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People trying to save enough to retire by 40 (theguardian.com)
45 points by paulpauper 32 days ago | hide | past | web | favorite | 93 comments



I have noticed in articles and blogs advocating for early retirement, a general sentiment that work is bad and actively reduces quality of life and is therefore something that should be avoided at all costs. While I do think working 60-70+ hours a week at a job you hate in order to spend money on convenience items isn't a great formula for a meaningful life, I am also not convinced that the only solution is to grind it out until one no longer has to work. Perhaps working toward a more meaningful career could be part of the equation as well, and wouldn't therefore require a scorched earth approach to finances


A scorched earth approach to working rather than finances, I'd say. Saving & investing only gives you more opportunities and a bigger safety net. You can always decide to keep working.

I'd say the issue with working towards a meaningful career is that sometimes what you want to do isn't (for good reason or definitely not) properly valued by the economy or supported by society.

If I want to be a indie game developer in an essentially dead genre, creating exactly what I want, that's extremely difficult to do. For example, I might have to do Kickstarter or Steam Early Access to raise money and be at the whim of the terrible internet. I'd have to engage in social media as is basically required these days (gross). And so on.

If I want to do this while working, it'll most likely take non-linearly longer and quality will go down because I just don't have that much brain juice or focus after work. And I'd have to sacrifice my health & relationships.

I'm sure there are other examples. Many that are more noble (volunteering, etc).


> Perhaps working toward a more meaningful career could be part of the equation as well

A lot of jobs aren't meaningful. Imagine writing ad software. Or filming commercials for loan sharks. Not everyone has the luxury of good, meaningful work.


Yeah, also regardless of how meaningful you find a job, you almost definitely don't get an option to not work Fridays, or take multi-month vacations, or to stop working for several years then come back. You must let it take over your life to the extent that they want it to.


> option to not work Fridays, or take multi-month vacations, or to stop working for several years then come back

I want this so bad. I'd be happy to take a pay cut to get it.

I wonder if engineering firms will catch on and begin to offer this flexibility.

I hope that in the future, if my start-up ever takes off, that I'll be able to offer this to my employees. Because it's something I want.


And even if the start of your career feels meaningful or fun, you'll possibly (probably?) "grow" into a position where that's no longer true. I enjoyed writing software, but after 15-20 years, they expected me to spend most of my time managing others (which I was bad at) or working with customers (which I hated). That greatly reduced my happiness, and so I retired early (mid forties) to get out of it.

Maybe I could've told them, "Don't raise my salary and increase your expectations", but that never really seemed like an option.


You've noticed bad reporting. What you are seeing is somebody taking advantage of a trend to get their average reader to behave a certain way. They just take the news and stuff it into the simplest narrative that they think would resonate with their readers. "Work bad." It's a straw man, even if by over-simplification, that warps the conversation.


No children. No travel.

Living frugally and then the risk of an early death?

Is this really that great?


Someone in our profession can retire in their 30s or 40s with no children and absolutely still have budget for lots of travel.

Putting a few million into index funds or a dividend-bearing portfolio can yield a decent annual "salary" of six figures. That affords insurance, travel, mortgage, time to work on side projects or a start-up...


I think the main problem is to make "a few million" first.

Or rather, if you had "a few million" to put into index funds, why bother doing that instead of living in a cheaper area that your few million would take you a lot further?


Why not both? You can get very far with $80-120k/yr in Atlanta or similar.


Travel is peanuts compared to children. Yes travel, no children. Seems like a good compromise.


Why is there risk of an early death?


There always is risk of an early death.


I've seen coworkers die in their 30s, 40s and 50s from cancers and heart attacks. Can concur.


A picture that will never leave me: 0745, one fine Tuesday morning, Van Diemem straat, Amsterdam about 30 years ago on my bike on the way to work. Ambulance parked on the side of the street. Very young guy on the stretcher, clearly a corpse. Very fancy briefcase sitting upright next to him, his hand still aimed at it.

It wasn't the corpse that got me, but the briefcase. It talked tales of ambition and a future and suddenly there was none of all that. Heart attack, according to the 5 lines he made in the local newspaper the next day. I can still see that briefcase. It's a good reminder.


If you drive a car or cross street there is always risk of early death.

