Author Topic: Frugality Without Early Retirement Can Make You Rich & Famous  (Read 5433 times)

SnackDog

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Frugality Without Early Retirement Can Make You Rich & Famous
« on: August 03, 2014, 05:18:10 AM »
Being frugal as a means to escape a dead-end job and life of misery is a worthwhile pursuit.  But it is also ok to be very frugal but continue working in a job you enjoy. The ultimate savings can be remarkable, particularly if you remain frugal in retirement and just live off your pension.  30 years in government or at a large company would provide a very generous pension.

Consider: if you start work at age 21, save $25,000 your first year, boost savings by 5% raises annually, and invest at 8% return.  Work 30 years then retire on your pension and later social security (e.g. never touch your savings).

Your stash:
Age 50 $5MM
Age 60 $10MM
Age 70 $20MM
Age 80 $40MM
Age 90 $100MM  -set up  a charity to receive all this and your name lives forever.

Sdsailing

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #1 on: August 13, 2014, 08:50:42 PM »

Kinda pointless, though.

Piper

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #2 on: August 14, 2014, 07:44:19 AM »
I like this idea. I've entertained the thought and calculated what my net worth could be like if I were to continue working. It's a pretty incredible number!

I've also started to keep in mind how much our annual spending allotment would increase if we were to work for just one more year (two more, three more years) after our current 5 year FIRE goal. Each year we continue working adds an additional $3,500, which is significant when you only spend 35k per year (with a mortgage). Granted, we already live the life we like and don't need to spend more annually, but a little cushion thrown in there is nice. Crunching those numbers also seems to keep me motivated to continue at my job. I imagine the five years will zoom by anyway.

When I was first introduced to this blog, I was going crazy wanting to FIRE ASAP. Now that the concept has settled a bit, I don't feel so restless.

Ybserp

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #3 on: August 15, 2014, 05:56:30 AM »
The important part would be finding or creating the charity worth spending your life on. Because if all you truly wanted was to be broadly known as being wealthy, there are other things you could do in your later years to draw that desired attention more effectively.

Nancy

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #4 on: August 15, 2014, 07:27:24 AM »
I would find this to be a waste of my life. Yes, we're going to give our 'stache to charity when we die, but I'm not going to spend my life working to build an enormous endowment so my name can live on "forever" when I die. I will be dead. It will not matter if my name is on a building or spoken as a rallying cry at every little league game throughout the land or absolutely forgotten. Also, Earth will not exist forever.

I do agree with your points that frugality + a long working career = monstrous wealth, and it's cool to keep working if you enjoy it.

Beric01

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #5 on: August 16, 2014, 12:02:36 AM »
I like this idea. I've entertained the thought and calculated what my net worth could be like if I were to continue working. It's a pretty incredible number!

I've also started to keep in mind how much our annual spending allotment would increase if we were to work for just one more year (two more, three more years) after our current 5 year FIRE goal. Each year we continue working adds an additional $3,500, which is significant when you only spend 35k per year (with a mortgage). Granted, we already live the life we like and don't need to spend more annually, but a little cushion thrown in there is nice. Crunching those numbers also seems to keep me motivated to continue at my job. I imagine the five years will zoom by anyway.

When I was first introduced to this blog, I was going crazy wanting to FIRE ASAP. Now that the concept has settled a bit, I don't feel so restless.

I'm the opposite. The more I read the blog, the more I want to FIRE, even if it's with less.

The OP's scenario isn't crazy, though salary increases do tend to drop off after 40. But I just can't bear the thought of even working until 40.

arebelspy

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #6 on: August 31, 2014, 01:27:30 PM »
Quote
Frugality Without Early Retirement Can Make You Rich

Of course it can.  How many times have you heard the "old person dies, leaves 10MM to cat's charity, everyone shocked they had money"?

One must determine their ultimate end (aim).  Once that's established, there's a million paths to get there, including working forever because you like it, saving because you like it, and donating what you don't need.  That's not only valid, but a great method.  The RE of FIRE is certainly optional once you hit the FI part.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Retired To Win

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #7 on: September 05, 2014, 05:28:51 AM »
I am in the boat with the people whose basic living expenses are met by a pension so that my investment income is all surplus / discretionary. Yes, it is very wonderful to have passive income that exceeds your living expenses by a substantial amount.  But, as some others have already commented, there is no point to it if one is simply going to let that money accummulate and then bequeath it to some charity.  Or even to some semi-deserving relative. 

The  money is supposed to serve YOU.  The (my?) challenge is to find satisfying ways of having it do just that.

Gone Fishing

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #8 on: September 05, 2014, 09:48:50 AM »
The numbers do get quite impressive!  More fortunes are probably made this way than we will ever know just because frugal folks are not flashy.

I might work forever if I can find something that I enjoy for about 20 hours a week and a month or two off a year to travel. Nothing wrong with doing what you want as long as it doesn't turn into a permenant hedonistic consumption fest. 

As it is, MMM is continuing to work doing things he enjoys.  As long as he continues to live on less than he spends his net worth will continue to grow.  Somebody might have deduced his net worth better than I have, but it wouldn't surprise me if he worth close to $2 million now.  Give him another 25 years of blogging, book revenues, and carpentry, a decent economy and he could easily hit $25 million in his lifetime.  He'll probably do something good with it as well.

I asked a financial advisor a while back how many of his top clients were slow money(frugal saving and investing) vs fast money(big job/company ownership/IPO money, etc).  He said 100% were slow money.  It works!

 

viper155

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #9 on: September 05, 2014, 04:21:46 PM »
Slow money is the only tried and true, almost failsafe way to get "rich". All the rest is a crapshoot. You must act like an adult your entire adult life. So easy to do yet attained by so few.

marty998

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Re: Frugality Without Early Retirement Can Make You Rich & Famous
« Reply #10 on: September 05, 2014, 05:15:05 PM »

Your stash:
Age 50 $5MM
Age 60 $10MM
Age 70 $20MM
Age 80 $40MM
Age 90 $100MM

So under this method 95% of your wealth is made after you turn 50. Hmm....there's truth in this - thought I saw a quote earlier that this even applied to the Oracle of Omaha ?