Author Topic: How many extremely early retirees are there?  (Read 21465 times)

brooklynguy

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How many extremely early retirees are there?
« on: January 16, 2015, 01:07:23 PM »
Does anyone know of any reliable source of information regarding how many extremely early retirees are out there (or how many aspiring extremely early retirees, a number which is probably harder to measure)?

I get the sense that this is a (rapidly?) growing movement, but maybe that's just my perception being skewed as an increasingly-more-involved member of this community.  I recall seeing passing references here and there to relevant statistics, but I can't find any data after doing some quick searching.  Even if there is no available source of information on what percentage of the population consists of extremely early retirees (or people who are attempting to become one), someone less lazy than me can probably arrive at a reasonable approximation by analyzing the relevant data that is available (perhaps including statistics regarding the readership of this blog?).

I'm intentionally not defining what I mean by "extremely early" retiree.

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Re: How many extremely early retirees are there?
« Reply #1 on: January 16, 2015, 01:53:37 PM »
The problem in your question is not just not defining extremely early, but not defining retiree.  The IRP would have a heart attack.

For example, does Jacob of ERE count currently?  Did he count before?  etc.

I do think there are a lot more than there used to be because of the growing movement, but it might also be a measurement problem (we have more access to the stories, so we think there are more - similar to how people think the world is more violent, even though it's not, or how autism diagnosis is on the rise, but not necessarily the disorder itself).

Let's just count them.

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brooklynguy

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Re: How many extremely early retirees are there?
« Reply #2 on: January 16, 2015, 02:26:43 PM »
Good point.  I guess I should've moved the closing quotation mark to the end of the word retiree.

As much as it feels like this is a growing movement, in real life the concept of extremely early retirement seems alien to the overwhelming majority of people, so even if the ranks are growing I would guess we're still an exceedingly small percentage of the overall population.


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Re: How many extremely early retirees are there?
« Reply #3 on: January 16, 2015, 05:29:33 PM »
Extreme ER = to or < 35
ER > 35 but less than standard retirement age

I prefer to think of this as EFI and FI instead since as arebelspy pointed out so many continue to work in one form or another. I also suspect that due to what is often required to become financially independent at such an early age is not typical, it will forever remain a boutique lifestyle only few among us will achieve.
« Last Edit: January 16, 2015, 06:05:13 PM by WYOGO »

Goldielocks

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Re: How many extremely early retirees are there?
« Reply #4 on: January 16, 2015, 06:01:25 PM »
Another related question is...

And how many ERE as a % read MMM?  Now THAT is a question!

Bob W

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Re: How many extremely early retirees are there?
« Reply #5 on: January 17, 2015, 08:15:22 AM »
Less than one in 1000 that do it on their own.  There are plenty of FI by age 35 though.
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Re: How many extremely early retirees are there?
« Reply #6 on: January 17, 2015, 08:46:42 AM »
There are always people that manage to beat the system. The difference now is that those of us who try can now band together with the reach and relative anonymity of the internet.

But I don't the movement will ever truly balloon. One of the iron laws of living in a capitalist society seems to be that for most people, expenditures always rise to match income.
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James

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Re: How many extremely early retirees are there?
« Reply #7 on: January 17, 2015, 09:59:48 AM »
The definitions don't match for the terms, and the individuals seldom match up enough to be categorized. I just think it defies the ability to quantify, even roughly.

If I wanted to quantify it I would give up on terms completely, and ask a question like "what percentage of the population have enough savings prior to the age of X where a 4% withdrawal would provide an amount equal or greater than their annual living expenses." We still wouldn't know an answer, but might be a question that *could* be answered. At that point everyone would start to quibble about the trust fund babies who have income for life but no actual savings, or those with adequate income from savings at this point but not enough to cover them as expenses rise in old age. It just defies our ability to quantify without extremely narrow parameters which then make the quantification of very limited interest or value.
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Re: How many extremely early retirees are there?
« Reply #8 on: January 17, 2015, 12:35:55 PM »
6
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Cherry Lane

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Re: How many extremely early retirees are there?
« Reply #9 on: January 17, 2015, 02:13:21 PM »
I wonder how states come up with unemployment numbers, and if that can be used to answer your questions.  While the population measured in unemployment figures is "not working but looking for work", you'd want "not working and not looking for work", filtered by some age restriction.  That info must be out there somewhere.

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #10 on: January 17, 2015, 06:30:43 PM »
It just defies our ability to quantify without extremely narrow parameters which then make the quantification of very limited interest or value.

No, if someone were actually serious about finding out the answer, all that would be needed is a single-question survey conducted among a sufficiently large sample size to see how many people self-identify as an "extremely early retiree" (without defining the term).

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Re: How many extremely early retirees are there?
« Reply #11 on: January 18, 2015, 12:44:47 AM »
This probably isn't the angle you are looking for, but you might be able to tease some numbers out of this: http://www.nytimes.com/2014/12/12/upshot/the-rise-of-men-who-dont-work-and-what-they-do-instead.html

If you dig further into the series you can learn more about their methodology, etc.