Other thing is if you spend a lot of money when you are young and you live long and then don't have money for medication so your quality of life is shit.


> then you don’t have money for medication so your quality of life is shit

Not if you live in a country with universal healthcare. I have no concerns about healthcare in later life (or at any point in my life).


I live in a country with universal healthcare and still you have to pay for a lot of drugs you need when you are older. There are older people who have to choose buy drugs or food as well.


That is really wierd. In the UK we pay a fixed price (£9) for prescriptions when we have the means to do so (i.e. in work), that's regardless of whether the drugs are more or less expensive than £9. Pensioners and people on benefits get prescriptions free.

It seems perverse to do it the way you suggest. Do you have to pay the full price of the prescription?


You don't pay full price on perscriptions, like insulin is reimbursed in some part, you still have to pay some amount. Though for people in small villiges it still might be a lot.

I am not good on details because I don't take any medication, I only see my granmother having like 5-8 different things to take. She can afford that no problem, but still all is not free, and there are people who are a lot poorer than my granmother.


At first I was wondering how people do this when surprise medical bills can easily bankrupt someone with 25x their yearly spending saved up, as mentioned in the article. Then I realized that this was The Guardian reporting non-US news.


Most FIRE practitioners in the US buy their own health insurance. It is modeled into their expenses the same as mortgage payments and property taxes.


Besides the $1k monthly premiums. Don’t forget to save up for the $10k deductible in case you actually get sick!


My understanding is that monthly premiums should be on the order of $600/mo for an excellent plan with a low deductable and copay. It's more if you have a family, of course.


A standard part of the financial model is an emergency fund that exists for purposes like this. I believe the advice is at least 6 months worth of expenses in the emergency fund, which should be enough to cover deductibles in the vast majority of cases.

Generally, people who FIRE sensibly build quite a bit of slack into their financial models to make allowances for unexpected large costs.


Well, that's what the HSA is intended for =)


Can’t people get their own insurance or ACA in the US?

Surprise medical bills can hit anyone regardless of their financial situation


That doesn't solve the problem. More than half of bankruptcies caused by medical expenses in the US are people who have medical insurance.

Further, medical insurance makes it impossible to live cheaply in the US. I make do with very few possessions, humble housing, and little spending. Health insurance accounts for about half my expenses, more than the next three largest expenses (rent, food, car insurance) combined. I'm probably going to move into a van at some point in the next year, at which point health insurance will be around 2/3 of my expenses.

If health insurance is 2/3 of your expenses, that means that you can be retired for 1/3 as long. And that's health insurance if I never get sick--healthcare costs a lot more if you do get sick. Granted, I would eventually qualify for medicare at which point that expense would come down.


Health insurance subsidies kick in at when insurance costs over 9.5% of income, unless you make over ~$50k/year. I'm not entirely sure how insurance could be 1/2 to 2/3 of your expenses, unless you are saving 90% of your income.


I'm really not sure where you're getting your math. I think you're conflating net (post-tax) income with gross (pre-tax) income, but the numbers you're saying don't add up even with that assumption, so I'm really not sure what mistake you've made or how to correct it.

My monthly breakdown is (VERY) roughly: 45% taxes, 15% health insurance, 10% rent, 5% other required stuff (food/utilities/other insurances). The remaining 25% mostly goes to savings/retirement, but sometimes not, depending on variances in expenses and if I decide to buy some big ticket item. When I do spend money it's usually on experiences (trips/concerts mostly) rather than buying things.

I make more than $50K/year. If you make enough money to pay the full cost of health insurance, and you live frugally on your other expenses, it would be quite easy for health insurance to be half your expenses.


You could move.


You can get screwed even with insurance. I had a bike accident in 2006, breaking both of my arms required me to get a bi lateral radial head replacement. It turned out the hospital to which I was sent was out of my insurance network, and I ended up getting an out of network bill for $50,000 USD.


My wife had a bad climbing accident in Glencoe a few years back and was rescued by the local mountain rescue team working in conjunction with an RAF helicopter and taken to Fort William hospital.

The only thing we were left with was the suggestion from the (awesome) nurse to "Come back to Fort William, but don't come back here!"...


Man that sucks. The whole 'out of network' thing sounds like a perfect excuse. As though patients have a whole lot of control over which parties the insurance companies sign up with.


