What am I missing from these 2 MMM articles?

[omega13]

I've been reviewing my FIRE strategy and happened to re-read these posts by MMM:

1. http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
2. https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/


What doesn't make sense to me is...


Post 1: MMM and his wife save ~800k within 10 years as they work.
Post 2: MMM seems to state that you if you only need 24k to live on past retirement age, then you only need to invest about 200k. You just let it grow to about ~600k until you retire e.g 65 and live on 4% SWR after that. Otherwise, you might be saving too much.


If it takes one 3 years to save 200k that will grow within 30 years to 600k why keep working the 9-5 after those 3 years?


Is the idea to keep working and payoff debts, house etc.? What am I missing?

[Trifle]

I'm not positive I understand your question, but I'll have a go.  If one stops contributing to the 401k and lets it sit there to grow (as your ball of 'old man' money), one does have living expenses in the meantime.  Food, housing, etc.  At the very least you would need to earn enough money to cover those while the 'stache was growing.  (Unless you had a spouse who was supporting you 100% or something like that).  Otherwise if you stopped working entirely after the $200k was saved, you'd need to eat into that 'stache for living expenses, and the money ball would never grow to $600k. 

[SugarMountain]

I've been reviewing my FIRE strategy and happened to re-read these posts by MMM:

1. http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
2. https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

 
What doesn't make sense to me is...


Post 1: MMM and his wife save ~800k within 10 years as they work.
Post 2: MMM seems to state that you if you only need 24k to live on past retirement age, then you only need to invest about 200k. You just let it grow to about ~600k until you retire e.g 65 and live on 4% SWR after that. Otherwise, you might be saving too much.


If it takes one 3 years to save 200k that will grow within 30 years to 600k why keep working the 9-5 after those 3 years?


Is the idea to keep working and payoff debts, house etc.? What am I missing?

Kind of off topic to your question, but man was MMM pretty lucky for his ducks to fall in a row.
Luck spot #1 - get into the tech industry in the late 90s.  Perfect timing.
Luck spot #2 - build/buy houses in the Boulder area where values exploded and weren't nearly as impacted by the meltdown as California, Nevada, or Florida.

They say luck is the result of preparation which is probably true to a degree here.  (And I'm in Denver in the tech industry and have shared some of that same luck but am not retired due to our spendy pants ways.)

[tct]

I've been reviewing my FIRE strategy and happened to re-read these posts by MMM:

1. http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
2. https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

 
What doesn't make sense to me is...


Post 1: MMM and his wife save ~800k within 10 years as they work.
Post 2: MMM seems to state that you if you only need 24k to live on past retirement age, then you only need to invest about 200k. You just let it grow to about ~600k until you retire e.g 65 and live on 4% SWR after that. Otherwise, you might be saving too much.


If it takes one 3 years to save 200k that will grow within 30 years to 600k why keep working the 9-5 after those 3 years?


Is the idea to keep working and payoff debts, house etc.? What am I missing?

Kind of off topic to your question, but man was MMM pretty lucky for his ducks to fall in a row.
Luck spot #1 - get into the tech industry in the late 90s.  Perfect timing.
Luck spot #2 - build/buy houses in the Boulder area where values exploded and weren't nearly as impacted by the meltdown as California, Nevada, or Florida.

They say luck is the result of preparation which is probably true to a degree here.  (And I'm in Denver in the tech industry and have shared some of that same luck but am not retired due to our spendy pants ways.)

Lucky? Today is just as good or better to get into the tech industry.  MMM home building in the Boulder area was a failure and he lost money. He has written about it more than once.

[Sarah Saverdink]

Kind of off topic to your question, but man was MMM pretty lucky for his ducks to fall in a row.
Luck spot #1 - get into the tech industry in the late 90s.  Perfect timing.
Luck spot #2 - build/buy houses in the Boulder area where values exploded and weren't nearly as impacted by the meltdown as California, Nevada, or Florida.

They say luck is the result of preparation which is probably true to a degree here.  (And I'm in Denver in the tech industry and have shared some of that same luck but am not retired due to our spendy pants ways.)

Lucky? Today is just as good or better to get into the tech industry.  MMM home building in the Boulder area was a failure and he lost money. He has written about it more than once.

Yeah, another "it's not that lucky" re: tech industry. The husband and I entered the tech industry in mid-2000s - right as the great recession hit - and we saved $1M in our first 10 years working as engineers. STEM careers pay well and are in high demand. Both of the companies we originally worked at downsized during the recession and we were still able to land new jobs that paid more without a gap in employment.

[maizefolk]

In the second article (the 2011 one), he's talking about how much money you'd need in your 401k at 30 if you wanted to  to retire at 60. This assumes you continue to work from 30->60 but don't save any more money OR that you separately and in addition to your 401k save up 25x your annual expenses and use that to fund your lifestyle until conventional retirement age (although this second one is overkill since you'd have your expenses from 60 onwards covered twice over).

[TheAnonOne]

As someone in my 20s, it's laughable how little you need saved to cover your "old man money". I probably had enough back when I was 24. The embarrassingly easy nature of it makes me pity the average citizen almost.


In general, when you save for retirement you are covering your last expenses first.

IE: (Average citizen)
Money saved from years 20-25, goes to cover years 85-Death
Money saved from years 25-30, goes to cover years 65-85
Money saved from years 30-35, goes to cover years 60-65
ect ect

The MMM community accelerates this, because in general the more you save, the faster those two areas meet. IE, the money you save today, goes to cover expenses tomorrow, or even in your past. You are FIRE at this point of course.