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Re: How many extremely early retirees are there?
« Reply #12 on: January 18, 2015, 01:02:27 AM »
I'm not aware of a source of data, but I have yet to come across another individual in the flesh

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Re: How many extremely early retirees are there?
« Reply #13 on: January 18, 2015, 01:14:25 AM »
I'm not aware of a source of data, but I have yet to come across another individual in the flesh

I take that back.  I've met Billy and Akaisha Khaderli.  They retired 35 years ago at age 38 as far as I remember.  So that brings us to 8 :P

And also Doug "Nords" Nordman who we were fortunate to have brunch with while vacationing in Hawaii
« Last Edit: January 18, 2015, 02:11:37 AM by Jeremy »

ulrichw

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Re: How many extremely early retirees are there?
« Reply #14 on: January 18, 2015, 02:01:39 PM »
The data that you want is available.

The Atlanta Federal Reserve Bank has a convenient tool here: https://www.frbatlanta.org/chcs/LaborForceParticipation.aspx

You can select "Reason for Non-Participating" and "Retired" to get a chart.

Note that the numbers are low, and are rounded to the nearest percent, so for more meaningful data, I've attached a screenshot of a pivot-table based on the downloaded data for the percentage of respondents who used "retired" as the reason for not participating in the labor force by age and year of survey.

Note: The other reasons respondents could select were "Disabled/Ill", "In School/Training", "Taking Care of House or Family", "Want a Job, but not Unemployed" and "Other"

The source data for this information is the Census Bureau's Current Population Survey, which I suppose is the answer to OP's question about a "reliable source of information regarding how many extremely early retirees are out there"

Left

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Re: How many extremely early retirees are there?
« Reply #15 on: January 18, 2015, 03:22:52 PM »
Wait, I thought MMM was self employed :), not "retired" since he still seems to work just only doing the work he wanted

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #16 on: January 19, 2015, 10:08:26 AM »
The data that you want is available.

Thanks, ulrichw!  Based on that data, it looks like 2.87% of the US population age 40 or below was categorized as "retired" in 2014, and 1.9% for age 34 or below (for some reason the dataset seems to exclude people exactly 35 years old; the bands skip from 30-34 to 36-40 -- is this a typo?).

Looking at the data over the 1998-2014 time period, there appears to be a definite upward trend in the number of extremely early retirees (and at the same time there was a downward trend in the number of traditional-age retirees).  But it's hard to draw any conclusions about how much (if any) of this trend is related to the "extremely early retirement movement" as opposed to trust fund babies, etc.

I would guess that the overall number of extremely early retirees of the likes of MMM, RootofGood, Jeremy/Winnie (Go Curry Cracker), Nords, etc., are so low as to be negligible from a statistical perspective.  So the jokes above about counting the number of extremely early retirees on two hands may not be so far from the truth.  I wonder if this will change (or is already changing) as the message of extremely early retirement (and the resources on how to accomplish it) become more widespread.

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Re: How many extremely early retirees are there?
« Reply #17 on: January 19, 2015, 10:18:26 AM »
When you first open the forum and you get the list of sub-forums, at the bottom there are some stats below the "members online". Right now there are 660 people, 420 guests, and 180 members, some hidden, and I'm not sure what makes up the difference.

This is a pretty typical amount of people, I check it sometimes just for the hell of it. Some are lurkers who may never join, or who aren't likely ER candidates. Some are already "old-farts" and can't retire extremely early since they are already beyond 30, 35, 40, 45, whatever your definition. But a large portion of these are the regular contributors who have/will/plan to retire early, some extremely early. And this is just one of many forums devoted to this kind of lifestyle.

But my point is this: I believe you are correct brooklynguy in that the message is spreading, and the movement is growing. In 5-10 years there will not be a dozen, or 100 early retiree's, there will be thousands. I'm glad to be one of them, although I might not fit everyone's "extremely" definition since I will likely be early 40's.
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Re: How many extremely early retirees are there?
« Reply #18 on: January 19, 2015, 10:43:43 AM »
well as everyone has said, so much depends on what you consider "retired" and what you consider "early"

for example, my friend quit her job to be a SAHM because she and her husband (who still works) are basically FI.  He could quit but he loves his job.  Is she an ER?
Then there's my uncle who was forced into retirement (commercial pilot) at age 57 because of a heart condition.  Is he "early"? Does it matter that he didn't want to retire?

I do see this as a growing movement, but it's still a fringe movement and my sense is that it will remain so.  US savings rates have increased and debt has decreased, but the vast majority of workers still aren't saving anywhere near enough to retire before they are in their 60s.  401(k) participation is still abysmal, and the overwhelming majority of people don't max out their IRAs each year.  All of which suggests that we won't see more than a small percentage (<<10%) retire early (before 59.5) in the upcoming decade.