And you can't avoid it really. I asked the hospital if they took my insurance as I was being rolled into the ER. They said yes. That means that they are happy to bill the insurance, not that that are in the insurance network.

Check out this story: https://www.google.com/amp/s/www.vox.com/platform/amp/policy...


For contrast: I also had a biking accident, broke my right leg in six places, pretty complex breaks too. Seven hours of operations and a lot of effort to get back to normal which more or less worked. Total cost: $500 or so in deductibles, not a cent more. I still have half an Ikea in my right leg on account of this little trip for my health, still debating whether to have it removed or not, which will be free because it is related to the original accident.

That story is disgusting, what I find really shocking is that apparently if you get the media interested suddenly your bill evaporates.


Head replacement? For $50k that sounds like a bargain!


Ha! Joking aside, I needed 2 implants of to replace these these => https://en.wikipedia.org/wiki/Head_of_radius


health insurance. yeah, it can be costly, but that is how it is done.


I'm almost 50 and when I look at the retirement saving calculator from my employer (through ADP), they tell me to expect to pay $15k / month for healthcare expenses when I'm 85. That can't be possible, can it?


Man, $15k/mo sounds crushing. What if you have a wife? $360k/y for a couple, this is crazy.


You still pay for it. The costs don't disappear into the ether (although it is definitely true that your exposure to extreme financial risk is substantially reduced).

However, there are downsides. If you have something very wrong with you, and it is somewhat rare (i.e. the medicine is expensive) or not well understood...you are done. The NHS provides universal care but not universal treatment. You go to the doctor, they go shrug can't help you. That is it and there is no "second opinion" (unless you go privately but that doesn't work either in many cases...you are usually seeing the exact same doctor, just paying for it upfront).

It is important to recognise that there are trade-offs in every situation. The UK system is, despite the cult-like following, not particularly effective. In terms of outcomes, it is below average by most measurements. It is very cost-effective...but that isn't the only thing that matters.


I think that's a bit harsh on the NHS - a more reasonable view would perhaps be:

“Compared to the other 18 countries the UK has middling funding and middling performance overall. We can be proud of the fact that the UK is a standout nation where people are not put off from seeking care due to cost, and the NHS is cheap to run. But austerity has bitten hard, and the lag of investment shows. If we want to hold our head up high next to our European neighbours we can and must do better.”

https://www.nuffieldtrust.org.uk/news-item/nhs-receives-mixe...

I don't think anyone thinks that the NHS provides the best healthcare, that's unlikely given the amount we pay for it, but as a country I guess we do have "cult-like" obsession with making sure everyone has access to healthcare.


I don't think that conclusion is one that follows naturally from the data.

And what the report misses out is that in many other countries patients are not put off from seeking care due to cost either...and they achieve better outcomes. They do this through a mix of private and public healthcare which is naturally intolerable to the NHS.

Btw, this should be plainly obvious if you actually look at what the data is...it is based on a population sample. If someone sick does not have access to care then that shows in the data. It is a great trick to change the question and say it is about access, it is not one that follows from the data.

As a lot of the Nuffield Trust get their staff from the NHS, I am not surprised that they self-importantly included that their work has led to the UK being a "standout nation".

The stuff about austerity is utter bullshit. Health spending per person has been growing after inflation at ~2%/year, and as a percentage of GDP health spending is up two points since 2010. Yes, attempts at cuts were made in 2017 (the rate of growth in spending was only ~1%) but that is because the govt had cut literally every other department to the bone first. A reasonable person would question whether that was worthwhile given that it involved large % cuts for the income of vulnerable people (in other departments, and in care budgets) rather than asking doctors to just accept an unchanged or small % drop in salary. Wasn't the recent negotiation for junior doctors a double-digit increase (which they wouldn't even accept and striked multiple times)? The willingness of Brits to not think rationally on this topic (and not realise how much lobbying goes into the maintenance of these views) is baffling.


> And what the report misses out is that in many other countries patients are not put off from seeking care due to cost either...and they achieve better outcomes. They do this through a mix of private and public healthcare which is naturally intolerable to the NHS.

It's "naturally intolerable to the NHS" because of its key tenets, which are:

* Free at the point of delivery

* Equality of care for all

i.e. There shouldn't be a tiered system where rich people get more. That leads to distortions and incentives to provide more for rich people and less for the poor. There would also be incentives for governments to start shrinking the pot of cash available to the NHS to make individuals pay more.

