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So do you just throw your hands up and say "I don't know". Or do you use reason and common sense to say it's plausible. It makes sense to me that someone who retires in their 30s or 40s will make at least a bit of money from some sort of side income. Is that really such a stretch?
In many cases, they may have invested in rental property or something passive. One of my buddies, who is 62, owns five houses he rents out. He's turned running them over to a property manager in town who owns 400+ properties in the area, and he charges 8% of the rent. The property manager basically does everything and only calls the owner if there is a business decision to be made. The owner doesn't even know the names of the tenants. It's basically automatic income.
No it sure doesn't, and there are people in their 50's and 60's who if and when they "retire" will be in the exact same boat of $35K/year. One needs $1M to throw off $40K/year at a safe withdrawal rate of 4% a year. That's a big goal for a lot of people. Someone who has hit that goal at age 35 is someone with investments of around $850K, which I consider very good at age 35.
$850k is good for any age. The median retiree is probably well below that, probably the 70th to 75th percentile is below that.
I'm 31 and while I don't know what everyone I know has, the only person I know personally in their 30s or younger who is beyond this is a self-made tech multimillionaire. People like that are such outliers it's really an injustice to count them with average folks.
I think what we're missing here in the discussion is that financial independence really is a spectrum.
Stage 0: Dependence (on debt, family, charity, or the government).
Stage 1: Solvency (You can pay all your own bills without incurring debt).
Stage 2: Stability (Paid off all/most consumer debt and have some savings).
Stage 3: Agency (Paid off all debt. Enough saved to walk away from job).
Stage 4: Security (Enough investments to pay a very basic lifestyle).
Stage 5: Independence (Enough investments to support your current lifestyle for
the rest of your life).
Stage 6: Abundance (Enough investments to live your current lifestyle and
increase it over time for the rest of your life).
Nope. You say you hang around the forums a bit, I'm surprised your understanding of FIRE is so poor. Google is your friend.
Nope.
The FIRE concept doesn't preclude working after retirement but it does not consider someone as FIREd if they still need to actively work, since they fail the "financial independence" part of the equation.
FIRE is a term that refers to Financial Independence and Retiring Early. While both financial independence and early retirement have a lot of commonalities and some intersection, they aren’t exactly the same.
Financial independence is having enough money in passive income that you can stop working. Essentially, the money you have invested and saved provides you enough of a return that you don’t rely on a traditional income anymore, hence the term financial independence. People that pursue FI (which is a commonly used abbreviation) generally have plans to pursue their passions and other things in life.
Early retirement, while similar, takes an ode to its traditional retirement counterpart. It generally means that you retire early and stop working. But instead of retiring at 65, or later, you may retire at 45 or 55. In general, people that want to retire early want to enjoy the traditional benefits of retirement, just at an earlier age.
Google does indeed appear to by my friend, and not your friend.
So do you just throw your hands up and say "I don't know". Or do you use reason and common sense to say it's plausible. It makes sense to me that someone who retires in their 30s or 40s will make at least a bit of money from some sort of side income. Is that really such a stretch?
I did the latter, using reason and common sense.
You say most of the financially independent people you know about are those who write blogs. Surely you'd agree this sample set would be over weighted with people using social media to earn money, therefore it seems questionable to draw any conclusion that most retired early people work in some manner.
Not knowing is just that, you're the one stating as fact that most have side gigs without really knowing and just making assumptions from a poor sample.
Stage 5: Independence (Enough investments to support your current lifestyle for
the rest of your life).
This is key. Financial independence means not needing to work to cover your expenses, some people have the bizarre viewpoint that someone can be FI and still need to work because their investments aren't enough.
In many cases, they may have invested in rental property or something passive. One of my buddies, who is 62, owns five houses he rents out. He's turned running them over to a property manager in town who owns 400+ properties in the area, and he charges 8% of the rent. The property manager basically does everything and only calls the owner if there is a business decision to be made. The owner doesn't even know the names of the tenants. It's basically automatic income.
I think that definitely qualifies as passive income. I've seen debates on this where people managing a bunch of properties and end up spending 15+ hours per week dealing with tenants, repairs, and other property management issues, it starts to enter a gray area of "passive" where some might claim they still have a job.
If you don't even know the names of your renters that sounds like as passive as you can get.
I don't worry too much about the RE part of FIRE. I'm only concerned with the FI part of the equation. There's no rule that one has to retire after or upon reaching F.I. It merely means that your current investments support your existing expenses fully and without needing to withdraw more than a safe withdrawal rate of around 4%.
Yep, there is no rule saying someone must retire upon reaching FI and if someone enjoys their work I can't imagine quitting just because you've hit your number.
A lot of people pursuing FIRE see the FI part merely as a means to RE (I sure did) but there is no right/better way.
In many cases, they may have invested in rental property or something passive. One of my buddies, who is 62, owns five houses he rents out. He's turned running them over to a property manager in town who owns 400+ properties in the area, and he charges 8% of the rent. The property manager basically does everything and only calls the owner if there is a business decision to be made. The owner doesn't even know the names of the tenants. It's basically automatic income.
That's certainly possible, but based on my reading in the PF blogosphere, it seems that at least some early retirees get a bit bored with completely passive income streams. They actually like to work, if it's at projects they find interesting, and if it's on terms they like. That can be a small side business, consulting work, writing/blogging, or part time employment for a short period of time.
You say most of the financially independent people you know about are those who write blogs. Surely you'd agree this sample set would be over weighted with people using social media to earn money, therefore it seems questionable to draw any conclusion that most retired early people work in some manner.
Not knowing is just that, you're the one stating as fact that most have side gigs without really knowing and just making assumptions from a poor sample.
OMG you're being an anal retentive a hair splitter. I think it's reasonable to conclude that people who retire in their 30s or 40s will still work a bit and get side income. I'm sorry I didn't do a scientific study with a representative sample of at least 1000 people before reaching that conclusion. Sheesh!
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