find co-workers who were let go, and you like, try to meet with them weekly. It provides a stability and a sounding board for ideas.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#16

Post by rskar »

Per https://www.marketwatch.com/story/this-is-exactly-how-much-i..., retirees have a lifestyle of roughly $60k or so per year. At a more modest $50k, and assuming a portfolio of working assets from which to draw this $50k, that would be something like a portfolio of about $830k at 6%. Assuming a 6% yearly net gain on investments, then if you can somehow sock away about $33k per year, you might achieve FIRE status in 15 years.

So there you have it: The event horizon is based on how realistically you can soldier on and invest 66% of your target retirement income each year for 15 years. Not sure how realistic that is for most people, let alone this hypothetical 40-something in the doldrums.

I'm using 6% for sake of argument for no good reason, but it's the usual rate used in converting a pension into a lump-sum. It is possible to do much better - stock market has been about 8% to 11% on average. So maybe 6% works as a fudge-factor in this sort of planning versus life's many ups and downs.

Anyway, if one had 30 years towards this "$50k FIRE", then the yearly "at 6%" investing is $10k; at 20 years, $21k; 10 years, $56k.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#18

Post by pfranz »

rskar wrote: post #16

Per https://www.marketwatch.com/story/this-is-exactly-how-much-i... , retirees have a lifestyle of roughly $60k or so per year. At a more modest $50k, and assuming a portfolio of working assets from which to draw this $50k, that would be something like a portfolio of about $830k at 6%. Assuming a 6% yearly net gain on investments, then if you can somehow sock away about $33k per year, you might achieve FIRE status in…

Don't forget taxes! Both on contribution and withdraw. Those under 50 are capped at $19k /year for 401k and $7k /year for IRA. Keep in mind you can't start withdrawing until age 59 1/2.

So any money accrued above those limits will be taxed and any money you need to withdraw before that age will need to be separate and taxed.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#19

Post by pfranz »

s1t5 wrote: post #7
pmiller2 wrote: post #5

10-15 years is doable with a savings rate of 67%. At that rate, you're accumulating 2 years' worth of spending for every year that passes by. In 12.5 years, you'll have accumulated 25 years' worth of expenses. If you invest well over that time, you can either retire earlier or do it with a somewhat lower savings rate.

Even if we assume that saving that much is possible, the math only works if you're up for living a lifestyle costing 33% of your current earnings for the rest of your life.

This is something I wish was talked about more in personal finance. Salary and spending don't have to be coupled.

Re: Ask HN: Can you still achieve FIRE if you start planning at 40?

#20

Post by mi100hael »

rskar wrote: post #16

Per https://www.marketwatch.com/story/this-is-exactly-how-much-i... , retirees have a lifestyle of roughly $60k or so per year. At a more modest $50k, and assuming a portfolio of working assets from which to draw this $50k, that would be something like a portfolio of about $830k at 6%. Assuming a 6% yearly net gain on investments, then if you can somehow sock away about $33k per year, you might achieve FIRE status in…

Conventional wisdom is 4% withdrawal for year 1, and then inflationary adjustments after [0].

So for $50k, that's $1.25M principal. If you can wait and supplement with social security or part time work so you only need to withdraw about $35k, then it's $875k principal.

[0]: https://www.fool.com/retirement/what-is-a-safe-withdrawal-ra...

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