The ideals I think are correct, and if I don't like them then I can get private healthcare for a significantly lower price than if the NHS didn't exist (because the NHS does all the difficult expensive stuff, like A&E): that means the private providers are protected from some of the worst costs of providing healthcare.


> The NHS provides universal care but not universal treatment. You go to the doctor, they go shrug can't help you.

That isn't actually the case. There are certain treatments and drugs that NICE (National Institute for Clinical Excellence) [1] won't sanction due to them either being ineffective or too expensive for the returns, but mostly you will get coverage for pretty much everything.

The main issue with the NHS is waiting times, but that can easily be avoided by topping up with private healthcare for about £80pm.

So, because of the NHS private healthcare is also cheap.

[1] https://www.nice.org.uk/about/what-we-do


It is the case. You have just explained part of how that operates (you appear to be incredibly casual about a bureaucrat deciding whether your life will generate a sufficient "return"...is that because you think it can never happen to you?).

But, in addition, the NHS has a fixed policy on whether they will treat certain conditions or not (I know this because I look after a relative with one of these conditions). In the US, you can seek a second opinion (from someone who is very specialist). That doesn't and cannot occur in the UK. You can seek a private opinion but you will be seeing the same doctor (who will likely not know anything beyond NHS policy). The only solution in these cases is (usually) to go to a system that has an active private healthcare market (Germany, the US, Netherlands, etc.).


> (you appear to be incredibly casual about a bureaucrat deciding whether your life will generate a sufficient "return"...is that because you think it can never happen to you?).

Not at all. I understand that there's a pot of cash and unless we have a government that is going to expand that pot of cash by either raising taxes (which I would be all for) or increasing borrowing that then we need NICE to make some decisions. Their mandate is to consider what's best for the population as a whole, not what's best for the government. It may have let you down, and I really do feel for you and your situation, but the extreme negativity with which you portray the NHS is unwarranted in my opinion.

I don't know what condition you're referring to, but if it's chronic then I assume it would likely bankrupt you if you tried treating it in the US.

Other aspects of our system that work very well is that NICE can negotiate with the pharmacutical companies for lower rates, because we have the buying power of 65 million people. US hospitals are often negotiating individually and so their costs sprial.

> You can seek a private opinion but you will be seeing the same doctor (who will likely not know anything beyond NHS policy)

That is far too sweeping a statement, this is the truth map:

* There are private only specialists

* There are NHS only specialists

* There are private only specialists who may do NHS overspil work that a private hospital has tendered for

* There are NHS hospitals with 'private wings' where you'll be treated by an NHS specialist

Depending on the specialism a specialist may be 'attached' to a private hospital group (like HCA) and you can call up HCA [1] and get a quote for anything you like (that they provide). If you have private insurance then you can get that private work covered if the insurance company is willing to pay for it - just like all insurance healthcare models around the world, or you can pay for it yourself.

I have spent the past 15 years building a healthcare software company and work with the biggest private healthcare companies in the UK (and recently with the NHS).

[1] https://www.hcahealthcare.co.uk


With either public or private healthcare a 'bureaucrat deciding whether your life will generate a sufficient "return"' will be the case. At least in the case of public government run insurance, they have an incentive to keep you alive and healthy. In the US private system, their incentive is only to profit. In other words, their incentive is that you die and save them having to pay for care.


My father died when he was 36. I was 11 years old at the time. I am the complete opposite to these people. I believe life is for living, now, not later, because who knows even if you'll get there.

I always had the 36 figure in my head: "I will enjoy life as much as possible to 36 and then calm down". Unfortunately (or fortunately depending on how you look at it) I have trained my brain to enjoy life to its fullest as much as possible, I can't snap out of it.

I suspect that these people who forego living to put cash to one side with the premise that in the future they'll be able to live the good life will find they are mentally unable to make that switch too.

I am now 44 and can say that my 20s were amazing, my 30s even better (because I understood myself much more), my 40s have been pretty good, but it's clear I am slowing down a touch - the motivations to live every moment are fighting with the slight loss in energy as I age.

Why anybody would think it makes sense to put the best years of their lives (in terms of physical fitness) to one side in the promise of some later payoff is beyond me.


