Salary Negotiation Question
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Gravel
Mr. Poopybutthole
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I've posted bits and pieces all over this place in the past year or two.
You are correct, I'm 34 and hoping to retire before I turn 40. Based on current projections, it's looking more like 38. It all depends on when the next recession comes (earlier would be better for us).
Essentially I found Mr. Money Mustache a few years ago. Wife and I had saved up maybe $60k between 401k's and IRA's in our 20's, but that was about it. We completely stopped saving from 2007 til 2012 (well, my wife was still doing a match of her 401k, but she was working part time and we stopped our IRA's). We had already been pretty frugal and I started making decent money. We threw it all into investments. Started out by maxing our 401k's and tIRA's in 2014. Added a taxable account last year since we've only got $20k in Roth IRA principal, and it takes 5 years for a Roth IRA ladder to mature.
Realistically we live on somewhere between $35-45k a year right now, with a combined income around $145k. 4% rule says we need $1M, but considering that was a 50/50 stocks/bonds study, ignored Social Security, and I also have a (meager) Federal pension, we're going with 5%. At least until we get closer and realize how shitting your pants scary retiring so early is. My goal is $800k in investments, plus whatever we have in equity in our house which we'll use to downsize. Mr. Money Mustache is a good jumping off point, but the FIRE (financial independence/early retirement) community is packed with information.
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BrutulTM
Good, bad, I'm the guy with the gun.
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I have told you this before but this is a terrible idea. My grandfather retired early (in his early 50s) and in my opinion it ruined his life. Men who don't have valuable work to do turn to shit very quickly.
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Hachima
Molten Core Raider
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When the company I worked for was acquired we had a lot of people in their 20s/30s cashing out with 7/8 figure bonuses. They hired financial counselors to address early retirement strategies for us. As BrutalTM mentioned one important aspect they covered was the depression pitfalls people fall into when they aren't involved in productive activities.
The 4% rule based on the Trinity study is a rule for how you should withdraw and not what you need to save up to in order to retire. The Trinity study worked on the bases that at retirement age you need enough funds to account for 30 years worth of withdraws and the inflation for those years. This is why the "25 times" rule is what is used for calculating what you need to save up for. At age 65 it turns out to be the same value. Earlier retirement will require more though. Some information out there puts 25 years early retirement at a 2.67 multiplier like Why You Should Never Confuse These Two Retirement Rules of Thumb I know Charles Schwab uses a more conservative multiplier that closer to a 1.9 multiplier for that age. This would make it closer to needing $2M - $2.6M to meet a current value of 40-50k withdraw rate at that age.
Gravel
Mr. Poopybutthole
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I get what you're saying about the Trinity study. There are several reasons I'm not concerned.
There are plenty of things to do in retirement. Boring people get bored. Sitting on my fucking ass in a cubicle all day is not my idea of a good life. Does it give me some purpose? I don't know, that's debatable.
- The study was based on a 50/50 equities/bonds allocation. Which is ridiculously conservative. While bonds do smooth out volatility, they also hinder gains enormously. Something like 80/20 for early retirement should have significantly higher long term returns.
- The study ignores any other source of income; Social Security, pensions, part time work, etc. It basically assumes you never earn another single dollar for the rest of your life.
- Piggybacking on #2, the biggest risk to successful long term portfolio value (lasting 30 years, which essentially is infinite in this case) is sequence of returns in the first 10 years. A rational person, if they see a major financial crisis in those first 10 years, will find some sort of income to protect their portfolio. Once again, see above for something like part time work. Even bringing in $10k a year would be enough to mitigate almost all sequence of returns risk. That seems reasonable.
There are plenty of things to do in retirement. Boring people get bored. Sitting on my fucking ass in a cubicle all day is not my idea of a good life. Does it give me some purpose? I don't know, that's debatable.
Siliconemelons
Naxxramas 1.0 Raider
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Re: retirement - if you truly downsize and have no medical issues - many of us could up and retire in 40s and go live in a little house out in a square state - and do...what exactly?
