Author Topic: CNBC article - 28yo with $250k on track to retire by 37  (Read 1210 times)


Spud

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Toad

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #2 on: August 10, 2018, 07:30:33 PM »
Meh.  I saw that earlier and all I thought was: if he has 250k at 28 he should be able to retire well before 37.

TheMoneyWizard

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #3 on: August 13, 2018, 01:26:17 PM »
Meh.  I saw that earlier and all I thought was: if he has 250k at 28 he should be able to retire well before 37.
I hope you're right!

Toad

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #4 on: August 13, 2018, 10:03:41 PM »
Meh.  I saw that earlier and all I thought was: if he has 250k at 28 he should be able to retire well before 37.
I hope you're right!

No need to hope...I am assuming you are this person.  All you need to do is a bit of math to see that even being very conservative you should be done before 37:

Assumptions:
 - From article $80,000 salary
 - From article 60% savings - assumed this was after tax salary (conservative)
 - Contributing nothing to 401k (all income taxed) - hopefully not the case, but a conservative assumption
 - Salary stays stagnant (no raises) - conservative
 - 7% gains on 'stache - seems to be the standard inflation adjusted value used around here
 - Contributions once a month, evenly distributed through the year
 - No dual income ever - you bought a house with your girlfriend so I suspect this is also VERY conservative
 - Your expenses never go down - conservative since your house will be paid off eventually

From this we can get:
 - After tax income ~ $61,250 (effectively 16.92% federal tax & 6.51% MN tax)
 - Yearly expenses ~ $24,500 (so, 4% SWR FIRE $612,500 or 3% SWR FIRE $816,666)
 - Yearly additions to 'stache ~ $36,750 ($3,063/mo)
 - Also, the 'Stache Growth chart attached

From the chart, with all of these (IMO very conservative) assumptions, you should be able to lean FIRE after approx. 5.5 years (when you are 33-34) or fat FIRE after approx. 8 years (when you are 36).  So as long as the market doesn't tank, if you have not met your lean FIRE by 34 I am going to come up to MN and find you and kick your butt into shape for being a Spendy McSpenderpants!  Frankly I feel I should do that if you haven't met lean FIRE by 32 since I was using very conservative assumptions!

Also, if you want to cut your restaurant/lunch budget, but still eat out, look into Mystery Shopping.  This is what I have started doing to control it, and it works wonders for me.

gerardc

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #5 on: August 13, 2018, 10:49:00 PM »
That's not news. No new information, not particularly impressive

JLee

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #6 on: August 14, 2018, 07:35:11 AM »
That's not news. No new information, not particularly impressive

This forum is "Mustachianism Around The Web," not "new impressive information approved by gerardc."

FIRE@50

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #7 on: August 14, 2018, 07:41:51 AM »
lol

TheMoneyWizard

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #8 on: August 14, 2018, 08:39:43 AM »
Meh.  I saw that earlier and all I thought was: if he has 250k at 28 he should be able to retire well before 37.
I hope you're right!

No need to hope...I am assuming you are this person.  All you need to do is a bit of math to see that even being very conservative you should be done before 37:

Assumptions:
 - From article $80,000 salary
 - From article 60% savings - assumed this was after tax salary (conservative)
 - Contributing nothing to 401k (all income taxed) - hopefully not the case, but a conservative assumption
 - Salary stays stagnant (no raises) - conservative
 - 7% gains on 'stache - seems to be the standard inflation adjusted value used around here
 - Contributions once a month, evenly distributed through the year
 - No dual income ever - you bought a house with your girlfriend so I suspect this is also VERY conservative
 - Your expenses never go down - conservative since your house will be paid off eventually

From this we can get:
 - After tax income ~ $61,250 (effectively 16.92% federal tax & 6.51% MN tax)
 - Yearly expenses ~ $24,500 (so, 4% SWR FIRE $612,500 or 3% SWR FIRE $816,666)
 - Yearly additions to 'stache ~ $36,750 ($3,063/mo)
 - Also, the 'Stache Growth chart attached

From the chart, with all of these (IMO very conservative) assumptions, you should be able to lean FIRE after approx. 5.5 years (when you are 33-34) or fat FIRE after approx. 8 years (when you are 36).  So as long as the market doesn't tank, if you have not met your lean FIRE by 34 I am going to come up to MN and find you and kick your butt into shape for being a Spendy McSpenderpants!  Frankly I feel I should do that if you haven't met lean FIRE by 32 since I was using very conservative assumptions!