This kind of comment confuses me. I know I cannot speak for everyone, but I want to make sure I get as much out of life now and in the future. I just understand the law of diminishing returns. I enjoy a new gadget and a vacation and a delicious coffee. I enjoy them as treats and get great joy out of them. I do not need to buy a new gadget every week or month or year. I do not need ten trips this year. I also can ride my bike to work, save money and have great physical fitness right now (and in my future!)

And after all that, because I spent less money with only a very minor decrease of lost "living" in the form of extras that don't give me lasting joy, I also gain decades of autonomy where I decide how to use my time.


the point of early retirement is to have more time to do what your want, to live the life you want

calming down does not mean not living life to its fullest potential.


> the point of early retirement is to have more time to do what your want, to live the life you want

Pretty difficult to do if you're already dead, right?


It comes down to probability. Let's say we want to maximize the total hours of time enjoyed living before before dying.

Let's say we know we're going to die in a month with 100% certainty. We might liquidate all of our assets. Go into debt. Pay to fly loved ones from all over the country to spend time with them. Spare no expense.

On the other hand, let's say instead we know we're going to die when we turn 100 and with 100% certainty. In that case, it makes sense to delay gratification, invest more, and get the benefit of compounded returns. We might aim to have enough passive income coming in at around 60 or 70, and then we can quit working and slowly spend it all so that our the last check we write before dying bounces.

Since we don't know when we die, the best strategy is somewhere in between these two extremes. If the actuarial tables say we have 50 years left, I'm more inclined to believe the better strategy is likely to look like the second scenario.


@defertoreptar reminded me of this: Rich, Broke or Dead? https://engaging-data.com/will-money-last-retire-early/

Calculate the odds your early retirement plans succeed, fail, or you die and it doesn't matter.


One of the earliest advocates in this game was Mr. Money Moustache[1] who spelled out the arithmetic of "save half what you earn until you can live on your savings" back in 2011 or so. Very entertaining writer in the contrarian vein.

[1] https://www.mrmoneymustache.com


I find reading his blog helpful in that it gives me a new perspective on things. E.g. putting a dollar amount risk on buying a "safer" car and things like that.

I highly recommend reading his blog to many people, in that I think it will help you think a bit differently.

One of my favorite blog posts[0] is about how happiness is the only logical pursuit.

[0]: https://www.mrmoneymustache.com/2016/06/08/happiness-is-the-...


I used to work in investment, and I sometimes did cash-flow modelling for individuals...even within industry, the work is often woefully inadequate. I can't see the FIRE crowd getting this right (every FIRE person I have talked to seems mildly delusional).

Usually the "model" is some bogus Excel projection of historical volatility and returns into the future. That is nowhere near enough.

The quantitative mistake is not looking at returns as a random process (i.e. not ending up with a monte carlo sim with your assumptions, not modelling returns/volatility/etc. as random processes, if doing that then not using non-parametric models, if doing that then not using enough data, etc.).

The biggest practical mistake is understating the effect of volatility. Once you start or plan to take income, volatility becomes very important. Thinking that you can ride out volatility, the de jure thinking today, exposes you to intolerable risk (usually at the point where you are not able to bear that risk i.e. when you can't generate income anymore).

The aim of any retirement planning should be robustness. There is some kind of insane irony (the financial world seems to specialise in this) that people are attempting to invest in a way that requires maximum robustness but are often using strategies that produce totally non-robust returns (i.e. 100% equity ETFs).

If you are going to try this: stop and consider whether you really understand what you are doing.


Between the Trinity study, FIRECalc, and a healthy discussion about bond tents - plenty of folks are taking volatility seriously.

For every blogger trying to “retire” on $300k there’s another person targeting a 3.5% SWR with a well balanced portfolio, quietly waiting out the boring middle. The former gets more press but I suspect the latter will survive the next downturn just fine.


Yeah, and people also need to cover the alternative. If you don't retire early and don't save a significant portion of your income, are you still going to be protected from massive medical bills?

Having a job isn't going to protect you from a lot of things.

What if you become disabled and find yourself no longer able to work? What's the cost of stress etc on your happiness life...

Not saying one is better than the other, just that saying "what if???" a bunch of times doesn't mean the other situation is any better.