As many state- you need...something to do...
As many state- you need...something to do...
zombiewizardhawk
Potato del Grande
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Siliconemelons
Naxxramas 1.0 Raider
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Well true... and if you are someone that really loves to do something that does not rely on being in a metro or suburb... like your big into wood working, or whatever - fine it's good...
If you have kids or grandkids and they are good with a similar life - fine, it would work out- you can watch the babies and take care of them etc... but if your kids or grands are living the suburb or city life and your out in the grasslands in a 1br 1bath house... expect a yearly "hi" etc... this all is saying retiring on a early and "slim for retirement" budget...and a big change in standard of living to do so.
This is not saying there are not very well off people that retire at 40 and have millions to support a "upper middle class life" till 90+ year old etc...
Also...generally if I was to have saved up close to 1m and want to retire - I would retire into such a lifestyle that the 1m$'s invested interest payouts could sustain me- and buy out as early as I can "old people insurance" for health and assisted living and death.
Because once you get sick you are paying it yourself and or any supplemental insurance you have bought- or you go gov - if you go gov, you best have de-vested all your $ 5 or 10 years prior.
BrutulTM
Good, bad, I'm the guy with the gun.
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Nothing wrong with taking a year or even two off and then starting a new career. That's not retirement though. If you want your life to have meaning, you have to be employed at something you care about, and just doing it when you feel like it is not the same thing. Responsibility is what leads to meaning, and if you have no responsibility you're going to start to feel useless because that's what you are.
Puttering around the shop, woodworking (unless it's in a production mode), fishing, golf, travel, etc. are hobbies, not occupations, and trying to make your hobby into an occupation is a great way to ruin your hobby. My grandfather bought a camper and a boat and went fishing in almost every state in the country. It took him about 5 years. In the last 20 years of his life, he fished less than he did while he was working. In fact I don't really remember him fishing at all. He used to spend hours a day just sitting at his kitchen table playing solitaire and hoping somebody from the family would come by. I went down and visited them a time or two while they were wintering in Arizona and they were just sitting around killing time with a bunch of other snowbirds in the middle of the desert. For him it led to some bad shit as well, and in a lot of cases people develop chronic pain, get hooked on opiates, and then die of an overdose but the root cause was lack of a meaningful occupation in the first place.
If you're in your 30s and your career is unfulfilling what you need is a new career. That can be daunting, especially if it involves going back to school, but you are way too young to just coast to a stop. I know a woman who finished law school and passed the bar at age 48 and now she's in her 60s and still lawyering her ass off. Traveling, video games, woodworking, golf, and fishing are all things you can do on vacation or the weekends.
Puttering around the shop, woodworking (unless it's in a production mode), fishing, golf, travel, etc. are hobbies, not occupations, and trying to make your hobby into an occupation is a great way to ruin your hobby. My grandfather bought a camper and a boat and went fishing in almost every state in the country. It took him about 5 years. In the last 20 years of his life, he fished less than he did while he was working. In fact I don't really remember him fishing at all. He used to spend hours a day just sitting at his kitchen table playing solitaire and hoping somebody from the family would come by. I went down and visited them a time or two while they were wintering in Arizona and they were just sitting around killing time with a bunch of other snowbirds in the middle of the desert. For him it led to some bad shit as well, and in a lot of cases people develop chronic pain, get hooked on opiates, and then die of an overdose but the root cause was lack of a meaningful occupation in the first place.
If you're in your 30s and your career is unfulfilling what you need is a new career. That can be daunting, especially if it involves going back to school, but you are way too young to just coast to a stop. I know a woman who finished law school and passed the bar at age 48 and now she's in her 60s and still lawyering her ass off. Traveling, video games, woodworking, golf, and fishing are all things you can do on vacation or the weekends.
I have a friend pretty into FIRE and he linked me this today that you might want to check out.
Crowdsourced Financial Independence and Early Retirement Simulator/Calculator