
Tech workers who are engineering a mid-30s retirement - asoli
https://story.californiasunday.com/tech-retirees
======
speedplane
The premise of this article is that if you work hard and build a large pool of
cash, you're "set" for life. So many problems with that. Most people, despite
high pay and best efforts, continue to live the rat-race.

That said, what I hope is insightful about this article is that it teaches
that having money can easily lead to having much more money.

If you start with $5M in the bank from family or whatever, you can make more
from interest than most experienced professionals in any field can make from
their skills. Meaning, sitting on wealth is often far more profitable than
trying to earn it.

It's a testament to how money disproportionally begets more money and how
inequality seems to almost naturally increase.

~~~
kachurovskiy
Please help me understand how one can possibly live a good life, let alone
prosper for decades with $5M in the bank without actually spending these
millions.

When I look around here in Europe, even a 1% interest seems hard to get - some
people even pay to have their money in the bank.

Even if you get 1% interest on average through the years, it's just 50k before
tax which is can be barely enough to support a family in the developed world.

~~~
phkahler
Look for long term stocks - ones with real value that also pay dividends. You
can get dividends in the 3-5% range. You also hope that the stock price will
at least keep up with inflation, but that is a separate issue to track.

Other options include buying a small business. Some don't require their owner
to put in full time to make OK money.

~~~
charlesdm
Small businesses can definitely be great, since you (generally) don't need to
put in much equity and can acquire the business mostly with debt.

A $3 to 500k investment might yield you an annual $300k owner salary.

~~~
marktangotango
Can you provide examples of what types of businesses for this profile?

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gaius
_After projecting their monthly cost of living, the Rooses determined they’d
need $300,000 in investments to be able to live off the dividends_

This number seems impossibly low to me. At an - optimistic - 5% return that’s
$15k/year between 2 people without allowing for inflation eroding the capital.
A lifestyle of traveling means buying airline tickets etc even if they stick
to locations with a very low cost of living. And presumably one day they would
want to return to the West.

~~~
spacehome
The "standard" advice is the 4%-rule -- the idea that you can withdraw an
inflation-adjusted 4% of your original portfolio in perpetuity. 5% is
aggressive and has failed historically. They're probably looking at $12k/year
spending for two people. If you want to move to live on this much, you have to
live like a local, and it might not be super pleasant.

~~~
gaius
Indeed. If you are going to do this then your capital has two jobs, it has to
support you while you travel, and it has to bootstrap you back into Western
life when you return (such as covering rent/deposit on a mortgage etc etc
while you job hunt). Three jobs in fact as it has to give you a buffer for
emergencies, if you have a health situation or need a quick repatriation for
any reason. Traveling means _not_ living like a local in a poor country,
because the locals aren't hopping on a plane at the drop of a hat, they live
where they live and are pretty much stuck there. And you won't be having much
fun if you have money worries hanging over your head!

Without thinking about it especially much I'd guess you'd want at least a mil
in capital to pull this off, perfectly possible to achieve living a frugal
lifestyle while working in Big Tech for 10 years - if you could bear it for
that long.

~~~
pc86
One thing people forget is the mental overload of making $150-200k a year but
spending 20-25% of that. Yes, initially if you've never saved or had money
before it feels good to sock away $4k+ out of each paycheck. But eventually
when you look at your bank account and see tens or hundreds of thousands of
dollars you start wonder why you can't just go have that $100 dessert you saw
on YouTube.

Living like a pauper for ten years while having to get multiple bank accounts
to handle FDIC coverage is harder than it sounds.

~~~
derekp7
That's why it is important to still have disposable income after your expenses
are taken care of. But the more important item, is general life stress. A lot
of stress situations can be made to go away if you throw money at it (things
like a constantly-breaking car, or living in a high crime area, or general
boredom). That is the main reason that people have a hard time saving at
almost any income level (until you hit over 70 - 85K).

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RikNieu
Every time I read about people with hyper-strict future modeling schemes like
this, I think of Nassim Nicholas Talebs Black Swan theory.

These kids would be one accident, unexpected disease or economic crash away
from being abruptly summoned out of their 'early' retirements. That or they
would realise they want to have kids. Or they'll get tired of beans in their
40s.

But by then, they'd have years open on their resumes, or have lost touch with
the skills needed to generate the income needed to pay for those unforeseen
emergencies.

