
How to Retire in Your 30s with $1M in the Bank - pdog
https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html
======
rhexs
"They saved a sizable portion of their income over the next five years and
drastically reduced expenses, until their net worth was around $1.2 million. "

Every millennial retires early story always has a unique anecdote like this.
How exactly do you save $1.2 million over five years on 110K a year? Did he
already have 800K in the bank before learning about early retirement? Is his
wife a highly paid executive or doctor?

"Because his wife currently works, they have yet to draw on those accounts."

Some important information is missing here.

Also, while I don't think FIRE is impossible or unattainable, lean FIRE
practitioners are gonna get walloped in the gut when we hit a nasty bear
market after a decade of markets pushed higher by crazy monetary policy.

~~~
fucking_tragedy
This reminds me of that article about an early thirty something who paid-off a
quarter million in student debt in X years[1].

Her parents bought her a condo, she got a job at her mother's non-profit and
she lived with a second-income earning partner.

The message was that if she could do it, anyone could do it.

[1] [https://www.businessinsider.com/how-ebony-horton-paid-
off-22...](https://www.businessinsider.com/how-ebony-horton-paid-
off-220000-worth-of-student-loans-in-3-years-2017-3)

~~~
klipt
Anyone[1]!

[1] Who comes from wealth, marries wealth, and benefits from nepotism.

------
grecy
In first world countries it's not difficult at all given two conditions.

1\. You have a good job (probably - but not necessarily - a professional job)

2\. You are willing to spend less money than other people.

And in fact, point 2 is way more important than point 1.

The secret to having more money is not to earn more, it's to spend less.

I'm 36 and I have quit and done what I wanted twice in my life now - once for
2 years I drove AK-Argentina, now I'm well over 2 years driving around Africa.
Before both jaunts I earned a mere fraction of what Bay area salaries appear
to be. Before Argentina my salary was $48k CAD.

The trick is simply to spend less. Don't upgrade your phone (or don't even
have one), don't eat out. Walk or ride to work, no TV, no Netflix, etc. etc.
Pretty soon you'll find you have way more money than you actually need, and
you can choose to work either part time, or not work at all for a while.

If you were willing to put in 10-15 years of this frugal life, you'd have
enough money to never work again, easily.

EDIT: Because everyone always asks how I do it, I wrote a book about how I do
this with my life: [http://theroadchoseme.com/work-less-to-live-your-
dreams](http://theroadchoseme.com/work-less-to-live-your-dreams)

~~~
vilmosi
> The secret to having more money is not to earn more, it's to spend less.

I honestly thought it was the complete opposite? The whole "being poor is
expensive" thing? That buying expensive shoes is economically better longer
term vs buying cheap shoes?

~~~
astura
It is

If you were making $50,000/year you might be able to save $10,000-$20,000 a
year by cutting spending. However you'd be able to save infinity more by
increasing earnings. If you were making $50,000 and got a raise and were now
making $100,000/year a year that would let you save $50,000/year. You aren't
going to save $50,000/year by cutting expenses.

There's no theoretical limit to your earnings, however, you can only save at
most 100% of your salary.

It's also a LOT (and I mean a lot) easier to cut spending when you earn more.

I think what the GP meant to say was if you increase spending when you
increase earnings you'll never save any money.

~~~
grecy
> _If you were making $50,000 and got a raise and were now making $100,000
> /year a year that would let you save $50,000/year._

These are the kind of simplifications that get thrown around all the time that
are simply wrong.

You're forgetting all the extra tax you'll have to pay to earn that extra
$50,000, so right from the start you are not getting anywhere near $50k extra
into your account. You're forgetting it will cost you more to earn that extra
(better work clothes, longer hours means buying more food, require better
phone, on call, etc. etc.) and you're forgetting that when you earn more
you'll spend more.

Certainly if you get a pay rise from $50k to $100k you have the _potential_ to
save more, but I still stand by the statement that it's not the best way to go
about it, if in fact your goal is to work less (reduced hours or retirement).
That's a very important point to keep in mind - the goal here isn't to save as
much money as humanly possible, the goal here is to work less.

~~~
asknthrow
> longer hours means buying more food

this is where you're failing to understand the frugal mindset. People with a
frugal mindset rarely if ever buy more food (if you mean, not make their own
meals), no matter their work hours.

~~~
grecy
I'm not failing to understand it, I live it.

You wind up spending more on food because you're utterly exhausted from
working longer hours. It's not that you want to, it's that you get backed into
a corner and don't have a choice.

------
bduclare
Every person successfully doing this seems to also be selling something. From
the article: "Mr. Jensen also practices an activity that for many FIRE
achievers seems to be the new golf: writing a financial advice blog." That
blog seems to be mostly affiliate marketing. There's even a comment here
already
([https://news.ycombinator.com/item?id=17894385](https://news.ycombinator.com/item?id=17894385))
where the author talks about living without a job then posts a link to a book
they're selling.

The real story here isn't about retiring early, it's about how to change your
career to writing books about retiring early. Writing is still a job.