I'm sorry if this sounds attacking in any manner, I think it's important to consider that there are risks in both sides, and that having a job isn't going to protect you from lots of things.


If you are using a fixed withdrawal rate, you don't know what you are doing. Sorry, it is just that simple.


Let’s take for granted that the Trinity study is wrong, like you claim. What are you advocating for? Spending flexibility? The Golden Butterfly portfolio? Bitcoin?


Statistics. Logic. Reason.


What an awful answer


Volatility does not matter much if you don't sell

The good news about investing is that nominal dividend returns tend to remain the same even when stocks fall a lot ,so your yield goes up and your payments don't fall much despite the market falling a lot. This means your income is still mostly preserved. In 2009 when the market crashed the dividend yield of the S%P500 got as high as 4% versus just 2% earlier.

That is what I tell ppl who are invested if they should sell. Ignore the swings. Focus on the long-term compounded returns and payments.


That is 100% the wrong view.

Investing for retirement is about robustness. You are taking a view that is deliberately non-robust (and is, therefore, exposed to significant risk).

Compounded returns don't matter.

The stuff on dividends is just completely wrong too (for example: your yield doesn't go up, it stays the same if your payments stay the same because the price you paid doesn't change...that is basic). I will say though that when I said income, I wasn't talking about dividends. In most cases (i.e. with most tax systems), you are going to prefer taking income as capital gains. Even in a tax system that isn't tilted towards capital gains, I would prefer companies that can retain earnings and invest your capital at a high rate (I am in the UK, the companies that are returning capital at a high rate are fundamentally weak...maybe this doesn't generalise though).


Good blog post covering some safety margin talk[0].

[0]: https://www.mrmoneymustache.com/2011/10/17/its-all-about-the...


I think the principle of living frugally and investing what you earn is admirable. To my eye it isn’t particularly innovative, but rather articulates a strategy, a set of values that many people have either lost touch with or not been exposed to.

You can live on investments alone, and they probably don’t need to be as much as you think.

However, I associate those ideas in the US with northeast upper-middle class culture ... which also tends to have a “Puritan work ethic” ... that work is good in itself.

This notion that work isn’t intrinsically valuable or worthwhile is interesting.

I wonder if any of the people doing this end up being surprised to find that they miss working, years later.

I was just sitting in a plane thing about this ...

I mean, you’re going to die no matter what. You are going to have suffering and pain, almost certainly in your life.

Is not-working going to save you from that?

I totally get it is someone is an aspiring screenwriter or what have you, but what if your idea of the good life is “hanging out?” Will you get bored and depressed with all this time on your hands?


A big part of it is not needing to work. There is a lot of security in knowing that you can just walk away from a bad situation, and take your time getting another job. Also, people who retire early don't just sit around watching TV all day, many of them actually start up something on the side. For example, Mr. Money Mustache is a blogger, which happens to generate income.

The difference is that you don't work for income, you work to give yourself something to do. Some people hang out their hat as a DJ, or do some teaching, but they also take enough time to travel or do other hobby type tasks that they wouldn't have time for otherwise with a 9-5.


> Will you get bored and depressed with all this time on your hands?

Don't you think it's much more natural to ask the opposite question? About the impact of exchanging all of your good years in order to generate revenue for your boss? About the prevalent 40 hour / week, 48 weeks / year job contracts people rarely question? About being forced to cram your life only into evenings and weekends? About the blinders this puts onto your personal development? Oh but you get money so you can sit in traffic in a nicer vehicle, that's nice. You can fly further away during your measly, rushed two week vacations, that's nice.


I have a great respect for my mother. She worked hard (as a nurse) and raised 8 kids.

When I talked to her about retirement (she retired at 67) she suggested not retiring too early-- it's too easy to get bored.


Look up FatFIRE, I think people on HN would be more aligned with that philosophy rather than regular FIRE.


This is doable, even with kids. Especially in the software industry. I like that this article mentions setting a wealth target based on expenses, not current income. It's all about having a life that isn't financially expensive. If you can reduce expenses by $10K a year (less than $1K a month), that's an additional $285,714 that doesn't need to be saved up (10000/0.035, assuming 3.5% withdrawal rate).