Beyond that, who knows.  Long-range economic forecasts are about as unreliable as forecasting the weather years into the future.
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Re: How many extremely early retirees are there?
« Reply #19 on: January 19, 2015, 11:28:48 AM »
Based on that data, it looks like 2.87% of the US population age 40 or below was categorized as "retired" in 2014, and 1.9% for age 34 or below

No, to get the "total percentage under 40 who are retired", you don't add up the percentages in the column (as a proof, ask what percentage of 76+ year olds are retired: add 82.72% + 88.46% = 171.18%?!) To get a precise number, you have to do a weighted average based on the size of each group (which are not equal). Using the downloadable spreadsheet, I calculated 0.57% retired for age 16-40.

That still seems kinda high to me...1 out of every 175 people in that age group are retired? I have about that many Facebook friends, most of them in that age range, and none of them are retired as far as I know. And since they're my friends, they're much more likely than the general US population to be in that relatively small highly-educated, high-earning demographic for which early retirement is possible.

Anyway, what a kickass first post by ulrichw!

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #20 on: January 19, 2015, 12:00:28 PM »
No, to get the "total percentage under 40 who are retired", you don't add up the percentages in the column (as a proof, ask what percentage of 76+ year olds are retired: add 82.72% + 88.46% = 171.18%?!)

Oops.  Apparently my laziness extends beyond the task of finding the data into to the task of properly analyzing the data.  Thankfully we have kickass posters like ulrichw and yourself to do it for us.

That still seems kinda high to me...1 out of every 175 people in that age group are retired? I have about that many Facebook friends, most of them in that age range, and none of them are retired as far as I know. And since they're my friends, they're much more likely than the general US population to be in that relatively small highly-educated, high-earning demographic for which early retirement is possible.

It still seems kind of high to me too, but while our personal social circles may be over-representative of the MMM-style extremely early retiree candidate population, they are probably under-representative of the dynastic ultra-wealthy non-worker population who probably make up a material portion of that 0.57%.

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Re: How many extremely early retirees are there?
« Reply #21 on: January 19, 2015, 01:02:47 PM »
The data that you want is available.

The Atlanta Federal Reserve Bank has a convenient tool here: https://www.frbatlanta.org/chcs/LaborForceParticipation.aspx

You can select "Reason for Non-Participating" and "Retired" to get a chart.

Note that the numbers are low, and are rounded to the nearest percent, so for more meaningful data, I've attached a screenshot of a pivot-table based on the downloaded data for the percentage of respondents who used "retired" as the reason for not participating in the labor force by age and year of survey.

Note: The other reasons respondents could select were "Disabled/Ill", "In School/Training", "Taking Care of House or Family", "Want a Job, but not Unemployed" and "Other"

The source data for this information is the Census Bureau's Current Population Survey, which I suppose is the answer to OP's question about a "reliable source of information regarding how many extremely early retirees are out there"

Awesome link.  Keep posting more like this, thanks!

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Re: How many extremely early retirees are there?
« Reply #22 on: January 19, 2015, 01:35:43 PM »
Based on that data, it looks like 2.87% of the US population age 40 or below was categorized as "retired" in 2014, and 1.9% for age 34 or below

No, to get the "total percentage under 40 who are retired", you don't add up the percentages in the column (as a proof, ask what percentage of 76+ year olds are retired: add 82.72% + 88.46% = 171.18%?!) To get a precise number, you have to do a weighted average based on the size of each group (which are not equal). Using the downloadable spreadsheet, I calculated 0.57% retired for age 16-40.

That still seems kinda high to me...1 out of every 175 people in that age group are retired? I have about that many Facebook friends, most of them in that age range, and none of them are retired as far as I know. And since they're my friends, they're much more likely than the general US population to be in that relatively small highly-educated, high-earning demographic for which early retirement is possible.

Anyway, what a kickass first post by ulrichw!

I'm going to ignore ages 16-20 b/c they are such a small group they probably won't affect the calculation much.

I was reading the data as the percentage of people who are unemployed who say they are retired, not percentage of people who say they are retired. So it would be 0.57% of unemployed people are between ages 16 and 40 AND say they are retired.

So we need percentage of people between 16 and 40 who are unemployed for any reason. Looks like labor force participation rate for ages 20-40 is right about 80%. So of the 20% of them not participating, 0.57% are choosing not to participate b/c they are retired. So I get about 0.011% of the population between 20 and 40 are choosing not to work because they are retired.

http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf says that there are about 82.6 million people between the ages of 20 and 40. if 0.011% of them are not working because they are retired, then that gives us the magic number of, drum roll please...

Around 90,000 people in the US are between 20 and 40 years old and retired.
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nawhite

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Re: How many extremely early retirees are there?
« Reply #23 on: January 19, 2015, 02:00:50 PM »
Actually, I want to do better, I have all the information I need now with the age ranges off by a year here or there and population stats from 2010.

