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Nope. 70th percentile median household net worth for the 55 to 64 age bracket is less than $400K. For most, much of that net worth is home equity. If you live in a leafy suburb, you get a false sense of the financial state of the average person.
Unless you're a federal/state/local worker or one of those rare union workers with the big pension none of the rest of us get, you need to be around 95th percentile household net worth to retire in your 50's. 95th percentile household net worth for age 55 to 59 is about $2 1/2 million. Even then, you're going to take a big cash flow hit since most who have accumulated that kind of wealth made 5%er income. If you're making $250K to accumulate that kind of wealth, the thought of living on $80K probably pushes a lot of those people to work a few more years.
Part of the FIRE philosophy is to live frugally so $2.5M isn't necessary. MMM talks about 600K, personally I would like to double that, but I think I could do it on less.
The other aspect of FIRE is living on much less than you make. So going from 250K to 80K won't be a problem as long as spending starts and remains below the 80K. Once savings goal is reached, and mortgage is paid off, 80K will buy a lot of beer.
To answer the OP, hard to say how many people are truly living the life, I would say a fairly high percentage of contributors to this board. But I don't know anyone personally. Then again, another pillar of FIRE is to not talk about. (the first rule? )
Part of the FIRE philosophy is to live frugally so $2.5M isn't necessary. MMM talks about 600K, personally I would like to double that, but I think I could do it on less.
Yes, exactly.
I think I could do it on 600k if I moved to a cheaper area, although I'm not sure I'd want to. But MMM had 600k and a paid off house, and I'm a renter, so that does make a difference.
If I rely on my government pension, I could probably retire now in a cheaper area and draw down my savings until I'm eligible to collect the pension. But I'm not sure I'm ready to do that.
While $2.5 M is nice, there's no way I need that much. It's great if I can get it, but if I have to work for many more years to get it, forget it, not worth it.
Like galaxyhi wrote earlier, everybody wants to FIRE. Most people aren't willing to. Just anecdotally, the people I talk to can't imagine skipping their $4k yearly vacations and expensive cars/purses, since that's their "relief from work". Ironically that level of consumerism is what's keeping them working longer. Most of us make our own beds, and some are hit with catastrophes in life that make it worse for them.
To get the actual numbers though, I think it would be best to check some publications by the IRS, SSA, Census, Gallup, etc to see the distributions. For example, this gallup poll is showing almost 30% of Americans expect to retire before age 65. For those that want to retire early, say pre-60, is closer to 7-15%.
I have no clue, but I'm going to go with 1.5% (5 million) that are actively pursuing FIRE. Mr. Money Mustache once wrote a post about readership and I think he included some random number like 5 million.. but that number probably includes those that are interested in it, but no where near meeting the terms to reach FIRE and those that have already reached FIRE. I'm sure there are those reaching FIRE outside of his readership too, so I'm just going to keep 5 million to account for those who have reached it and those that can't.
Yes I have not quite, but almost, pulled that number out of my a$$. Can anyone do better than that though?
5 million is a LOT of people and yet as a percentage it's not much at all... sorta depends how you look at it...
5 millions seems about right. Start with about 325 million people in the US. 87.4 million over the age of 16 do not work due to already being retired, in school, incarcerated, illness, or disability. That leaves 237 million. Take out the 65 million who are under 16 and that leaves about 172 millions who are working and able to work to potentially save for eventual retirement. If we go with the 5 million estimate of people actively working towards FIRE, than means under 3% of working americans are actively trying to retire early or be financially independent. I'm one of them!
What percentage of people actually implement a plan to retire 'early'?
I have no idea.
I worked in a career that offered a 20-year pension, the majority of workers bail before they complete 6 years.
When I was at 15 years [5 years from pension eligibility], I took the time to calculate Net Worth and project our post-retirement finances. I did that again the 18-year mark.