We have two kids. They go to public school. We live in a modest 4 br house that is less than 2,000 sqft, in the DC metro. Housing is $1,700 a month (including county/city taxes and insurance). Food for 4 is $1,000 to $1,500, but this can vary a lot depending on preferences. School costs $0 since it is public school. Phone bill is $35/month for two lines since we prepay for a year and use an MVNO. This is for 8gb on one line and 2gb on the other. The phones themselves are modest and paid off (pixel 2). Electricity is about $150/month, natural gas about $100 a month, water $77. Transportation (one car for the whole family, no commute) averages about $200/month long-term, including car, maintenance, gas, insurance. Going with one car and having no commute makes a big difference. We live in an area that is walkable/bikeable. Internet is $90/month for 250/12.

Based on the Maryland health connection gov website, if we can keep our expenses, and therefore income, at or below $60,000 a year, then there is a $380/month/adult credit for health insurance purchased from the government exchange. At this income level, children can qualify for MCHP:

"MCHP Premium is low-cost health insurance coverage for higher-income children up to age 19 between 200% FPL and 300% FPL. MCHP Premium provides access to health insurance coverage for eligible uninsured children through the Maryland Managed Care Program, HealthChoice, for a modest monthly premium."

The MCHP premium premium for families between 250-300% FPL: $70 per month (per family, not per-child).

For the adults, the KP MD Bronze 6200/20%/HSA/Dental plan is $179/month/adult in this scenario, after the $380 credit. The plan is HSA-compatible, so we can build tax-free medical money in an HSA and keep that long-term, invested in stocks. The out-of-pocket max is $13,100, so we don't go broke.

Capital gains taxes are very low to non-existant. Married, filing joint, can realize $78,750 a year at 0% federal rate. The sum of all the expenses above (housing, food, utilities, health insurance, transportation, education) is $48,336. Bump that up to, say $55K or $60K to allow for additional discretionary spending, and that is:

$1,571,428 to $1,714,285 at a 3.5% withdraw rate. That's with no additional income generation at all. This is in the DC metro area, in Maryland, which is definitely a higher cost of living area. It's definitely not absurd like SF or some other places. There are lots of great tech jobs in area. Even Amazon HQ2 is not far.

There's one notable omission: college. Personally, I got my GED when I was 16 and did not pursue a degree. No college debt. Due to working my way up through companies, first small, then larger, I was able to not only build wealth, but pay off my wife's college debt (and she doesn't work; she takes care of the kids).

So, this can definitely be done. It takes some sacrifice to build up the wealth, but no a total sacrifice. Spending money and enjoying life are two distinct things. Spending money is not a prerequisite for enjoying life. Plus, the difference between spending just a little over one's means, and a little under one's means is monumental --one leads to wealth, the other to poverty. I personally do not at all feel like I missed out in my 20's or envy any of my peers.


Once this was called "a pension"


Pensions don't generally pay out mid-career, if I'm not mistaken. What's the relevance here?


Relevance being pensions allow for early retirement at 55 in some countries. Some pensions are time served such as the police so you can retire at 42 after 20 years on the force.


55 is extremely different from 40,and "one specific job has an early pension" is pretty wildly different from claiming that early retirement is equivalent to pensions.


Maybe this is just indoctrination from living in a capitalist society, but I'm not sure I'd like retirement. Or at least I'm not sure it'd make me happy. Sure I'd love to take short breaks, i.e. sabbaticals, but I'd ideally like to be working in some capacity on something meaningful.

And it does feel like this movement is all about delaying purpose until you have enough money. And having seen up close people who got a late start, it's not fantastic. For instance, take the dude who's trying to become a screenwriter in his 40's. He's gonna be around a bunch of 20 somethings, quite a few of whom have degrees in film, who are willing to stay up late, grind out screenplays and hustle like hell for a career in film. Will he do that?


It's a false dichotomy. There's no where in this "movement" that says "choose worse jobs now" or "avoid finding meaningful work now." Choosing to save money by shopping around on your insurance or buying last year's hot new gadget instead of this year's, or holding onto your car for a few extra years all can have a huge impact on your finances (particular if you minimize recurring costs and debt payments combined with investing - it becomes an avalanche.)