16-20 year olds:
0.2% of non-partcipants, 64% not participating, 20.04 million people = ~25,700 people (I don't know if I believe this one, I bet there were a lot of high schoolers who said "well shit, I'm totally Retired!!!"

21-25 year olds:
0.4% of 27% of 21.59 million = ~23,300 people

26-30 year olds:
0.64% of 19% of 21.10 million = ~25,700 people

31-35 year olds
0.66% of 17% of 19.96 million = ~22,400 people

36-40 year olds
0.97% of 17% of 20.18 million = ~33,300 people

41-45 year olds
0.91% of 18% of 20.89 million = ~34,200 people

46-50 year olds
1.53% of 20% of 22.70 million = ~69,500 people

51-55 year olds
4.08% of 23% of 22.30 million = ~209,300 people

and up from there.
« Last Edit: January 19, 2015, 02:03:31 PM by nawhite »
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Re: How many extremely early retirees are there?
« Reply #24 on: January 19, 2015, 02:02:10 PM »
Based on that data, it looks like 2.87% of the US population age 40 or below was categorized as "retired" in 2014, and 1.9% for age 34 or below

No, to get the "total percentage under 40 who are retired", you don't add up the percentages in the column (as a proof, ask what percentage of 76+ year olds are retired: add 82.72% + 88.46% = 171.18%?!) To get a precise number, you have to do a weighted average based on the size of each group (which are not equal). Using the downloadable spreadsheet, I calculated 0.57% retired for age 16-40.

That still seems kinda high to me...1 out of every 175 people in that age group are retired? I have about that many Facebook friends, most of them in that age range, and none of them are retired as far as I know. And since they're my friends, they're much more likely than the general US population to be in that relatively small highly-educated, high-earning demographic for which early retirement is possible.

Anyway, what a kickass first post by ulrichw!

I'm going to ignore ages 16-20 b/c they are such a small group they probably won't affect the calculation much.

I was reading the data as the percentage of people who are unemployed who say they are retired, not percentage of people who say they are retired. So it would be 0.57% of unemployed people are between ages 16 and 40 AND say they are retired.

So we need percentage of people between 16 and 40 who are unemployed for any reason. Looks like labor force participation rate for ages 20-40 is right about 80%. So of the 20% of them not participating, 0.57% are choosing not to participate b/c they are retired. So I get about 0.011% of the population between 20 and 40 are choosing not to work because they are retired.

http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf says that there are about 82.6 million people between the ages of 20 and 40. if 0.011% of them are not working because they are retired, then that gives us the magic number of, drum roll please...

Around 90,000 people in the US are between 20 and 40 years old and retired.

The % for employed, and all the individual reasons for not employed add up to 100%, so if it says 2% of 36 -40 yr olds said they were retired, then that is 2% of the population, not 2% of the 17% that are not working....

It is indeed telling the reasons people say for not working.

"ill", "going to school", "homemaker", "retired", "Want a job but not unemployed", and "other"...

So anyone who has given up looking for work, as well as anyone who is passive income or considers themselves not employed due to seasonal work,  and does not want to call themselves a "home maker" or "ill/disabled", only really has "retired" ,  or "other" as answers, and nearly no one chose "other" as their response.  (perhaps because of the design of the query)

EXAMPLE
A depressed 32 yr old married male, out of work that has stopped looking after 2 years --  well, he may have an aversion to calling himself the equivalent of housewife if he has no kids,  and may not choose "other", and may in fact call himself "retired" meaning that his partner, parents (or government handouts) are working to support him. -- he does not want a job...

What would a Drug or gambling addict self select into?  ..  What about competitive amateur athletes?  What about a person starting their own business, but not drawing a salary yet and living off cc's and personal savings for now?  What bout the student travelling the country for a year before starting to work?

This response "Retired"  is therefore mixed up with others, so maybe that 0.57% number is accurate after all?   

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Re: How many extremely early retirees are there?
« Reply #25 on: January 19, 2015, 02:08:39 PM »
[...]
I was reading the data as the percentage of people who are unemployed who say they are retired, not percentage of people who say they are retired. So it would be 0.57% of unemployed people are between ages 16 and 40 AND say they are retired.
[...]

The percentage actually is the percentage of the overall population, not of labor force non-participants.

I've attached a screenshot of the non-pivoted data for 2014, and a spreadsheet containing the original dataset I downloaded from the FRB (in case you want to look at it yourself). As you can see, each row adds up to 100% and includes the labor force participants as a whole and the non-participants broken down by reason for non-participation.

Note that the spreadsheet does some of the work for you, because it gives the percentage of the overall population in each age range.

A note on terminology, too:
Even though "Unemployed" and "labor force non-participants" sound very similar, they are two different populations as used in most of the published statistics.

"Unemployed" are people who are not working, but are looking for work.
"Labor force non-participants" are people who are not working and are also not looking for work. This is a little tricky, because non-participants include people who might want to work, but have given up trying to find work for some reason.