~~~
Franciscouzo
Of course you won't hear about those that are not writing about it, as they're
not writing about it.

------
existencebox
This was a feel-good article but rather devoid of substance, and I say that as
someone who pursues personal frugality. There's not much in here that hasn't
been established in pretty much every other discussion on the topic (lower
costs, maximize investable savings) without even the token discussion on
diversification and tax structure that usually give something concrete.

I'm bashing on the article a bit, perhaps unfairly, I just found it to
exemplify a trend I often see in these FIRE newslets, wherein the samples
given are wonderful encapsulations of "how to retire at 30 with 1m in the
bank? Make >100k a year and save most of it"

~~~
j45
Saving 60% of your salary above a standard of living cost for 8-10 years
appears to be the key.

Whether you increase income, cut spending, or both, software devs are well
positioned to do this, especially dual income.

There's lots more to read on this topic than a single article and it shouldn't
be used to bash down the relevancy of learning financial literacy.

~~~
existencebox
Let me be precise: I would do nothing but encourage ANYONE to be financially
literate.

However, I did not feel this article did that. If anything, it portrayed the
FIRE group as "those weird nerds who find that number stuff cool." (which,
while not necessarily incorrect for some of us, seems to bury the lede that
ANYONE can take learnings from this)

What I felt was _lacking_ were the breadcrumbs (outside of the token reddit
reference) towards financial literacy. I've seen far better introductions in
that respect than this article. (In that vein I'd namedrop bogleheads as well,
if anyone reading this is looking for other avenues)

I would also note that saving 60% of your salary for 10 years will only set it
up if you're making well over the median US household income, which was a
component of my original point.

------
BurningFrog
Without reading the article, $1M isn't nearly enough to retire on at 30,
unless you have some disease that will kill you before you're 45.

~~~
Jtsummers
If you can manage 1 million in cash/stocks and own a home somewhere
(reasonable if you’ve saved up that much). 4%/year is $40k, and will hopefully
be below your earnings on the money. That’s a reasonable amount to live on if
you don’t insist on New York or San Francisco or something.

That’s still 25 years of living if you get no interest or earnings.

~~~
firebones
Assuming 0% inflation or a real return on the $1M well above 4%, no health
issues, no change in expenses, no massive drawdown in the market in year one,
etc.

Build a spreadsheet that has "expected return" (e.g., 1.06) and inflation
(e.g., 1.03), annual expenses, taxes, starting principal, and then project out
the annual rate of return net of expenses + taxes for 30-60 years from age 30.
You will be surprised at how soon $1 million seems like nothing. Keep in mind
that both expenses and returns can see shocks (not to mention taxes) that put
you in a situation where "be below your earnings" assumption goes underwater
and the compounding effects work against you rather than for you.

All I'm saying is this: be prepared that 5-20 years into your super-early
retirement that you're kicked back into the job market--so have skills and a
reasonable path for where you're going to come back into the market. It's not
really a coincidence that many of these early retirement lifestyle gurus are
supplementing their decisions via the job of competing for eyeballs as
bloggers.

------
swang720
To me, FIRE is more about financial freedom, than early retirement. Having the
ability to quit your job at any time is the ultimate leverage, and gives you
the ability to choose work that fulfills you intellectually, without worrying
about the financial consequences.

------
cletus
So this is one issue I, like a lot of engineer types no doubt, have been
contemplating for some time. Goals differ depending on who you talk to. This
article talks about in one's 30s with $1m in the bank.

By the 4% rule that will generate you $40,000 a year. There are a lot of
places in the US you can live on that. It gets more difficult with kids but
not impossible. It's not what I'd call a retirement lifestyle I'd want
however.

Indeed the article mentions working at Starbucks and I imagine for these folks
there's a lot of this. I wouldn't call this retirement as such, I'd call it
_semi-retirement_ (which is fine).

Speaking of Starbucks, it mentions the real big problem with retiring early in
the US: health insurance. I really don't see a good way around this. It's also
why many countries are popular for US retirees (notably Costa Rica, Mexico and
more recently Ecuador).