Also, if you want to cut your restaurant/lunch budget, but still eat out, look into Mystery Shopping.  This is what I have started doing to control it, and it works wonders for me.
Haha, loving the tough love!

I set the age 37 goal when I started my blog and was still salaried around $55K. At the time I assumed I'd never get a raise for the rest of my career, which was obviously crazy conservative since it was just my second year on the job. I'm now earning nearly 50% more and clearly way ahead of schedule, which is why I get a good chuckle whenever my story hits the mainstream media and all the doomsday preppers come out.

Your analysis is spot on and a breath of fresh air from the usual commenters. Of course I'd find that level of analysis on the MMM forums! The only part that's off is I get a fat 7% match on my 401k contributions too, which would make not hitting the goal even more face-punch-worthy.

When I recently realized how ahead of schedule I am, I started to reconsider my contribution and withdrawal strategy. My current plan is to take the MMM approach of treating my 401k as "old man money" and instead work to build up cash flow for ER.

I'm not here to pimp my stuff, but I consider my alternatives in this post and would definitely appreciate thoughts from the savvier mustachians around here. As of now, I've reduced my 401k contributions from full max to full employer match (7%) and I'm hoping to build rental property and dividend income.

Toad

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #9 on: August 14, 2018, 10:21:30 AM »

When I recently realized how ahead of schedule I am, I started to reconsider my contribution and withdrawal strategy. My current plan is to take the MMM approach of treating my 401k as "old man money" and instead work to build up cash flow for ER.

I'm not here to pimp my stuff, but I consider my alternatives in this post and would definitely appreciate thoughts from the savvier mustachians around here. As of now, I've reduced my 401k contributions from full max to full employer match (7%) and I'm hoping to build rental property and dividend income.

I will look at some of your stuff later this week, mainly because your case is particularly interesting to me since your income and expenses (and in turn FIRE target) are similar to mine.  You are a bit ahead of me since I did the unmustachian thing of getting a Ph.D.  So I didn't really start generating income until I was 27.  Currently 32 with a ~175k 'stache, so not too far behind.  I am looking more at 37-40 for my FIRE age though.

Really just started hitting this hard this year after finding this place, but from everything I have read, it is foolish not to max your 401k.  It isn't really possible to "over contribute" since you can do a Roth conversion ladder and take out your contributions without early withdrawal penalties.  That was one of my main takaways from looking at this closely earlier this year.  I had never fully contributed to my 401k previously (only contributed up to the match) because I always planned on early retirement and was worried about tying my money up.  Now that I know about the Roth conversion ladder, I see how foolish I was.

CCCA

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #10 on: August 14, 2018, 11:05:18 AM »
I just used the numbers in @Toad's post and plugged them into my FIRE calculator.
His estimate was similar to this one.

Spud

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #11 on: August 14, 2018, 11:15:05 AM »
That's not news. No new information, not particularly impressive

This forum is "Mustachianism Around The Web," not "new impressive information approved by gerardc."

+1

If we apply gerardc's "new information" rule to MMM's complete list of all posts, everything from January 2013 onward is just rehashing the same old stuff. That means the last 68 months of posts from MMM haven't really helped anyone LEARN anything NEW about the mechanics of early retirement. Everything in 2011 and 2012 is where the truly valuable information is. Even then it's probably stored in less than a handful of the posts from those two years. Apply the Pareto principle. From the perspective of a reader, the vast majority of the value of a blog is contained in a fraction of the total number of blog posts.

This whole online early retirement/FIRE community is built on one concept.

Spend significantly less than you earn.

That's it.