By this definition there should be no retired unemployed people.

One reason for the potentially high-sounding number is that these are people who *say* they are retired, not necessarily people who fall into some strict definition of the term. For example, I probably would have said I was retired in a survey back when I took a year off from working in 2007, even though I intended to start working again.

(Thanks, btw, for the positive feedback in this thread - I'll try to keep up the good work :)).

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Re: How many extremely early retirees are there?
« Reply #26 on: January 19, 2015, 02:36:00 PM »
I would guess that the overall number of extremely early retirees of the likes of MMM, RootofGood, Jeremy/Winnie (Go Curry Cracker), Nords, etc., are so low as to be negligible from a statistical perspective.  So the jokes above about counting the number of extremely early retirees on two hands may not be so far from the truth. 

Let's not forget the distinction between people who blog about something, and people who do that same something.  I'd wager there are hundreds if not thousands of people gardening in the PNW for every person who blogs about it

Why should early retirement be any different?  If anything, I think the ratio of people doing it to people talking about it would be even higher for early retirees.

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Re: How many extremely early retirees are there?
« Reply #27 on: January 19, 2015, 02:53:44 PM »
Let's not forget the distinction between people who blog about something, and people who do that same something.  I'd wager there are hundreds if not thousands of people gardening in the PNW for every person who blogs about it

Why should early retirement be any different?  If anything, I think the ratio of people doing it to people talking about it would be even higher for early retirees.

I wasn't drawing conclusions based on the number of early retirement blogs that exist, but based on the (admittedly unscientific, anecdotal) evidence, which I think suggests that extremely early retirement is exceedingly rare.  It wouldn't strike me as all that unusual to come across a PNW gardener (even as a resident of the Northeast), but I think it is exceptionally rare to come across an extremely early retiree (apparently (based on Jeremy's response above), even for someone as immersed in that world as the creator of a popular early retirement blog himself).

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Re: How many extremely early retirees are there?
« Reply #28 on: January 19, 2015, 04:01:34 PM »
they are probably under-representative of the dynastic ultra-wealthy non-worker population who probably make up a material portion of that 0.57%.

I was initially ignoring this, because I figured "one percenters", though we hear a lot about them, are necessarily rare. Like, 1% or something. But then I realized that a much larger proportion of the "one percenters" are likely to be "retired" (50%? 80%?), and 50% of 1% is 0.5%. So maybe they are an important component. But then I reminded myself of the actual thresholds (pdf).

To be in the top X% in net worth:
1%: $3.9M
0.1%: $20.6M
0.01%: $111M

Certainly I could see 50% of the Top 0.01% being retired. But I'm not sure how many dynastic trust-fund kids under 40 would consider $3.9M a sufficient sum to declare retirement. Also, most of the people in these upper echelons of net worth are likely older than 40 anyway, so there isn't much overlap to create large populations. So now I'm back to thinking that dynastic wealth doesn't have a big impact on the numbers.

I was reading the data as the percentage of people who are unemployed who say they are retired, not percentage of people who say they are retired. So it would be 0.57% of unemployed people are between ages 16 and 40 AND say they are retired.

I initially read it that way too (and typed up half a post under that belief), but then downloading the spreadsheet revealed what others have pointed out: the "retired" percentage is a percentage of the entire population (at that age), not just the out-of-the-workforce population. But yeah, that's not what you would guess from the way their interactive chart is set up.

Let's not forget the distinction between people who blog about something, and people who do that same something.  I'd wager there are hundreds if not thousands of people gardening in the PNW for every person who blogs about it

Why should early retirement be any different?  If anything, I think the ratio of people doing it to people talking about it would be even higher for early retirees.

I would think the ratio would be the opposite. Now that we're long past the age of non-monetized livejournal blogs where people just blabbed about whatever was going on in their life, I feel like rarer activities are more likely to be blog (popular) topics than common ones. Unusual things are more interesting to read (and write) about. I feel like 50% of long-distance bike tourers blog. Gardening? Who wants to read about that? Everyone does that. (off the top of my head I can think of at least 4 Facebook friends who garden vs. 0 early-retirees).
« Last Edit: January 20, 2015, 03:02:32 PM by skyrefuge »

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #29 on: January 20, 2015, 02:06:46 PM »
Bolded above leaves out people who retired early many years ago and just accounts for people who are under 40 now and retired. If someone retires at 35,  30 years ago, and is now 65 then they wouldn't be in that data even though they retired very early (assuming they stayed retired) and would be in the "65 and older retired" group.  No way to tell at what age they actually retired. So the number of extreme early retirees (and not sure what you put that age at - I retired at 42 and wouldn't consider that extreme ERE or even MMM style) may be much higher than any current "for this year only" data suggests.

That's true.  We can use the historical data to try to approximate the total number of early retirees out there today (including people who retired early in past years but have since aged into "normal" retirees), but it would get tricky to try to deal with the year-over-year overlap in people not moving into a new age band.