Or maybe I'm just cynical.

~~~
bloaf
I tend to agree about the hyper-strict parts (e.g. less than $500k in
savings).

The thing to think about is whether or not you'd be better off if you kept a
job, but had a lower savings rate. How certain are you that you'd be able to
keep earning money through a disease or recession on the "job only" track?

The other thing is that with $1.3 million in savings, the 4% withdrawal rate
puts your annual spending allowance at the median household income in the USA.
In other words, just having that amount saved means you're earning more than
50% of the US.

There is a gray area between $500k of savings (income near the poverty line
for family of 3) and 1.3 million, but I think the risks of the FIRE strategy
are a little over-stated.

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wsc981
I'm trying to do this as well and I think for me a "soft retirement" should be
achievable when I reach 40 years of age (currently I am 36).

I'm from the Netherlands but have a Thai girlfriend and since 1 year a
daughter as well. The house we're building is almost finished. It's not too
expensive, around 38.000 EUR and it should suit the 3 of us well. I paid for
it, but the house is 100% my girlfriend's property. If we'd split up it would
be a slight set back for my plans, but manageable. This year we will also buy
a car, will will be fully my property.

For a soft-retirement I expect to need at least 150.000 EUR into index-funds.
That should hopefully average out in around 10.000 EUR a year - enough to live
on in Thailand especially with a paid-off house and car. As long as no big
accidents happen. In the long run I do aim to have quite a bit more money of
course.

My next goal is to save at least 40.000 EUR a year for the next 3 years. I
will probably need to make 55.000 EUR a year for this to become possible
(spend 15.000 EUR on costs of living and save the rest). I think with remote
work this should be achievable.

For now I still have a house in The Netherlands that should give me a 30.000
EUR profit after the house is being sold and the mortgage is paid off.

If I really need some money quickly and I'm having difficulty finding remote
work, I can always go back to The Netherlands and freelance for a couple of
months. Freelancing should earn me at least 10.000 EUR a month and I can
probably avoid taxes using my offshore company as long as I don't spend more
than 180 days a year in The Netherlands.

After reaching 150.000 EUR I will then probably still work for clients
occasionally, but will take it slower and focus more on my own hobby projects.
Perhaps after reaching 300.000 I can really "retire" (spend time with family,
work on hobby projects, enjoy life to the fullest) :)

~~~
walshemj
I would not sell your house just rent it out in case you need to come back.
When I was young 5 or 6 the family next door moved Seattle to work for boing -
they kept the house in the UK and rented it out which was lucky as when boing
went through mass layoffs they had a house to come home to.

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speedplane
This is the crux of the problem:

> “I’ve never been a fan of waking up and going to work and exchanging time
> for money.”

If you believe your job is merely a transactional exchange of time and money,
you need to find a new job. It doesn't have to be that way.

~~~
LoSboccacc
besides, investing capital to maximize return is of itself a full time job,
especially with such a small initial capital.

~~~
phkahler
Right, with that small sum of money you get a better return on your time by
working for money. If they can really live with that little spending why get a
job and save $100K per year and significantly add to the invested money? Of
course I suggest that for "just a year or two" but when do you really stop?

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Waterluvian
Only 300k? Sure... But future you is going to be really pissed off that you
sold him a lifetime of frugality.

Okay that's not fair. Maybe this really is a lifestyle for you. I sure hope
you're not wrong.

~~~
fipple
That's not necessarily the end of your income. You can make money in various
ways.

~~~
vasilipupkin
Then why not just get a job ?

~~~
barry-cotter
I imagine the point is that you have achieved fuck you money and know that you
don’t need to.

~~~
vasilipupkin
but "making money in other ways" just sounds like having lots of odd jobs.
That's my problem with Mr Moustache Man, he is supposedly retired, but by my
count, between him and his wife, they have 5 jobs. Then why not just get one
really good one. I mean, it's great if they love their 5 jobs, but that's just
called working at a job you like, not being retired. My father in law is
retired and he doesn't do any jobs for money - that's to me the definition of
retirement, not having odd jobs here and there.

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evrydayhustling
One bummer about this type of lifestyle optimization is the way that it is
fragile to surprises you have no control over, like bad market timing or
medical surprises. The odds of each surprise are small, but the odds of no
impactful surprises are also small.

The risk, besides missing opportunities to explore life or have an impact on
others, is sub-optimizing for financial independence. As an example,
optimizing for income (even if increased expenses leave you with the _less_
savings) can leave more options to respond to surprises than making sacrifices
to permit a cheaper lifestyle.

~~~
shoo
> as an example, optimizing for income (even if increased expenses leave you
> with the less savings) can leave more options to respond to surprises than
> making sacrifices to permit a cheaper lifestyle.

Can you give some concrete examples of how this might work?

I read your comment as suggesting to optimise for higher absolute revenue but
lower absolute profit, which I find confusing - since it seems less useful
than just optimising for profit - so maybe I'm not understanding what you are
saying, or not fully understanding the consequences.

~~~
evrydayhustling
Sure! Let's compare taking your first job at a high salary in a high cost of
living area, versus a lower salary in a cheap place. The latter might net you
more after-tax "profit" in the early years, but several factors can upset that
balance over time:

\- Exponential raises (x% per year) cause the higher pay to more rapidly
outpace the baseline costs of living, even if higher. \- Many unexpected
expenses, like a medical disaster or market losses, can offset taxes on higher
income, leaving room to more rapidly recover if you have a higher income. \-
Once you've established a higher salary point, it is generally easier to
retain it, even if you take steps to mitigate your costs like moving farther
outside the city.