If you can't do that consistently, month after month, year after year without feeling deprived or worrying about what others will think of you, then all the other shit about investing and withdrawal rates, 401k and pensions, portfolios and tax etc is irrelevant. Why? Because you won't be able to amass any money to pay off debt or invest. Think about what a simple concept the above is. Yet we've got hundreds of blogs all over the internet that try and make it sound like it's new and complex and funky and you need to read hundreds of posts yada yada yada.

So if we should dismiss MyMoneyWizard because there's nothing new, then why the hell are we even on this forum? (I know why, but hopefully you can see the point I'm making).

If you broaden the scope from early retirement/FIRE to "Personal Finance" in general, that one concept of spending less than you earn still governs everything. Sure, most blogs talk about to save on your shopping by hunting down coupons, vouchers or discount offers, or how to increase your income etc, but the way I see it, that's all bollocks.

You capacity for earning is limited. Your capacity for spending is NOT.

Until you can control your spending, everything else is irrelevant. I can say that confidently because there are countless former sports stars out there who at one point had net worth's of 8 or 9 figures, and now they have nothing. A quick Google search brings up all sorts of stuff like this.

So why do we have all these different blogs recycling the same information? In part, it's because people keep reading it, and there's always money to be made.
« Last Edit: August 14, 2018, 11:19:48 AM by Spud »

TheMoneyWizard

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #12 on: August 14, 2018, 12:41:18 PM »
That's not news. No new information, not particularly impressive

This forum is "Mustachianism Around The Web," not "new impressive information approved by gerardc."

+1

If we apply gerardc's "new information" rule to MMM's complete list of all posts, everything from January 2013 onward is just rehashing the same old stuff. That means the last 68 months of posts from MMM haven't really helped anyone LEARN anything NEW about the mechanics of early retirement. Everything in 2011 and 2012 is where the truly valuable information is. Even then it's probably stored in less than a handful of the posts from those two years. Apply the Pareto principle. From the perspective of a reader, the vast majority of the value of a blog is contained in a fraction of the total number of blog posts.

This whole online early retirement/FIRE community is built on one concept.

Spend significantly less than you earn.

That's it.

If you can't do that consistently, month after month, year after year without feeling deprived or worrying about what others will think of you, then all the other shit about investing and withdrawal rates, 401k and pensions, portfolios and tax etc is irrelevant. Why? Because you won't be able to amass any money to pay off debt or invest. Think about what a simple concept the above is. Yet we've got hundreds of blogs all over the internet that try and make it sound like it's new and complex and funky and you need to read hundreds of posts yada yada yada.

So if we should dismiss MyMoneyWizard because there's nothing new, then why the hell are we even on this forum? (I know why, but hopefully you can see the point I'm making).

If you broaden the scope from early retirement/FIRE to "Personal Finance" in general, that one concept of spending less than you earn still governs everything. Sure, most blogs talk about to save on your shopping by hunting down coupons, vouchers or discount offers, or how to increase your income etc, but the way I see it, that's all bollocks.

You capacity for earning is limited. Your capacity for spending is NOT.

Until you can control your spending, everything else is irrelevant. I can say that confidently because there are countless former sports stars out there who at one point had net worth's of 8 or 9 figures, and now they have nothing. A quick Google search brings up all sorts of stuff like this.

So why do we have all these different blogs recycling the same information? In part, it's because people keep reading it, and there's always money to be made.
Good points. I also think there's another element.

In blogging, the messenger matters. It's the exact reason people visit blogs over other sources. If it was only about the cold hard facts, then everyone would learn the basic information on Investopedia or Yahoo Finance and be on their merry way. The fact that different bloggers have different voices and different situations is exactly what brings us to blogs in the first place.

That's why you see so many sites sharing similar information, IMO. MMM's style, presentation, and outlook is going to resonate with a certain type of person. You can see that in the demographics of this forum; the percentage of analytical INTJ engineers is off the charts here. My style is much less numbers/analytics driven, which seems to resonate with a whole different segment, many of who might otherwise never be drawn to FIRE or even realize it exists.

If both blogs somehow help save people from a lifetime of wage slavery, I think it's worth it.

marty998

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Re: CNBC article - 28yo with $250k on track to retire by 37
« Reply #13 on: Today at 05:59:02 AM »
Your forum signature is a little out of date @TheMoneyWizard :)