It's probably sufficient to mine the current data to get a snapshot of the percentage of young retirees as of today; unless the early retirement rate has decreased over time, we can use that number as a proxy for the maximum percentage of early retirees in any given historical year.

So now I'm back to thinking that dynastic wealth doesn't have a big impact on the numbers.


This sounds plausible to me.  So let's just use these Census Bureau numbers as aggressive estimates of the number of "extremely early retirees" in existence today, recognizing that there's probably a fair amount of over-counting because the self-selected "retiree" population includes some number of trust fund kids and/or people more properly categorized under one of the other "non-working" categories but who were reluctant to self-select into that group (there's probably also some level of under-counting--e.g., the MMM-style early retiree who self-selects into a "working" category because of his blog-running or carpentry side-jobs--but I think this would be more than offset by the over-counting).

And I'm going to assume that the omission of 35-year olds in the age bands in the government data was simply a typo.

So on that basis, the weighted average percentages are as follows:

0.474% of the US population between the ages of 16 and 35 is retired

0.565% of the US population between the ages of 16 and 40 is retired

I think it's a reasonable assumption that virtually none of the "retired" 16-20 year olds (0.2% of that age group) are "extremely early retirees" in the MMM-style sense, so here are the figures excluding the 16-20 age band:

0.563% of the US population between the ages of 21 and 35 is retired

0.657% of the US population between the ages of 21 and 40 is retired

sol

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Re: How many extremely early retirees are there?
« Reply #30 on: January 20, 2015, 04:24:24 PM »
0.657% of the US population between the ages of 21 and 40 is retired

That's still like two million people.

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #31 on: January 20, 2015, 05:33:32 PM »
That's still like two million people.

More like 500k, using nawhite's census numbers above.

Still, like skyrefuge said, seems kinda high.  Guess we're not that special after all.

sol

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Re: How many extremely early retirees are there?
« Reply #32 on: January 20, 2015, 05:57:40 PM »
That's still like two million people.

More like 500k, using nawhite's census numbers above.

Still, like skyrefuge said, seems kinda high.  Guess we're not that special after all.

Apparently I'm really bad at math.

beltim

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Re: How many extremely early retirees are there?
« Reply #33 on: February 10, 2015, 01:56:09 PM »
they are probably under-representative of the dynastic ultra-wealthy non-worker population who probably make up a material portion of that 0.57%.

I was initially ignoring this, because I figured "one percenters", though we hear a lot about them, are necessarily rare. Like, 1% or something. But then I realized that a much larger proportion of the "one percenters" are likely to be "retired" (50%? 80%?), and 50% of 1% is 0.5%. So maybe they are an important component. But then I reminded myself of the actual thresholds (pdf).

To be in the top X% in net worth:
1%: $3.9M
0.1%: $20.6M
0.01%: $111M

Certainly I could see 50% of the Top 0.01% being retired. But I'm not sure how many dynastic trust-fund kids under 40 would consider $3.9M a sufficient sum to declare retirement. Also, most of the people in these upper echelons of net worth are likely older than 40 anyway, so there isn't much overlap to create large populations. So now I'm back to thinking that dynastic wealth doesn't have a big impact on the numbers.

This is an interesting point.  According to http://www.census.gov/people/wealth/data/dtables.html (Table 4), only 2.0% of households with a householder aged 35 or younger have a household net worth in excess of $500,000.  And Table 1 shows that the median net worth of households with net worth in excess of $500,000 is $836,000.  So 1 out of 4 of all households younger than 35 with net worth greater than $500,000 are retired?  That seems improbable.

Note, I'm making a (large) assumption here that households with lower net worth aren't retired, since other major sources of retirement income are largely inaccessible to this age group: Social Security, pensions (which typically require longer vesting periods), and disability income (those people would presumably report as "disabled/ill" in the Census.

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #34 on: February 10, 2015, 03:17:03 PM »
So 1 out of 4 of all households younger than 35 with net worth greater than $500,000 are retired?  That seems improbable.

If I'm correctly following how you arrived at that conclusion, I think you are conflating "households" with "people".

beltim

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Re: How many extremely early retirees are there?
« Reply #35 on: February 10, 2015, 03:36:01 PM »
So 1 out of 4 of all households younger than 35 with net worth greater than $500,000 are retired?  That seems improbable.

If I'm correctly following how you arrived at that conclusion, I think you are conflating "households" with "people".

Good point.  So that probably changes it to ~1 in 6 people under age 35 with household net worth over $500,000 are retired.

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #36 on: February 10, 2015, 03:48:33 PM »
Good point.  So that probably changes it to ~1 in 6 people under age 35 with household net worth over $500,000 are retired.

Yep.  That seems less improbable (as an aggressive estimate, for all the reasons discussed earlier in this thread).

