The Simple Math Behind Early Retirement

Post by jimbokun » Fri, Jan 18, 2013, 4:56 PM UTC

rayiner wrote: post #120

danielweber wrote: post #66

Earlier quoted context omitted.

He's right that all savings are someone else's debt. But, if that is your big sticking point, you can literally load up on the cans of pork and beans as your retirement fund. "Savings account" is an abstraction for that, and it's important to realize how abstractions leak and fail, but for most people the abstraction is just fine.

Savings accounts are not abstractions for loading up on cans of pork and beans. If everyone simultaneously did that, then stopped working, everyone could still eat. If everyone put money into a savings account, then stopped working, they'd all starve. I think this is a deeply meaningful distinction. "Saving for retirement" in the modern financial sense is really more akin to having your kids take care of you when you…

Post by smackfu » Fri, Jan 18, 2013, 4:58 PM UTC

gte910h wrote: post #113

smackfu wrote: post #47

Earlier quoted context omitted.

The problem with the extremes of this logic is that if you scrimp and save and live poor to get to that 75% savings rate... you still have to live poor for the rest of your life on that 25% of your take home.

Nope. 10 years later you can go screw it all, and still have 35k in passive income a year and a huge nest egg. You're also probably think 35k in an expensive place, where he lives in a random suburb of boulder I think.

Post by tc7 » Fri, Jan 18, 2013, 4:59 PM UTC

liber8 wrote: post #103

TheCapn wrote: post #65

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At the heart of it your quarrel with his program is that people have no willpower to change? I mean, you're very right in that we have a horrible track record but, in your opinion, is the advice sound should someone be able to adjust their lifestyle?

Of course people can change their lifestyle. I have no doubt that MMM and the extreme early retirement guy, and some of the devotees of those blogs, have done exactly that. That doesn't mean extreme frugality is the first thing people should focus on though. People have limited willpower. Using it to cut out $20/week worth of lattes or $100/month worth of cable just isn't the best use of it, unless you've already cov…

Post by marvin » Fri, Jan 18, 2013, 5:08 PM UTC

hudibras wrote: post #49

brazzy wrote: post #43

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There are very few really reasonable assumptions over a 50 year timeframe. 5-7% ROI is not one of them, I'd say. On the other hand, you missed an important point: 4. "No longer working" isn't a permanent all-or-nothing decision. You can start working again if it becomes necessary for some reason (probably won't earn quite as much though). Or even keep working, just with fewer hours and/or a job that pays less but whi…

That's true, it's the flexibility to work exactly as much as you want--even if it's zero hours a year. In my own financial calculations, I also assume that I start collecting social security benefits when I turn 67. A lot of people consider that naive ("SS is going bankrupt!"), but I don't. So that'll be either a raise for my retirement income or at least a cushion to soften the losses I may have taken in the market…

Post by hudibras » Fri, Jan 18, 2013, 5:08 PM UTC

afterburner wrote: post #116

Irregardless wrote: post #100

Earlier quoted context omitted.

Reminds me of a great article I saw posted on HN a few months ago. I wish I could remember where it was, but it basically said "You'll never get anywhere by skipping coffee and bringing lunch to work, focus on the big gains like increasing your salary by 30% instead". The frugal lifestyle BS most likely does more harm than good for the average person. People shouldn't be sacrificing quality of life because they're wo…

I agree. It reminds me of the story of a low income divorced father barely scraping by month to month, who could have used a several hundred dollar windfall to try his shot at a trade school or some such training program, but instead spent it on a fun weekend with his son when he had a couple days with him. Long term possibly maybe shot at improving his life slightly, or a good life experience with his son now... it'…