
The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing - wycs
https://www.wsj.com/articles/the-new-retirement-plan-save-almost-everything-spend-virtually-nothing-1541217688
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ambicapter
> One complaint from readers was that the 33-year-old author and her husband
> still earn sizable incomes. Nate Thames works for a nonprofit and was paid
> about $270,000 in 2016, according to his employer’s most recent tax forms.
> Ms. Thames makes an undisclosed amount from her blog and a recently
> published book. “Now I understand why even with cutting everything to the
> bone, that we haven’t been able to save like they do,” a reader posted in an
> online review of the book. Ms. Thames says she is “transparent about the
> fact that my husband still works a conventional job from home and that I
> enjoy working for myself through Frugalwoods.com.”

> Mr. Sabatier, 33, says his Millennial Money website made $401,000 last year.
> Blogger Joe Udo, 44, recently disclosed he has made almost $350,000 since
> starting “Retire by 40” in 2010.

> Tanja Hester, author of a blog called Our Next Life, called for FIRE
> bloggers to be more transparent about their financial lives in a post this
> year. She said she makes less than $1,000 a year on the blog, but declines
> to disclose her income from a book advance, saying “there’s no need to share
> your actual numbers if you are honest with readers about your general
> financial situation.”

Like much of the self-help ecosystem, seems the key to living that superior
lifestyle is having other people pay for it.

~~~
astura
There is a lot of, for lack of a better word, fraud in the financial stories
posted on the internet, and if you call it out on the financial forums, you
get accused of just being jealous. Like people who got wealthy from getting a
job through family connections, borrowing tens of thousands of dollars from
family members to start a business, large inheritance, parents pay for
college, stuff like that, then pretend they lifted themselves up by their
bootstraps and anyone can do the same.

There was an article a bit ago like "how I paid off $150,000 in student loans
in a year" where the woman said that her aunt or something gave her a high
paying job, her grandma gave her a condo, and she lived rent free with her
parents while renting out the condo, then used the money she wasn't spending
on rent to buy a second condo. Anyone can do it!

I really don't understand why that is the way it is, but whatever.

~~~
roenxi
Stating the obvious - the average person must produce about as much as they
consume over their lifetime or 'the system' will by definition collapse.

I'm on board with what you say, but frugality is a pretty basic virtue and
there are a lot of people who set themselves up for failure - there are people
earning more than ~$80,000 who have good excuses for struggling financially,
but they are rare. The fact that some people luck out in life and don't
acknowledge it doesn't detract from the basic good sense of consistently
investing in the future, and being realistic about whether your purchases are
buying you more happiness than they lose you time through working.

The core of the FIRE philosophy is to try and do all the production in one big
up-front batch, and then benefit from any opportunities that come along. It is
obviously easier for the upper middle class and harder for the lower working
class. There isn't anything wrong with that though, as long as everyone
acknowledges that saving isn't equally easy for everyone and it depends on
their ability to contribute to the economy.

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esotericn
I prefer the term "financial independence" to "retirement" because retirement
implies some sort of withdrawal from work.

~~~
eswat
Plenty just stick with the Financial Independence without getting into
Retiring Early. But the latter does imply that you withdraw yourself from
work, at least from being a sole contributor to a business you don’t own.

~~~
esotericn
Retirement implies a sort of finality that I think can only be present in
older (or young but disabled) individuals that can no longer meaningfully
work.

I don't think a 30 year old can 'retire'. From a specific field (e.g.
professional football)? Sure.

In general? Money isn't the thing that makes successful people work.

It's really hard to spend 50 years on pure leisure. I can't think of any
examples.

~~~
dragonwriter
> Retirement implies a sort of finality

Coming out of retirement is a not-extremely-rare thing; I don't think
retirement implies finality, though it might arguably imply the absence of an
expected financial need to return.

~~~
esotericn
I suppose what I'm really trying to get at is that these terms are simplified
and only seem to mean anything in the context of someone who does some variant
of a full-time job or series of full-time contracts for decades.

It assumes the front-loading of work punctuated with either long periods, or a
complete (final) period, of mostly nothing.

Imagine a theoretical person that inherits 10 million dollars. If they never
take a full-time job and instead just do the odd thing here and there, paid,
unpaid, doesn't really matter, are they retired?