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Re: How many extremely early retirees are there?
« Reply #37 on: February 10, 2015, 08:13:15 PM »
There seem to be some assumptions here that I am not sure about:

  • Retired people have a household income net worth of more than $500k - this is clearly false.
  • No-one appears to have included "alternative lifestyle" types who often live on air - these people would inflate the numbers retired living on less than $500k.
  • One of the early comments included the fact that MMM was not retired as far as the data is concerned, and so we should be looking at early FI people. Now, although I didn't know it, I was FI by 35 (ER was later because I wasn't aware that I was FI, or that FI meant ER was a possibility), and I have managed at least two people who were multimillionaires under 35, so they were FI too (I don't know why they worked, and they had both made their money themselves), so early FI might not be as unusual as some here think.
  • It looks to me from your figures that early retirement is anything under 55 - when the figures start to be a significant percentage of the people, and even then is is only 1 in 10 between 55 and 60.
« Last Edit: February 10, 2015, 08:16:36 PM by deborah »

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Re: How many extremely early retirees are there?
« Reply #38 on: February 10, 2015, 11:39:28 PM »
I'm not sure how much I trust self-reported "retired" status in these surveys. I could imagine my younger self ticking the "retired" box in these surveys just because I'm annoyed at having to fill it out. What is retirement, anyway?

For me, a more meaningful metric is labor force participation rate for prime age men. CalculatedRisk has a recent post on the decline in the participation rate across all age groups: http://www.calculatedriskblog.com/2014/12/decline-in-labor-force-participation.html. There is a secular trend toward lower participation, as well as a cyclical component visible after the GFC.

It is a fascinating question for me. I think part of the explanation is women catching up to men in earning power. This allows a dual-income couple to save more, of course, but it also means it might make sense for the husband to take the role of stay-at-home parent. Another factor is asset price volatility, especially real estate and equities, which, as a by-product of increasing inequality, allows a lucky few to retire early. Yet another factor is the high cost of real estate in cities with good jobs. A dual-income professional couple in places like NYC/SF could conceivably save enough to retire to a lower cost location by the time they're ready for kids in their early 30s, but still not have enough money to avoid going massively into debt to buy a nice house in NYC/SF. It's probably too soon to see much of an impact yet, but Obamacare is also likely to contribute to lower labor force participation. Lastly, I believe the income based repayment plans on student loans will push some people into early retirement, such as RootofGood, since the repayment terms act as a 10-15% surtax on earnings.

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Re: How many extremely early retirees are there?
« Reply #39 on: February 11, 2015, 01:04:36 AM »
Extreme ER = to or < 35
ER > 35 but less than standard retirement age

I know I'm picking nits here, but I'd put the line at 40. Then I'd call the rest before standard retirement age "early." Basically you're putting people who are there at 35 in the same boat as those who do it a full two decades later. That's a lonnnnngggggg time.

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Re: How many extremely early retirees are there?
« Reply #40 on: February 11, 2015, 02:18:01 AM »
Extreme ER = to or < 35
ER > 35 but less than standard retirement age

I know I'm picking nits here, but I'd put the line at 40. Then I'd call the rest before standard retirement age "early." Basically you're putting people who are there at 35 in the same boat as those who do it a full two decades later. That's a lonnnnngggggg time.

I agree I'd draw the line at 40.  Now I am biased, stopping working a few months before my 40th birthday.  But damn it I told mom when I was in my 20s I was going to retire before I was 40, cause that sounded cooler. :D

brooklynguy

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Re: How many extremely early retirees are there?
« Reply #41 on: February 11, 2015, 07:38:40 AM »
There seem to be some assumptions here that I am not sure about:

  • Retired people have a household income net worth of more than $500k - this is clearly false.

This assumption underlies only beltim's estimate that ~ 1 in 6  people under age 35 with household net worth over $500k are retired (and not the overall estimates of the number of early retirees in the population), and beltim clearly stated that he was making this "(large) assumption."

In any event, I think it's a pretty fair assumption.  Obviously not every early retiree (in the sense we're using here--namely, people who accumulated enough to feel comfortable declaring FIRE at a very early age) has household net worth exceeding $500k, but I would guess that the vast majority do.  Notably, the Census data includes home equity as part of net worth.

(Note that I'm assuming the word "income" was a typo in your post, and that you meant to refer only to "household net worth")

Quote
  • No-one appears to have included "alternative lifestyle" types who often live on air - these people would inflate the numbers retired living on less than $500k.
  • One of the early comments included the fact that MMM was not retired as far as the data is concerned, and so we should be looking at early FI people. Now, although I didn't know it, I was FI by 35 (ER was later because I wasn't aware that I was FI, or that FI meant ER was a possibility), and I have managed at least two people who were multimillionaires under 35, so they were FI too (I don't know why they worked, and they had both made their money themselves), so early FI might not be as unusual as some here think.

As noted earlier in the thread, we recognize that these estimates are most likely inflated because various subsets of the population show up in the data as "false positives," which I think more than offsets the number of "false negatives."

