Quote: (01-06-2018 03:40 PM)treypound Wrote:
One of the guys in my gym this morning was telling me about how he plans on "retiring" from actively working at year-end to pursue his investment interests (managing his rental real estate and doing indy consultant work). He is 40, and when I asked how long he had been working at his current company, he said it will be 9 yrs this summer.
I know based on the life decisions you make (i.e kids, marriage), it may be virtually impossible to financially retire for most at 40, but how much money would be enough for you to walk away from your job?
This is a subject that is near and dear to me, and have been reading/thinking/listening to podcasts on it for the better part of the last year as I found myself in the same boat (and even made a post about it a couple months back). Apologies in advance for the long post.
First off, due to the rapidly improving quality of life, you need to make some paradigm shifts which were true since basically forever up until 50 years ago. While less true now, most jobs were dangerous, repetitive, boring, dirty etc. The only reason you'd spent half your life in a coal mine hacking at rocks, or hunched over in a rice paddy, is because it was better than spending your whole life freezing and starving. Jobs were extremely taxing, and no one would do these sorts of things for the hell of it. Hence the idea of retirement came about. It was something for when you were physically unable to continue, and ideally be able to look after yourself through savings. Now however, you can literally earn a lifetime of "not starving/freezing" in a decade thanks to improvements in efficiency, and if you also happen to have above average income, or a minimalist slant, you can definitely live a pretty decent life.
To answer your exact question, a million is probably enough for most people. If you're in early 30s, that's 40k/year that is as likely to last as your body is. Since it's all capital gains and divs, you're paying little tax, so your after tax income would be the equivalent of around 60k from a job, or right around average. Given you have no work expenses and could live anywhere, I don't understand not being able to make that work. I chuckle at the "I'd need a few million" comments. Basically at 4%, that's 120k of tax advantaged income, after tax equivalent to close to a 200k salary - almost a 1%er. Humans are great at adapting to good and bad things, so losing a leg or buying a Ferrari generally leaves you at the same happiness point in a few months. Any issues you still have at a 40k aren't solved with more money. Lots of millionaires off themselves. How many lobster and steak dinners can you eat in a night? How many rooms in your house can you realistically use? Warren Buffet seems perfectly content in his middle class home, and his idea of a great meal is going to Mcdonalds. Poor people love to say "Money doesn't buy happiness" which is true - but incomplete. Lack of money also contributes hugely to stress, worry, and a host of other things best avoided. A better version might be: All else being equal, it's probably better to have more money than less, but it wont magically solve issues beyond "I have no food or shelter".
That said, retirement, and the idea of a job/career I think needs to be redefined. People generally put up with shit from work because otherwise they starve. Now this new cohort, by virtue of merely being happy to live like the average person from 1980 realized they can do so working 10 hours a week. .
That however begs the question, "Then What?". So many people I know live their lives on autopilot. Go to school, university, apply to whatever jobs they're remotely qualified for, spend everything they make on shiny baubles they think will make them happy, have kids. All their time is literally spoken for, and they do not have to make a single decision or have time to think about the hard questions. Getting to this point in a sense is a bit scary because you're forced to look at yourself and answer to questions like "Are you happy?" "what do you truly love?" "Are you fulfilled?"
Like many, I tried the hedonistic world traveller party fiend thing for a while, but that just left me overweight, with a borderline alcohol dependency, a handful of interchangeable girls slayed and single serving friends added on facebook. Now, I'm working again (although more than I'd like - so might be time to explore the fuck you part of fuck you money) and since I've always been a bit of the introverted intellectual, I honestly find myself reading a ton, and going for 6 hour hikes through the woods.
A story that really nails it for me is the story of the Mexican fisherman.
Quote:Quote:
An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.
The Mexican replied, “only a little while. The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs. The American then asked, “but what do you do with the rest of your time?”
The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life.” The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”
The Mexican fisherman asked, “But, how long will this all take?”
To which the American replied, “15 – 20 years.”
“But what then?” Asked the Mexican.
The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!”
“Millions – then what?”
The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
Quote: (01-07-2018 06:10 AM)remarkable vigour Wrote:
No, Mr Money Moustache is one of the worst.
Firstly, he is an environmentalist masquerading as FIRE in order to get his message out.
I absolutely love the guy. Preachy sure, but I agree with what he says. To say the whole thing is a scam based around environmentalism seems a bit tin foil hatty to me, and perhaps it's that I too am an engineer that I see a certain beauty in efficiency. Being able to bike 100km to go camping, using something like 2500 KCals (1/3rd a liter of gas) of energy and knowing that someone else required 20 times that is simply neat.
A lot of these things (minimalism, efficiency optimization, environmentalism, early retirement) are inter-related, and one often segues into another. I'd say he's primarily about efficiency, and early retirement / environmentalism are by naturally occurring consequences of that.
