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It all comes down to what you want. Living on $30k is a lot better than dreading work everyday while missing out on tons of time with family.
My pension is just a little over half that much [$18k/year], and I have lots of time for my family and hobbies.
We also save about half of my income for investments. [recently bought an apartment building that we are remodeling. When you live on half your income you still have room to improve your portfolio. Regardless of how much that gross income is.]
I don’t think you nessecarily need a high income to retire early. In fact, never having one probably makes it a little easier because you never get used to living a more extravagant lifestyle. If you live like the average consumer that makes $120k and spends $115k - making $20k is potentially a huge downgrade.
I have been on pension since 2001. I know a lot of fellow retirees. Very few of us have ever earned high incomes.
I tried to follow the strategies presented in 'The Millionaire Next Door', by Thomas J. Stanley, and William D. Danko, and it seems to have worked well for us this past 18 years.
Were you 40 when you retired to the pension? I have a buddy that is on long term disability from the military for being wounded in combat. He hasn't worked since he got back, so I guess he was retired at 28 on pension. I wouldn't exactly say that's a normal path to FIRE though.
Most of the FIRE people that are making the headlines are the one's retiring at 30-40. It would be pretty difficult for someone earning $50k/yr to set aside enough money to generate $30-$40k/yr in 10-15 years of work. Clearly you can retire at 55 if you are just good with your money, but that's not what is generating the discussions as they aren't the ones people are saying will be likely to run out of money or the people being judged in general. It's the people retiring with 30+ years before they even hit 70.
Quote:
Originally Posted by eddiehaskell
I don’t think you nessecarily need a high income to retire early. In fact, never having one probably makes it a little easier because you never get used to living a more extravagant lifestyle. If you live like the average consumer that makes $120k and spends $115k - making $20k is potentially a huge downgrade.
The majority of people in a position to FIRE early on what would be considered a reasonable SWR for most people ($30k-$50k) are high earners. Obviously there are people like you and Jacob from ERE that are retiring on $10-15k/yr, but that is the extreme minority.
Plus, not sure about you, but for Jacob it's a bit disingenuous because for expense purposes he treats his wife as a roommate. So he spends $7k/yr, but doesn't really mention what she spends. So he talks about his half of expenses only when mentioning he spends $7k/yr. If I cut my expenses in half and said half were mine, half were my wives and didn't have kids I'd be living off of less than $20k/yr and we still have a mortgage on a 2.2k sqft home and travel very often. Pay that off and I am down to under $15k/yr (again assuming no kids).
I don’t think you nessecarily need a high income to retire early. In fact, never having one probably makes it a little easier because you never get used to living a more extravagant lifestyle. If you live like the average consumer that makes $120k and spends $115k - making $20k is potentially a huge downgrade.
Seems pretty obvious to me.
I never made over $65k/year in my life. Did not stop me from retiring at 42 though.
Quote:
Originally Posted by mizzourah2006
Were you 40 when you retired to the pension?
I was 42.
I went Active at 18, I got out after 6 years and went to college on the GI-bill. Four years later there was not much demand for EEs, so I re-enlisted and served another 14 years.
Quote:
... I have a buddy that is on long term disability from the military for being wounded in combat. He hasn't worked since he got back, so I guess he was retired at 28 on pension. I wouldn't exactly say that's a normal path to FIRE though.
We collected an assortment of apartment buildings at each duty station. As an enlisted sailor I was able to amass a reasonably large Net Worth before the US Navy tossed me out onto pension.
Quote:
... Most of the FIRE people that are making the headlines are the one's retiring at 30-40. It would be pretty difficult for someone earning $50k/yr to set aside enough money to generate $30-$40k/yr in 10-15 years of work. Clearly you can retire at 55 if you are just good with your money, but that's not what is generating the discussions as they aren't the ones people are saying will be likely to run out of money or the people being judged in general. It's the people retiring with 30+ years before they even hit 70.
The majority of people in a position to FIRE early on what would be considered a reasonable SWR for most people ($30k-$50k) are high earners. Obviously there are people like you and Jacob from ERE that are retiring on $10-15k/yr, but that is the extreme minority.
Plus, not sure about you, but for Jacob it's a bit disingenuous because for expense purposes he treats his wife as a roommate. So he spends $7k/yr, but doesn't really mention what she spends. So he talks about his half of expenses only when mentioning he spends $7k/yr. If I cut my expenses in half and said half were mine, half were my wives and didn't have kids I'd be living off of less than $20k/yr and we still have a mortgage on a 2.2k sqft home and travel very often. Pay that off and I am down to under $15k/yr (again assuming no kids).
I do not know what 'most people' do. I was career military, so the community I am most familiar with are military.
After 20-years of Active Duty, we are seen as being far too elderly to continue, so we are High-Year-Tenured onto pension. Knowing you are working in a career field that only allows you to work for 20 years, can serve as an incentive to live on a tight budget and invest. Which is what I did.