These are just some examples. Overall, having a higher income opens up more
possibilities for investments that alter the cost dynamics of the system,
versus putting up with the cost dynamics that are available to lower income
folks. For the same reasons the get rich richer, limiting yourself to the
options of the poor can reduce your opportunities.

Edit: I should note that this doesn't take into account cases where you find
special opportunities in a low cost area! I know folks who were able to
reinvest surplus income from early jobs in local businesses, effectively
acting higher up the capital food chain earlier in their lives, because they
stayed in cheap places. However, this is a more active strategy that didn't
seem to be the same spirit of the "save more from your income so you can
retire early" OP.

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random4369
300k is laughable. 2-3M is a more plausible figure if you want to finance two
people purely off passive income.

~~~
2sk21
Came to say the same - unless you lived in, say rural India, there is just no
way you can live off the dividends from a $300k investment.

~~~
ThrustVectoring
$300k of investment yields roughly $1k a month, which is doable in the US. You
just have a studio apartment in Indiana or something, and do very little other
than cook very economically.

~~~
smileysteve
and don't have health insurance, or a car (in rural indiana)

~~~
ThrustVectoring
You qualify for significant ACA subsidies at that income level. And there's
small towns where not having a car isn't that much of a problem.

Like, you're under 133% of the poverty line, so you pay no more than 2% of
your income on health insurance premiums.

~~~
gaius
But do you still qualify if you are sitting on a pile of investments? Don’t
think you would in the UK.

~~~
ThrustVectoring
You do, but the pile of investments is either generating income or losing
value to inflation, so in practice it's not that much of an issue. You can't
spend tax-deferred retirement accounts like a 401k or tIRA without realizing
taxable income, and there's significant contribution limits for Roth IRA
balances for tax-exempt gains. You can defer capital gains but not dividends,
so a large stock portfolio doesn't help you much either.

Plus if you manage your income to stay under ACA subsidy limits, you're
generally going to be paying a higher effective tax rate by forgoing tax-
deferral opportunities at higher tax brackets in your income earning years or
Roth IRA conversions to use up lower tax brackets in your post-retirement
years.

So yeah, it's a pretty big loophole.

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pc86
> _There were her ethics ( "anti-consumerist, anti-capitalist, for social
> good")_

And yet she's working a six-figure job in Silicon Valley writing software for
Lyft? And her whole goal is to suck as much money as possible so she can exit
the system? Okay.

~~~
shoo
From my perspective, her plan seems strictly better than sucking as much money
as possible while staying dependent upon the system. It seems pretty pragmatic
to me.

What would you suggest as a better alternative? It sounds like financial
security is important to her.

(disclaimer: i have a somewhat similar plan, although i can't coherently
identify as anti-capitalist, as that seems to be a key component of "FIRE" \-
maximise surplus, invest surplus in capital, use capital to produce labour-
free returns on investment...)

~~~
pc86
I'd have more respect for an anti-capitalist viewpoint if you weren't using a
capitalist system to make a living. It stinks of wanting to take a holier-
than-thou position while not making any real sacrifices to support such a
position.

------
DoreenMichele
My favorite book of this ilk is "How to survive without a salary" by Charles
Long.

For understanding where the money goes, tracking every penny for 30 days is a
good exercise.

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NiklasMort
US numbers are funny, I could easily retire with 200k in most places of the
world, including Europe. Gotta get me a US salary job I guess.

~~~
roel_v
Where in Europe can you retire on 200k? I mean, without going 'buy 15k plot of
land in backwater Romania, live there in a wooden shack for the rest of your
life'?

~~~
dejv
Maybe if you live alone in your own house at some small village and let
goverment pay for your social security, medical and give you some additional
pocket money (you get that in most EU countries). But still, forget
travelling, splurging on new appliances and such.

~~~
bojan
The government will not pay anything for you if you have a considerable chunk
of savings you can pay for yourself from. You are only really considered poor
if you have no savings.

~~~
dejv
It depends on how you declare your savings, even if you declare your income
out of invetment of 300k it might be less than poverty line and you might be
able to claim some monetary help from govt. Anyway, even if you didn’t get
those, your medical and social insurance should be paid by govt.

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Jyaif
I am surprised that the rent for (at least) 5 square meters is less than 2 gym
memberships in the SV.

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jshaqaw
A few things. Life does tend to get more expensive. Kids cost more. Then your
parents age and may need help. Around your 40s-50s is when these obligations
really pick up.

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RickJWag
They'll be bored out of their skulls in no time.

And if kids come along-- well, they'll want to go back to work anyway.