If you're a contractor and sometimes work and sometimes don't, are you
continually coming into and going out of retirement?

~~~
dragonwriter
> Imagine a theoretical person that inherits 10 million dollars. If they never
> take a full-time job and instead just do the odd thing here and there, paid,
> unpaid, doesn't really matter, are they retired?

No, they are probably just a capitalist, but part of the social support
structure of capitalism is the fetishization of work and the fact that you
don't talk about the non-laboring ruling class, just a spectrum of success of
workers, some of whom have earned retirement through their work.

> If you're a contractor and sometimes work and sometimes don't, are you
> continually coming into and going out of retirement?

I would say no, if your expectation when you leave is that you will need to
comenback to maintain your lifestyle.

If you occasionally take a job for self-fulfillment, maybe.

~~~
esotericn
> the fact that you don't talk about the non-laboring ruling class, just a
> spectrum of success of workers, some of whom have earned retirement through
> their work.

I like to talk about them all the time. ;) Though I think we're seeing eye to
eye here.

Different groups see "work" in such different ways that I think the
terminology of stuff like 'retirement' doesn't transfer well.

Some people cannot see a life without work. Others do it for toys. Others do
it as a status game.

Others don't really do it at all. I guess you could call that the 'leisure
class'.

A theoretical human who has no need for food - are they fasting?

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neogodless
Here are the useful ideas:

\- spend (much) less than you earn (by working)

\- figure out your risk tolerance and long-term goals, develop an Investment
Policy Statement (including desired asset allocation and re-balancing
strategy, if any)

\- stick to this plan until you're super comfortable with your plan, your back
up plan, and your SHTF emergency plan

\- enjoy your freedom to control your time before you turn 67

It's probably not useful to:

\- take painful steps to reduce your spending

\- risk your health

\- do anything you don't want to continue doing after you stop working (except
work!)

\- assume or rely on BLOG / BOOK / WRITING income like those that stopped the
"usual" sources of income, but gained celebrity by writing about (the
otherwise useful) ideas

------
et-al
Obligatory non-paywall mirror:
[https://outline.com/HyGdqf](https://outline.com/HyGdqf)

~~~
znpy
Thank you. Mods should alter the link of this post and make it point to the
url you posted.

Mods, are you there ?

------
Gibbon1
The paradox of thrift

[https://en.wikipedia.org/wiki/Paradox_of_thrift](https://en.wikipedia.org/wiki/Paradox_of_thrift)

~~~
woolvalley
If your putting it in the stock market or loans, doesn't it increase the
supply of such things, thus making the return less and making people have to
work harder as a result if 'everyone' did this?

As far as I can see, it only applies if the cash is inert in a bank account
not being loaned out.

~~~
simonh
It depends on the demand for investment. If there are loads of potentially
successful companies starved for resources, more spending on stocks and loans
could increase total returns linearly, or perhaps even more.

If there’s a glut of money for investment, then that’s a different story.

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prolikewh0a
Isn't this really bad for a capitalistic system? You need people to spend
money and buy things that aren't just rent and basic food.

~~~
awinder
Not sure for why you’re getting downvoted, but I think your point (which I
would agree with) is that if large majorities were to act in this way, that
system would be sustainable for nobody. The reason why FIRE works in this way
is that people are piggybacking on a consumption culture to reap the benefits
of compounding interest on stocks, without personally contributing to it.
You’re not going to see avg 8% gains in index funds in a world where wealth is
hoarded, and FIRE isn’t going to work without that high compounding rate.