When I was in the short strokes, I was required to sit through a week-long class to prepare myself for being a civilian. In that classroom were 25 fellow 'almost retirees'. Not a single one of my classmates had given it any more than a passing thought. None of them knew where they are going to go. None of them had any other sources of income lined up, beyond their pension.
Everyone of them was confident that their degrees and military credentials would be enough to land them a follow-on career path somewhere. I was shocked.
A few of them admitted to me that if they were to only get their pension and no other income they would be ruined financially.
IMO, the vast majority of those even remotely thinking about having millions by age 50 - are not doing so by working for someone else and maxing out a 401K. Everyone I've ever known who has done that has their own successful business, a major inheritance or some other type of windfall.
Further, unless one has at least $2-million by 50, with limited debt, a COLA-protected income and is a pretty good money \manager, they cannot confidently declare themselves FIRE! -- given a potential life expectancy of 80+ along with unknown inflation, tax and healthcare issues.
Almost every young person imagines themselves one day being FIRE ... preferably sooner, rather than later. But, reality and an unwillingness to live within their means ....keeps all but, a very few from actually reaching that objective. (We retired FIRE at about 60, and have built-in pension protections against inflation and long term health care, plus are value conscious in our spending and live a non-extravagant, debt-free lifestyle.
I don't think FIRE is very prevalent with an average savings rate of 5-6% in the US, and it taking roughly 15% to hit financial strength at normal retirement age.
We are trying to save 40-45% and 2.75% as a target draw down. I am hoping to FIRE by 55 at latest. With ongoing part-time work and possibly move somewhere cheaper, 45 might be a possibility.
Further, unless one has at least $2-million by 50, with limited debt, a COLA-protected income and is a pretty good money \manager, they cannot confidently declare themselves FIRE! -- given a potential life expectancy of 80+ along with unknown inflation, tax and healthcare issues.
I don't agree. The withdrawal rate for a 60 year portfolio is only slightly lower than what's needed for a 30 year portfolio.
I notice the FIRE crowd also tends to be more health conscious. Part of that is because conscientious people are usually conscientious about everything. But I also think it's because when you're not in the rat race, you have more time and energy to do healthy things like cook your own food and exercise. Not a guarantee, but healthy lifestyles usually = much lower health care costs and fewer health care problems such as obesity, diabetes, high blood pressure, etc.
The FIRE crowd also has a tendency to work small side gigs they enjoy doing that prop up their incomes to a small degree. Even a modest side gig income of $5000 a year can really help increase the life of your portfolio.
Last edited by mysticaltyger; 07-10-2017 at 02:23 PM..
IMO, the vast majority of those even remotely thinking about having millions by age 50 - are not doing so by working for someone else and maxing out a 401K. Everyone I've ever known who has done that has their own successful business, a major inheritance or some other type of windfall.
Further, unless one has at least $2-million by 50, with limited debt, a COLA-protected income and is a pretty good money \manager, they cannot confidently declare themselves FIRE! -- given a potential life expectancy of 80+ along with unknown inflation, tax and healthcare issues.
Almost every young person imagines themselves one day being FIRE ... preferably sooner, rather than later. But, reality and an unwillingness to live within their means ....keeps all but, a very few from actually reaching that objective. (We retired FIRE at about 60, and have built-in pension protections against inflation and long term health care, plus are value conscious in our spending and live a non-extravagant, debt-free lifestyle.
2 million at a 3% WR would still produce $60k/yr. That is plenty for many people with no debt and unless something catastrophic happens you would never run out of money at a 3% WR. Hell, if you eliminated our mortgage (still include property taxes and insurance) and daycare we are on pace to spend about $33k for a family of 3 this year. This includes a vacation up to the Northeast for a week, several trips to visit family, a week long vacation to the Clearwater area and an expensive bachelor party weekend in Las Vegas as well as all normal monthly expenses.
I'm not sure how many are trying to become FI, my guess is it is a very small population. Most people I know that make good money are more interested in finding ways to spend it.
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