Obviously, by intentionally failing to clearly define the parameters, it becomes impossible to be objective (and I don't want to become a profiler for the Internet Retirement Police), but I would say that someone like MMM who retired while maintaining some side hustles should be counted as an early retiree while someone who is FI without realizing it (and with no intention of retiring) should not be counted as an early retiree.  In this thread, we're trying to estimate the percentage of the population that is FIRE, not FI (I have to assume the latter is substantially larger).

Quote
  • It looks to me from your figures that early retirement is anything under 55 - when the figures start to be a significant percentage of the people, and even then is is only 1 in 10 between 55 and 60.

If I were forced to draw a bright line, I would tend to agree with NICE! and clifp that 40 is the cutoff for "extremely early retirement" -- I think 55 is more like "traditional early retirement."  Not that it matters what I or anyone else thinks on this point.
« Last Edit: February 11, 2015, 07:42:43 AM by brooklynguy »

market timer

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Re: How many extremely early retirees are there?
« Reply #42 on: February 11, 2015, 07:58:10 AM »
You don't need $500K to retire. A $3K/month disability check can be enough.

beltim

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Re: How many extremely early retirees are there?
« Reply #43 on: February 11, 2015, 08:31:02 AM »
You don't need $500K to retire. A $3K/month disability check can be enough.

Like I said, they would presumably be counted in the "disabled/ill" category.

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Re: How many extremely early retirees are there?
« Reply #44 on: February 11, 2015, 08:55:36 AM »
I was essentially retired from age 16, but didn't get really serious about it until I was in grad school (age 22).  I was definitely retired until age 30 or so. I didn't do much of anything, traveled the world a couple times over, had almost no responsibilities, drank and partied like a lord, and lived on a tiny fixed income (grad student stipend).  This all unraveled, however, when I foolishly graduated, un-retired and went to work. 

These days, having enjoyed a decade or so of fulfilling retirement in my 20s, I'm happy to settle back, work and otherwise take it easy and be bored.
The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind. –Thomas T. Munger

arebelspy

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Re: How many extremely early retirees are there?
« Reply #45 on: February 11, 2015, 09:45:45 AM »
I was essentially retired from age 16, but didn't get really serious about it until I was in grad school (age 22).  I was definitely retired until age 30 or so. I didn't do much of anything, traveled the world a couple times over, had almost no responsibilities, drank and partied like a lord, and lived on a tiny fixed income (grad student stipend).  This all unraveled, however, when I foolishly graduated, un-retired and went to work. 

These days, having enjoyed a decade or so of fulfilling retirement in my 20s, I'm happy to settle back, work and otherwise take it easy and be bored.

That seems like a good way to go about it, as long as you didn't dig too big of a hole and can still be FI within 15 years or so (a 50% savings rate with no debt level).
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Sid Hoffman

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Re: How many extremely early retirees are there?
« Reply #46 on: February 11, 2015, 11:32:26 AM »
One of the iron laws of living in a capitalist society seems to be that for most people, expenditures always rise to match income.

Only capitalist societies, huh?  That must be why the importance of saving for the future instead of spending it all now is the basis of old pre-capitalism fables like "The Ant and the Grasshopper" or mentioned in biblical texts from thousands of years ago.  Sorry, but leave politics out of this.  Human nature and the tendency to live only for the moment has been around for as long as humans have been around, and their folly has been written about for as long as humans have been writing.

Cookie78

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Re: How many extremely early retirees are there?
« Reply #47 on: February 11, 2015, 11:58:07 AM »
Extreme ER = to or < 35
ER > 35 but less than standard retirement age

I know I'm picking nits here, but I'd put the line at 40. Then I'd call the rest before standard retirement age "early." Basically you're putting people who are there at 35 in the same boat as those who do it a full two decades later. That's a lonnnnngggggg time.

I agree I'd draw the line at 40.  Now I am biased, stopping working a few months before my 40th birthday.  But damn it I told mom when I was in my 20s I was going to retire before I was 40, cause that sounded cooler. :D

So close! Best case scenario estimates I will retire at 41.

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Re: How many extremely early retirees are there?
« Reply #48 on: February 11, 2015, 02:59:13 PM »
I guess technically one can define ERE as they please, however the basis for my suggestion was not arbitrary. This is how Jacob over at ERE defines it and from my perspective it is hard to argue with his credentials on the matter...

arebelspy

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Re: How many extremely early retirees are there?
« Reply #49 on: February 11, 2015, 04:36:01 PM »
I guess technically one can define ERE as they please, however the basis for my suggestion was not arbitrary. This is how Jacob over at ERE defines it and from my perspective it is hard to argue with his credentials on the matter...

IDK, I think many don't agree with many of his definitions on relevant words. :)

Just claiming words early doesn't make it authoritative, IMO.  In terms of "ERE," sure.  In terms of calling an early retirement "extreme," maybe not as much.   I'd say someone who retired at age 36 retired extremely early.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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