It's more like

20-25-> 85-Death
25-26->65-85
26-30->35-65
30-FIRE_DATE -> FIRE_DATE-35


I think MMM himself had an internal struggle about retiring early vs using standard "retirement vehicles". Back when his blog started there wasn't AS MUCH clear information about easy ways to load up a 401k and get at it early.

[DarkandStormy]

I've been reviewing my FIRE strategy and happened to re-read these posts by MMM:

1. http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
2. https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/


What doesn't make sense to me is...


Post 1: MMM and his wife save ~800k within 10 years as they work.
Post 2: MMM seems to state that you if you only need 24k to live on past retirement age, then you only need to invest about 200k. You just let it grow to about ~600k until you retire e.g 65 and live on 4% SWR after that. Otherwise, you might be saving too much.


If it takes one 3 years to save 200k that will grow within 30 years to 600k why keep working the 9-5 after those 3 years?


Is the idea to keep working and payoff debts, house etc.? What am I missing?

Well, part of the $800K is tied up in home equity, which is offset with a mortgage that needs to be paid down.

As to your question...that sounds great but how are you going to pay for your expenses from age ~25 to 65?  I don't even understand how you're confused.  You will have to pay for food, transport, housing (rent, mortgage, and if neither of those then property taxes) at the bare minimum.  This will be paid via ordinary income (a job) or via your stash.  If it comes from the stash, then that limits how much it will grow in the future.  This isn't hard.

[Dicey]

MMM home building in the Boulder area was a failure and he lost money. He has written about it more than once.

Uhm, I think he only lost significant money on one property???

[J Boogie]

As someone in my 20s, it's laughable how little you need saved to cover your "old man money". I probably had enough back when I was 24. The embarrassingly easy nature of it makes me pity the average citizen almost.


In general, when you save for retirement you are covering your last expenses first.

IE: (Average citizen)
Money saved from years 20-25, goes to cover years 85-Death
Money saved from years 25-30, goes to cover years 65-85
Money saved from years 30-35, goes to cover years 60-65
ect ect

The MMM community accelerates this, because in general the more you save, the faster those two areas meet. IE, the money you save today, goes to cover expenses tomorrow, or even in your past. You are FIRE at this point of course.

It's more like

20-25-> 85-Death
25-26->65-85
26-30->35-65
30-FIRE_DATE -> FIRE_DATE-35


I think MMM himself had an internal struggle about retiring early vs using standard "retirement vehicles". Back when his blog started there wasn't AS MUCH clear information about easy ways to load up a 401k and get at it early.

You're going to plan on covering 20 years of living expenses with 1 year of work?

[Scandium]

As someone in my 20s, it's laughable how little you need saved to cover your "old man money". I probably had enough back when I was 24. The embarrassingly easy nature of it makes me pity the average citizen almost.


In general, when you save for retirement you are covering your last expenses first.

IE: (Average citizen)
Money saved from years 20-25, goes to cover years 85-Death
Money saved from years 25-30, goes to cover years 65-85
Money saved from years 30-35, goes to cover years 60-65
ect ect

The MMM community accelerates this, because in general the more you save, the faster those two areas meet. IE, the money you save today, goes to cover expenses tomorrow, or even in your past. You are FIRE at this point of course.

It's more like

20-25-> 85-Death
25-26->65-85
26-30->35-65
30-FIRE_DATE -> FIRE_DATE-35


I think MMM himself had an internal struggle about retiring early vs using standard "retirement vehicles". Back when his blog started there wasn't AS MUCH clear information about easy ways to load up a 401k and get at it early.

You're going to plan on covering 20 years of living expenses with 1 year of work?

I don't think that math checks out either, if anything it's backwards as money you make later should have longer to compound so be used later in life (not that it matters anyway).
But to be fair; $30k saved up at 25, compounded for 40 years at 7% is about $25k/year over 20 years, even assuming no further growth. So it is doable.

I'm more curious how you're supposed to save enough in 5 years (26-30) to last you 30 starting just 5 years later (35-65)?

[SugarMountain]

I've been reviewing my FIRE strategy and happened to re-read these posts by MMM:

1. http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
2. https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

 
What doesn't make sense to me is...


Post 1: MMM and his wife save ~800k within 10 years as they work.
Post 2: MMM seems to state that you if you only need 24k to live on past retirement age, then you only need to invest about 200k. You just let it grow to about ~600k until you retire e.g 65 and live on 4% SWR after that. Otherwise, you might be saving too much.


If it takes one 3 years to save 200k that will grow within 30 years to 600k why keep working the 9-5 after those 3 years?


Is the idea to keep working and payoff debts, house etc.? What am I missing?

Kind of off topic to your question, but man was MMM pretty lucky for his ducks to fall in a row.
Luck spot #1 - get into the tech industry in the late 90s.  Perfect timing.
Luck spot #2 - build/buy houses in the Boulder area where values exploded and weren't nearly as impacted by the meltdown as California, Nevada, or Florida.

They say luck is the result of preparation which is probably true to a degree here.  (And I'm in Denver in the tech industry and have shared some of that same luck but am not retired due to our spendy pants ways.)

Lucky? Today is just as good or better to get into the tech industry.  MMM home building in the Boulder area was a failure and he lost money. He has written about it more than once.

Having been in the tech industry since '89, first as a developer and now in management, my opinion is that while today is good, it's nothing like the salad days of '95-2000 for salary increases and stock options that fly upwards in value.  I didn't think he really ended up losing much money, just had to hang onto the house and rent it for a while, but it's been years since I read those posts.