More so - the more money you have prepared for your future, the more flexibility you now have to choose the work you want to do. You can still get paid, but you also have a massive cushion and the power to say "no."


tldr: "no children"


My research suggests Cash Flow is a better investment strategy - Based on personal experience, US$600K can control a residential real estate portfolio that pays $96K annual profit (after property manager, insurance, mortgage, etc.). To get the same at 5%, math suggests a $1.9M principal (minimum) is needed, invested in paper assets.


Do you have sources for that claim? I find shocked that 600k gets you 96k yearly. 16% returns are absolutely ridiculous for real estate, AFAIK


He left out the interest payments on the principal he can leverage with $600K.

Say your bank allows 3:1 leverage then $600K will get you 1.8 million for 2.4 million total to spend. In some places that's enough to get an 'octoplex', 8 flats in one building. Each of those can be let at $1000 -> 12K * 8 -> 96K. Now you need to pay interest, the current rates are 1.7% or so, say 30K annually, or about 1/3rd of your total income on the property.

Of course there is still the maintenance, the cost for managing the property, the inevitable non-paying renters and evictions as well as flats that are empty between tenants. But that's more or less the basics of it.

Depending on local conditions this scheme may be more or less profitable. The things to watch out for in a scheme like this is rising interest rates which will likely kill the market so you would not be able to sell. If you want to nail down the interest rate over a longer term then you'd have to expect a higher interest rate.


Correct in my experience! :)

And we rarely sell, instead we retain cash flow. We will "flip" a Single Family door via 1031 (US Tax Code) into our next 5-8 doors (after owning it for 4 or so years). But we expect to hold onto the other building, and those we acquire as we go, as this again is a subscription model - Cash flow.

"The market" (i.e. real estate appreciation) does not affect us so much over time, only when we do buy/sell.

And right now, US rates are again low...


We have our first 5 doors, we keep $12K a year. Financed with 25% down. We are targeting our next 5-8 doors purchase in the next 3 months. Typical expectation (when we buy right) we keep about $200 per door per month.

Buying right is a large caveat - There are many bad deals out there, but still some good ones. Timing can be a large part of it, so patience is required. We will be independently wealthy in roughly 7 more years, if we can continue to get the timing right.

So I posted a representative of our plan, we are working that plan.

ymmv :)


This also assumes frequent, aggressive - but still completely legal - tax planning. I live in the US, so I am adhering to the IRS' code.

I wish I had studied wealth-building sooner, instead of having my roaring twenties, I would have been aware of the choice to be done accumulating by 35 (independently wealthy) and able to focus even more time on the volunteering, mentoring, and tinkering I do now.

It is possible, but it requires discipline, something I continue to work at.


This is very interesting to me, and you sound very familiar with the topic! Is there any particular place I can look into this in greater detail? I've often considered investing in real estate, but never considered using leverage.


A book I used the actual ideas from (rather than just studied) was The ABC's of Real Estate Investment by Ken McElroy. I also hired mentors that covered different aspects, from The Wealth Factory (A Garrett Gunderson company), Paradigm Life, and Rich Dad Advisors, among others.

The last has given me the most help and is the reason we have had the success we have so far experienced; Ironically, it tends to get down-voted with a quickness on HN. The principal (Kiyosaki) is quite controversial, maybe due to his anti-establishment method. That and possibly his crude language/delivery. He also has stretched the truth about his own experiences, another negative. But the basic knowledge is the same that has worked for Real Estate for many, many decades (more?).

The leverage is the same used in the USA for home mortgages - We put down 25% and the bank lends 75%. If you can take advantage of assistance programs (i.e. First Time Buyer, Military GI Loan, etc.) you may find even better terms for non-commercial residential (less than 5 doors).

Some of my mentors have recommended buying a duplex or triplex to get started, and living in one of the units. It can mess with the tax advantages, so work carefully with a CPA, but it can almost seem that financially, the tenants are paying your mortgage and basically buying the property for you.

I prefer always using a Property Manager - Less profit, but also no calls at 2:00am about plumbing issues, lost keys, etc.


Not just for real estate. Anyone who can maintain a 16% return for the long run would be one of the best investors in the world.


Real estate tends to be leveraged.


How much leverage? You can’t compare an unlevered equities portfolio against a 5x (or more) levered real estate portfolio.


75% leverage, typical for the US. And in paper assets I would pursue options for the same ability. It is possible to earn cash flow in that market, but I have not had much success taking my emotion out of it, so I focus on real estate.




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