This is one of the things that bugs me about the FIRE “movement”. it’s a great
hack for the people doing it, but it can’t become a mainstream system without
breaking.

~~~
jogjayr
It's been addressed on MMM:

[http://www.mrmoneymustache.com/2012/04/09/what-if-
everyone-b...](http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-
became-frugal/)

The key quote: "If an entire society gradually decides that it wants to
consume less, then it needs to produce less as well.

If there is less stuff that needs to be produced, then people don’t have to
work as many hours to create it. That’s perfect, because many people will be
dropping out of the workforce much earlier as they finish earning the money
they need to get going on their early retirement. The shortage of available
work will be balanced by the reduced number of people willing to do that
work."

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HissingMachine
Saving for retirement is a wise move whoever you are. I live in Finland where
we have mandatory retirement saving system, but more and more people have
started to find out that it's not really that good for everyone. Just now
there was a story in a major newspaper that an university researcher didn't
have that much retirement savings because research grants don't add to your
retirement savings (tho this has changed recently) so she will be seeing near
minimum retirement which isn't that much in a very expensive country. I'm in
my mid 30s and I save for retirement and most of my friends do also, it's just
that it ain't easy because after taxes and mandatory retirement payments and
social security payments, money left usually goes to daily living, so you have
to downscale and minimize expenses now that you have enough when you have to
retire. The system is not optimal, and we do have mandatory minimum retirement
after all if you can't afford to save, but you don't want to be that person
who finds out couple of years before retirement that you are going to live
near poverty line when retiring, it's harsh.

so saving for retirement is a good move who ever you are and where ever you
live.

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esotericn
I think that talking about financial independence requires a sort of implicit
elitism which is difficult to avoid.

Basically, it's obviously the case that _everyone_ can't do this in an
instantaneous fashion.

Consider - if everyone works for 10 years in total, then in the stable state
(no pop growth) at any point in time roughly 15% of people are serving the
other 85%.

The claim, is more like "if you try, you can do it". As in, a randomly
selected individual is likely to be able to push themselves into a higher
income group and cut their budget, if they focus on it.

I think this sort of problem plays out all over. An individual can be paid
well if they study computer science and get a job at a decent company.

The nation can't. It's a logical impossibility.

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Tiktaalik
I think given longer lifetimes, increased costs and flat wages, "save almost
everything, spend virtually nothing" is going to need to be the rule for life
in general not just for early retirement.

~~~
closeparen
Increasing costs and flat wages mean _somebody_ gets to be less frugal.

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claydavisss
Even if they don't retire early, good on these folks.

They will at least be able to take time off when they want, or self-fund an
opportunity to be their own boss (which, at 48, I am convinced should be
everyone's goal).

Another alternative is what I call the "slow burn"...work at brutal
competitive jobs to build up a nest egg, then just "peace-out" and go work
something mindless to keep a little income or maybe secure health insurance,
while using your nest egg for life's big expenses

~~~
fvjwiur
beware that burning out in a high-stress job will affect not just your own
health, but your childrens too via epigenetic inheritance

~~~
sgt101
citation please.

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theandrewbailey
> Ms. Thames says she is “transparent about the fact that my husband still
> works a conventional job from home and that I enjoy working for myself
> through Frugalwoods.com.”

> Ms. Pattee, who married in 2015, says she and her husband, Andrew Hanna, 33,
> live off the rental income and save his salary in medical administration.

This doesn't sound like retirement. It sounds like being a housewife.

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commandlinefan
I tried that when I was younger - but then I found out how much money it costs
to attract and keep a girlfriend. Now I know how much money it costs to raise
kids.

~~~
simonsarris
I truly don't know why this part isn't discussed more. Attracting and keeping
a mate has to be 95% of the rat race existence in itself.

~~~
astura
Only if you want to attract certain types of mates. If you want to attract a
mate that has the same values as you, it makes saving for retirement much,
much, much easier, not more difficult. When I got married I more than doubled
my savings.

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modzu
a lawyer making 150k could stick to the "old" retirement plan just fine. can
your average millennial stuff 2 million away in 5 years just by saving??

~~~
nawitus
Maybe not 2 million, but early retirement can be based on savings rate, not
any specific number of millions.

[http://www.mrmoneymustache.com/2012/01/13/the-shockingly-
sim...](http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-
behind-early-retirement/)

~~~
skookum
This reply is somewhat disingenuous. Read the question instead as "can your
average millennial stuff away 64% of their income?"

To achieve the "shockingly simple" 11 year FIRE goal in that blog post,
someone working 40 hour weeks at $15 an hour would need to indefinitely keep
their annual expenses below an inflation-adjusted $12K to build the required
savings prior to their early retirement and to live off those savings
afterwards.

In reality, the math is only shockingly simple if you can control all the
inputs.

~~~
nawitus
The math is simple, but saving is hard.

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ckdarby
Those of you who are a developer take note of the article.

Many of us in the IT space underestimate the harm & impact of working in our
industry. You are the exception to not burn out, you are the norm to not be
able to sustain the demand and you should plan for an early retirement.

~~~
closeparen
To invest in something is to provide it with capital. If you’re drawing the
equivalent of a wage as investment income, corporate America finds your
capital at least as valuable as your labor.

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drankula3
I'm hitting a paywall. Does anyone know a workaround for the wsj?

~~~
psergeant
There is a “web” link on this article. If you click it, you’ll find a search
engine link to the article which will give you access

~~~
dgreensp
This doesn’t work anymore.

