As long as you're being mindful of being cash flow +ve and save some $ for rainy day, you're good.
I Started with
1. Emergency fund (6months+ expenses or whatever you're comfortable with),
2. 401(k) / IRA (if you're employer provides it),
3. indexing (simple plain old vanguard low fee fund).
thats about it, nothing more.
I am a chase private client, own a house and could probably retire within next 3 yrs or sooner if I really wanted to... I dint think of FI all the time, it just happened.
Actually many of us think is worth it. Take the price of that haircut, pay 10% compound interest on it for 60 years, then ask yourself if you really care what your hair looks like.
I used to spend money on these things when I was younger, but with a few decades of adulthood under my belt, I care less about nice haircuts and fancy cloths.
Now, time is more valuable that anything else in life, and financial independence buys me that time.
The notion that we should all sell ourselves as wage slaves so that we can afford a new iPhone every year is bonkers.
Reject it all. Live Free.
I think the idea that you'll be so much happier once you're on that beach than you are now is equally as insane as conspicuous consumption.
Your last sentence is also a straw-man. You are attempting to debunk what constitutes a click-bait headline. Nobody will defend that ridiculous, oversimplified, universally-extended argument. What is even your point? The full statement requires so many variables to fully qualify, what truth are you attempting to convey?
It's easy to go overboard, but it's not that expensive to get regular decent haircuts, wear nice shits, etc. On a developer's salary it's basically noise, and the ROI over a lifetime will almost certainly be positive.
It's important to do a cost/benefit analysis, not just a cost analysis. :)
My hair grows thick, and I need to cut it every week or 2 to make it life comfortable. a 10 minute walk or ride + a haircut is an hour, and I'm happy with how i look.
Different people have different tolerances. For some, a spartan lifestyle "costs" them nothing at all.
I've had my partner cut my hair for many years; this was less time investment than going to a stylist.
Now I just shave it.
For some it's fine. If someone wants to have it styled that is great too.
I've found that I'm actually happier when I am more frugal. Spending money on things, more often than not, just makes us lazier, not happier, in my experience.
What's funny is a marine biology grad student in the article wondering how much they should be saving. Until one finishes that PhD, career investment and putting the, say, $100/month discretionary stipend funds towards healthy food and bicycle safety maintenance, rather than eating instant ramen noodles to save an amount that will make negligible difference in retirement, makes sense. (Or, if trust fund grad student, especially in a difficult field like marine biology, live like a grad student on stipend, and Bogleheads the rest.)
It's not technically a 401k, but has the same tax advantages. Just be aware that there are limits to your total tax advantaged contributions, so if you're maxing out your work 401k, you'll only be able to add funds via roll over.
Open a 401k, rollover your existing 401ks to it, select whatever funds you want.
It is limited to business owners.
You will need market returns. You will also desire some measure of safety. AA gives you those.
Don't focus on a number but focus on giving yourself some room to breathe. Slowly build a habit of saving money by snowballing money into a savings account to start. Don't measure your worth by money.
I didn't consider saving until I bought the engagement ring (which left me at a bank balance close to 0 and it wasn't the first time). I was 27 years old.
I started setting aside some money as a cash reserve (bucket #1) and I made sure there was enough money to:
- get me through two months on rent (3,000 GBP)
- feed myself for two months (400 GBP)
- buy one flight ticket home (to parents basement)(700 GBP)
By the time I was 29, I had about 10,000 GBP in savings between the two buckets. A good portion of it was spent on our wedding and honeymoon (from #2). By 30 I had 15,000 GBP in savings. Most of that was spent when I moved to Tokyo (damn moving costs). I had $1,000 USD left; it was a fresh start.
I'm 32 now and I have about one year worth of living expenses in savings and then some. I make monthly contributions towards a pension, life-insurance, and a retirement fund (bonds).
Pay off your debt first!
It has a guaranteed return on "investment".
The following scheme has worked well for me.
First take any employer matched retirement scheme (401(k) / IRA, etc.) and keep some money to build up a rainy day fund if you don't have one (a few weeks income is a good starting point) as theres no point defaulting on a loan because you made extra payments the week or month before.
But there is no point saving or investing money that could be going towards paying down a 22% credit card debt or 16% car loan, or even a 5% House loan. The only exceptions would be low interest loans (i.e. <1-2%) with a fixed payoff date.
On Mortgages, there are many schemes but I'd advise, 40% 1 year fixed, 40% 2 year fixed, 20% revolving credit, dump any rainy day funds, and any other spare funds, on the revolving loan == interest you don't pay. Keep the fixed term loans expiring every other year so any interest rate spikes only hit half your capital.
Disclaimer: I am not a financial adviser and this is not intended as "investment" or "financial advice".
Savings rate is basically the only number that matters in determining how long until you can comfortably retire. A 10% savings rate puts you on track to retire in ~50 years, starting from zero and given some conservative assumptions.
I liked to put some in stocks I already had decided on, but also a bit in cash, then when there was a panic and prices dropped, I grabbed a bunch of things I already had and knew were solid. Not a gambler, just an observer that likes a bargain and is patient.
More than sounds like IMO...
Frankly they’ll benefit everyone more by investing it in their own financial security and education.
Let’s all please stop philanthocapitalism.
It’s a mechanical way to obtain social capital.
(Many of the same also manage to retire quite handsomely. It's all about living within means.)
For most the anxiety of boxing yourself into that belief that after a certain day of your life that you can’t earn another dime makes no sense. If you look at the current stats there’s a huge % of people nearing “retirement age” who have nothing saved.
Personally I have had a surprising number of Uber drivers who are retired and bored and drive to socialize with others. Although they may be lucky to have saved enough I don’t necessarily think it would be “depressing” for someone who was otherwise of retired age to take on a job that they felt they were capable of doing instead of sitting at home doing nothing all day
Financial education is so important, yet so seldom presented. It literally can make a HUGE difference in quality of life. Everyone should at least understand the basic blueprint of how to care for your own financial future.
For those who haven't seen it yet, a great next step is to visit Bogleheads.org. A great community of knowledgeable savers, including many who never earned a great salary but still have managed to assure their own future. If you haven't seen it, check it out!
I'm personally targeting $2 million to retire comfortably by 50, and I think that's only slightly pessimistic.
For context, I'm 35 and in good health, but I plan on having to pay several thousand a month in health care and housing, and need to be able to endure market swongs.
Retiring now is certainly possible but strikes me as foolish.
I can assure you my father retired on much less and largely relies on national and union pensions.
Not to say it’s good to retire on less. He’d happily have more money put away but that wasn’t how life happened. It’s not how life happens for a lot of people.
Hence the “different world” remark.
also retiring to the swamp or midwest or desert is not everyone's cup of tea, particularly if it means severing ties with your community.
That isn’t going to work.
More importantly, once you're in your 80s it's probably safe to start whittling away at that principle.
You can get, averaged over several years, something like $50k/year from that.
I don’t think it’s sound advice to keep your retirement in stocks when you’re actually in retirement...
But you also don't know how long you'll live for, so to have your money doing nothing for 20/(30?!) years could hurt. My wife's grandmother is 99. That's a long time in low-growth near-cash.
Your point about $20k not being much is true, but I also would presume that someone who's saved that much probably would have some social security coming in, at least doubling that.
if your AGI is under $39k (or $78k married couple?), there's 0% tax on long term capital gains (gains from equities sales or qualified dividends). At least at a federal level, there likely wouldn't be any tax due on that $24k pull.