Now I'm Australian so I could go back and retire in Australia (I live in the
US) but honestly I find that idea unappealing. Whereas there were parts of
Australia that had a relatively low standard of living, those days are long
over. Housing is ultra-expensive (particularly in the East Coast cities).
Other expenses like utilities are expensive. Hell, electricity prices were a
factor in recently toppling a sitting Prime Minister (fun fact: the last
Australian PM to serve a whole term as PM was John Howard ending in 2007;
there have been 4 coups since, 2 per major party).

Europe is an option. Not everyone has that option of course. And it varies a
lot by country. Germany is a pretty nice compromise between being good for
expats, being relatively low cost (compared to Switzerland, the UK or France
at any rate). Some countries are relatively cheap now and have good climates
like Portugal, Italy and Greece but are financially precarious.

Personally I'd like somewhere that's relatively inexpensive, safe/stable and
with a good climate. The last one eliminates a lot of otherwise good options
(eg Canada).

The US has a lot of affordable cities still (eg Atlanta). The health insurance
problem is a huge risk/cost though.

------
kinkora
IMHO i think we need a another acronym for "RE" in "FIRE" because it is a lil
bit of a misnomer. Most people who come across the concept of FIRE will
inadvertently ask the following questions:

• What will I do after i am "retired early"?

• Wouldn't I be bored when I'm "retired early"?

• What happens when I need more money than I expected later for <insert reason
here> after I'm "retired early"?

• If an emergency crops up, how do I deal with the unexpected expenses after
I'm "retired early"?

People seem to equate the "RE" part as you show the finger to your boss, stop
working completely, and you are at home now doing nothing. While that might be
true to a very very very small percentage of people that FIRE, in my personal
experience, most people (including myself) continue to work or at the very
least, do something part time (sell things on the side, cut their working
hours down to 3 or 4 days, part-time "menial" jobs, etc). I will hazard a
guess that most people that FIRE-ed are actually still "working" ergo still
have some form of income to supplement their living expenses (on top of their
FIRE stash) thus I will describe the RE part more of a mental freedom thing
than an actual thing one does.

My personal anecdote - I am technically FIRE in a lot of measures but I am
pursuing a fat FIRE (mentioned in the article) so I'm not exactly there yet
from my perspective. However I do have the choice to FIRE if I want to but
yet, I continue on working. Why? CAUSE I LOVE MY JOB! but let's say tomorrow
if I stopped liking my job for whatever reason, I will still continue finding
another job that I like even though I have the freedom to sit at home and be
"retired early". I will even boldly say that 9/10 people I know that are on
the way to FIRE or have FIRE-ed all are either still working or continuing on
doing something they love that most people will define as a "job".

Sorry for my verbose explanation but the "RE" is a lil bit of a pet peeve of
mine of all concepts of FIRE. Definitely need a better acronym - maybe
something closer to FU money.

------
danieltillett
Where this is all going to fall apart is when the stock market goes down or
inflation takes off. You really don't want to be retired, out of the workforce
for 10 years, and only have a million dollars in assets if either of these
happens.

~~~
nostrademons
Depends what your assets are in. You really want to have ownership of monopoly
assets that are low down on Maslow's hierarchy of needs if this happens. That
could be apartment blocks in metro areas where demand exceeds supply, or it
could be Google/Facebook/Amazon stock, or it could be defense stocks (war is
usually the inevitable result of hyperinflation), or it could be a successful
local medical practice.

The people who get fucked by inflation, in order of screwedness, are a.)
people who depend on cash savings or fixed-denomination bonds for survival b.)
wage workers in non-differentiated industries c.) commodity small business
owners (eg. restaurant or gas station owners) d.) salaried workers in
differentiated professions and e.) monopoly business owners and executives.
There's also a separate debtor => creditor axis where inflation benefits
debtors much more than creditors.

~~~
firebones
Not necessarily disputing your second paragraph's financial/economic points,
but if you're owning apartments (and managing them) or have a medical
practice, you're not retired. That does say to me that a lot of this early
"retirement" mythos is merely a euphemism for "non-traditional career
downsizing." Nothing wrong with that.

------
fisherjeff
How is this story not about the increasing prevalence of horrendous work
environments and expectations? Of course these people wanted to retire - their
relationships with their jobs were wildly unhealthy.

Which seems, unfortunately, increasingly common.

------
amptorn
Step 1: make about $110,000 a year, apparently. Then, save a lot of it up.
_Amazing._

Also, his wife is still working?

~~~
Viliam1234
> Also, his wife is still working?

Technically, this alone is enough for early retirement.

------
ape4
The guy on the article retired in his 40's.

"On Tuesday, March 10, 2017, Mr. Jensen called his boss and gave notice after
15 years at the company. He wasn’t quitting, exactly. He had retired. He was
43."