I don’t think you nessecarily need a high income to retire early. In fact, never having one probably makes it a little easier because you never get used to living a more extravagant lifestyle. If you live like the average consumer that makes $120k and spends $115k - making $20k is potentially a huge downgrade.
That's true. I've been fortunate with a lot of passive income investments, so my situation is not comparable to most, but as a result of the wide variance of every single one of my investments, even including my own company, I've never had anything approaching a reliable income. I've had years where I lost money, I've had years where I made a lot of money, but most of it was reinvested. As a result, I've spent most of my life still nervous about finances (which would make people scratch their heads if they saw my balance sheet), because I've often had very little cash on hand, or cash flow, so I've had no choice but to live a more modest life. It's actually a blessing, though, for the most part, or has been at least in many cases because it does force you to evaluate what's really important when it comes to spending money.
Because of my bizarre tax returns, I've mostly just bought houses and condos I could afford to buy with cash or at least 65% cash, because it's doubtful I could have qualified for any traditionally structured mortgage of 20% down and 80% borrowed. As a result, I've valued being frugal at least compared to many people (not so much on this forum, there are some really frugal people here...), or at the very least I take the time to make sure I'm getting the best deal, that I need what I'm purchasing for some specific purpose, and that whatever I don't need and is a luxury is purchased infrequently and not overly costly (a few video games here and there, movies, etc.).
I say that because I can understand the perspective of people who have stopped to say, "Wait a minute, just because I'm making more money doesn't mean I need to spend more money just to be happy, does it?" Especially because some of these people are quite miserable in their jobs, so which is going to make them happier, that new car or saving more money to get the heck out of that miserable job faster? I think, however, that logic doesn't always win out over human emotion. I know some people who hate their jobs, but at the end of the day, they feel like it's all they can do to go out and get a nice meal or go shopping, because even if it's the "right" decision to save more money and not waste it on consumer nonsense or eating out constantly, it's HARD work mentally to do that day in, day out, week in, week out, every month, every year, etc.
I think most people could benefit from reviewing their monthly expenses and examining if there are areas that are just pure waste or that don't bring enough happiness for the cost, though. I can't blame anyone for setting a die-hard goal of being financially independent, though. Who wants to be told you have to go work for someone else just to live? Not a great situation. I'd try to get out of that as fast as possible if I were most people. Whatever it takes, it's worth it. Even if I loved my job, I'd still rather be there because I ENJOY doing it and the money is a nice bonus, rather than knowing, well gee, if I don't work this job, I'll be homeless, so guess I'll keep doing it no matter what.
Here's how the discussion went at our house; (It will be (is) similar at MMM house)
~age 12 1) Go to College?, sure - that's a great idea! (if you think you need to), It's your free choice.
2) 100% On YOUR Dime (student / child)
3) You have a Roth (at age 12). I will be matching your wages 100% until you age age 18. With the intent you are contributing my match (or equivalent) to your Roth IRA (Eligible access for college withdrawal)
4) In our state (WA).. FREE FT college instead of HS, so... "Strongly consider that"!
5) Many states are CHEAP for excellent college (~$6k / yr in neighboring WY to MMM, <2 hrs) go there, get a job ($80k / yr in WY is not tough) after a yr... apply for U as a resident
6) Military option for EDU
7) Employer option (My employer paid (reimbursed) for all (5) of my degree programs
8) Get a JOB, relevant to your major. Graduate with EXPERIENCE in your field!
9) You know a lot of skilled trades, USE them for income (lifelong or for college money) (My kids had built their own homes during Jr High... homeschool projects)
10) Grants, scholarships highly competitive and favor the rich, and the minorities, so don't expect much!
Age 18... kids were GONE (and well prepared and desired to do so!)
20 yrs later... they are FINE
Very engaged in communities and public service and making more than I ever did. And traveling a lot and pursuing (and achieving) FIRE.
and... not whining.
The nicest way I can put it is that a parent who tells a child that doesn't meet my definition of a good parent.
The nicest way I can put it is that a parent who tells a child that doesn't meet my definition of a good parent.
I, for one, am more than happy people are questioning the standard way of doing things when it comes to higher education. For one, as currently practiced, it isn't financially sustainable to individuals or taxpayers. Secondly, even if it was, not everyone has the intellect to finish college. Thirdly, we have a lot of people who are great at specialized knowledge, but do not have many practical skills outside what they do for a living (myself included). This can't be a good or healthy thing.
The nicest way I can put it is that a parent who tells a child that doesn't meet my definition of a good parent.
Geez really?! Any investment advisor I've ever spoken with has always nailed home the importance of retirement funding for you and spouse, before paying for college. As said, paying for their education doesn't garantee they will take care of you when you are old.
Plus, there are plenty of companies that pay for your education if you are willing to look. UPS covered mine.
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