~~~
pcurve
And wife still works.

------
amanzi
So obviously this isn't really a guide about how to retire at age 30. But the
key message to take from the article is to live within your means with a
strict budget. And if you can't live within your means, be prepared to move to
another part of your country with more affordable housing and lower expenses.

------
nopinsight
In one sense, it’s switching from working one’s professional job to being a
homemaker, a penny pincher, and an amateur investor.

It could work and one may enjoy it better than a certain job. But isn’t it a
better use of one’s time to switch to a related job, perhaps a part-time one,
where one can deploy existing skills/education productively, and not worry too
much about everyday’s expenses?

Also, what would happen to one’s mental state when a bear market hits and the
nest egg one depends on takes a big hit at the same time that the job market
freezes up?

Using the privilege of time to find out what one really _loves_ to do and
embark on a journey to master that and perhaps make a living out of it in
future would be both more fulfilling and less risky in the long run.

------
topmonk
I'm retired early, but mainly because I got lucky in bitcoin. I'd suggest
retiring to Asia. You can live a lot cheaper here.

My thinking is as technology progresses, the gap between the life styles of
the poor and the rich will continue to decrease. If all we do is spend our day
staring at screens and phones, and one day wearing VR goggles, what does it
matter what car you drive, how big your place is, or whether you live in a big
city or out in the countryside (or in another country, in my case)?

------
GuiA
I’m 28, from Europe, have worked for a well known large tech company in
Silicon Valley for over 4 years (and a few startups before that). I currently
have a bit under $500k “in the bank” (mix of cash, stock, bonds, index funds).
I intend to leave tech in 2 years when - according to my current savings rate
- I’ll be a bit under $750k.

I intend to travel and do my own thing for a year or three, and then go into
teaching (primary school). I’ve worked with kids in various settings since I
was 17, so I know it’s something I love doing. The goal is for my saved income
to be an additional safety net/reservoir of money for buying a home in
addition to my potential teaching salary.

Outside of Silicon Valley, I can live under $30k a year, which will be roughly
4% of my total savings. Not super aggressive, but not super conservative
either.

The way I see it, tech will have (ideally) provided a very healthy jumping
point to my subsequent non tech career. I think that’s the way to do it,
because I honestly can’t see myself starting a family with my current
workload/obligations/etc. Working remote is a distant option, but not super
appealing for some reason.

I’ve been writing software since I was 12, I don’t intend to stop - just that
after a bit under a decade in the tech industry, I realize it doesn’t match my
ideals in the ways that teaching does.

Plus, I figure I can keep contributing to open source etc with the summers off
and what not.

Who knows, maybe this is very idealistic, and I will fail miserably and in 5
years I will be begging for my job back - but at least I tried, and I think
with my experience and resume I won’t have too much of a hard time getting
employed in tech again.

Some of my friends in SF are surprised at how much I’ve saved in that time.
I’ve certainly made sacrifices - not going to Tahoe every other weekend in the
winter, cooking at home more often than going out for overpriced SF
restaurants, etc.- but I don’t feel like I’ve had to particularly deprived
myself. I do have the luxury of having gone to school in Europe and paid as a
TA/RA in the US, so I have no school debt - certainly a privilege.

Just another anecdata point in case it is useful to anyone. Happy to answer
any questions - i feel like money talk is still kind of taboo and should be
discussed more openly.

~~~
krn
Were you raised in the East side of Europe, by any chance? I noticed, that
those, who grew up in post-communist countries, generally deal with money much
more carefully. They primarily see it as a tool to free themselves from
external dependencies, not the other way around.

~~~
GuiA
Nope, France. My grandparents grew up during the nazi occupation though (and
one of them fought in the resistance) and raised my parents as such, so
perhaps that had an impact.

------
RickJWagner
FIRE is awesome. The retirees live their dream, then they vacate their high-
paying job for the next applicant.

Everybody wins.

------
empath75
Step 1: earn a million dollars.

~~~
CM30
Yeah, that's the key point with a lot of these articles. They assume you're
able to get a job making $100,000+ a year. Not sure about anyone else, but
that seems like it's both unrealistic for people in many fields (aka ones that
aren't tech/finance/law/medicine/high level business related ones) and
unrealistic for many locations. I mean, over here in London that's a steep
ask, with only about 17% of roles I've seen offering anywhere near enough for
this sort of plan.

So yeah, step 1 is earning a million dollars, arguably by being in the top
10-20% of your industry salary wise.

~~~
bena
That's a big ask in most places. Median personal income in the US is right
around $45k.

------
gnicholas
How does one do this and put kids through college? Do you just set aside a
certain amount of money and hope it covers the cost of college, which is
notable for accelerating faster than the rate of inflation?

How do you explain to your kids that they have to go to a public university if
the savings aren't enough? I'm sure some kids would be self-aware enough to
appreciate all the extra time they had with you, but others might just wish
you'd worked like a "regular person" and tha they could afford to go to a
private university.

~~~
astura
You'd put some money in a college fund. That fund would be invested so it
would be collecting interest and capital gains as well as whatever you're
putting in weekly or monthly.

>others might just wish you'd worked like a "regular person" and tha they
could afford to go to a private university.

Then you've raised bratty kids. Parents don't have any sort of obligation to
put their kids through college - mine sure didn't put me through college,
lmao. I took out loans and went to a private university; then I paid my loans
off myself. If my parents helped me out that would certainly have been
appreciated, but I certainly wouldn't expect it.

~~~
gnicholas
> _Then you 've raised bratty kids. Parents don't have any sort of obligation
> to put their kids through college_

If you retire in your 30s and tell your kids “I don’t have an obligation to
put you through college”, I think that non-bratty kids might well be not
thrilled.

------
rhexs
Bogleheads [1] has an interesting thread on the same topic. Mostly the same
talking points, but a lot of anger towards millennials for "not paying their
fair share".

A bit disappointing. Bogleheads is an excellent investing forum, but a lot of
the advice is from boomers with the world's most generous and poorly planned
pensions.

[1] -
[https://www.bogleheads.org/forum/viewtopic.php?f=10&t=257992...](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=257992&newpost=4099570)

------
echelon
How can you retire with $1M at 30? Even frugal living seems as though it would
burn through this. And what about travel and entertainment? This seems like an
unreasonably low amount of money to have.

------
newnewpdro
He who wants nothing has everything.

------
Aloha
It's a neat idea if you can keep a high wage job, and move to a low wage area.
Otherwise I fear its impossible for most.

------
contingencies
If you want to live cheaply and see the world (or staying in one place does
not appeal), consider becoming a perpetual cycle tourist and live in a tent.
There are tonnes of countries where it is easy and spectacular to travel this
way and these days a light bluetooth keyboard and a phone with HDMI out are
all you need to make money.

------
uptown
I’ve seen this before with someone who inherited a sizable amount of money
from a deceased relative right after the financial crisis. Given where the
market is today I’m not sure what advice I’d give to them if the same were to
happen today.

Do you still just go with the long-term play and put it into index funds when
they’re at all time highs?

~~~
TACIXAT
Will you short the S&P 500 right now? If the answer is no, just hop on the
index fund train. It might be near an all time high, but it can go higher
while your money is sitting idle. Maybe it will drop and wipe out most of or
more than those gains, but you will be there for the recovery. Studies have
shown this to be an incredibly effective strategy.

------
sakopov
Does anybody here own rental property? If so how did you start out and what
kind of property did you start out with?

~~~
downrightmike
A quick search on reddit will answer your questions better and give you days
worth of reading. /r/financialindependence

------
bcherny
What's the $1M equivalent for the Bay Area?

~~~
dasil003
You don't do it in the Bay Area, you come here for the salary, live with
roommates in the cheapest place you can find, and if you keep things tight you
walk away with $1M ten years later.

~~~
SCAQTony
Detroit, Buffalo, Youngstown, Ohio and Houston, Texas in 20 years when
electric cars own 50% own the road. You would do very nicely.

~~~
mistrial9
Detroit ? lead-in-the-water, streetside shakedowns, multiple burglaries..
living with .. whom?

~~~
SCAQTony
I don't like any of the towns I mentioned, I used them as an example as to
what sort of environment you would have to live in which would allow you to
live on the interest of 1-million dollars for 50-years-plus.

------
TuGuQuKu
Sounds miserable -- maybe just get a job you enjoy instead of eating lentils
every day so that you can squirrel away an extra $3 into a retirement account?

Either way, enjoy watching your plan to get rich doing nothing crash and burn
when this bubble pops in 2 years lol

~~~
unethical_ban
You joke in an earlier post about how people should "get out of here with
reddit puns", yet you make wild conjecture about stock market moves, the
plight of people who have invested, and and it with "lol" as if this were some
Twitter banter.

$3 a day is more than $1000 a year, and for poorer people that would make a
lot of difference. For modest earners, even, that is an emergency fund or a
local family holiday. But enough with rebutting your specifics: I agree with
the other poster. Given an option of "live within your means" or "Don't have a
savings account and carry a credit debt", there is a pretty obvious choice.
And before you try to call me out on false dichotomies, re-read your post.

~~~
TuGuQuKu
Never read my posts again lol

