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  #1  
Old 09-17-2018, 11:14 PM
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Default FIRE (aka live on $20K per year)

"Financial independence, retire early." Modern day hippies? I don't think this will end well for these people. One medical emergency and they'll be broke and middle-aged without any work experience.

Also foregoing most productive work years after middle age.

https://www.forbes.com/sites/alexand.../#6475c8925359

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Maybe it was coming of age during the Great Recession and seeing their parents' retirement savings disappear. Or perhaps they're motivated by the ideas of investment and wealth management. Or maybe they just don't like their day jobs.

Whatever the case, a small group of American millennials are bucking the trend and saving gobs of money in order to achieve FIRE or financial independence, retire early.

Inspired in part by the personal finance bible, "Your Money or Your Life" by Vicki Robin and Joe Dominguez, these folks are pinching their pennies in their twenties and thirties in order to build up big nest eggs.

Some don't mind retiring on drastically reduced means, living as a family of four off $20,000 a year while others store enough away to live comfortably as millionaires. Whether they land on the high or low end of the spectrum, considering that 1 in 3 Americans have less than $5,000 saved for retirement, the FIRE community's goals are lofty.
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Old 09-17-2018, 11:16 PM
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i'd rather have a short comfortable retirement than a long stressful one eating rice and beans
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Old 09-18-2018, 04:57 AM
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Originally Posted by Gonzo View Post
i'd rather have a short comfortable retirement than a long stressful one eating rice and beans
Most of these FIRE people seem to prefer a short stressful working life, followed by a long stressful retirement.
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Old 09-18-2018, 07:25 AM
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My oldest son has this as a goal. I didn't realize it was a trend.

The good news is that it has motivated him to save, and to work much harder than he has in the past. I'm not too worried about it, as long as he doesn't work himself into the ground. I suspect he'll get to his late 30s, and realize the cost of living will make it tough to retire as young as he's thinking.
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Old 09-18-2018, 09:30 AM
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Originally Posted by Gonzo View Post
"Financial independence, retire early." Modern day hippies? I don't think this will end well for these people. One medical emergency and they'll be broke and middle-aged without any work experience.

Also foregoing most productive work years after middle age.

https://www.forbes.com/sites/alexand.../#6475c8925359
I think it's a great idea to try to minimize the number of hours you spend working. Working is basically the same thing as being in prison. And being free of that prison is worth some discomforts. However, I think a lot of these specific ideas are stupid.

The goal is noble. Actually achieving the goal is difficult for 3 reasons:
-Being cheap gives depreciating returns
-Careers peak late in terms of money
-Life peaks early in terms of Purpose
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Last edited by Sredni Vashtar; 09-18-2018 at 09:39 AM..
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Old 09-18-2018, 09:32 AM
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I'm not sure without working I'd do anything except seek volunteer employment.
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Old 09-18-2018, 09:34 AM
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I'm not sure without working I'd do anything except seek volunteer employment.
Yeah, it's hard to be a freed slave.
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Old 09-18-2018, 10:00 AM
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The $20K/year for a family of four thing is a bit of a red herring. Most FIRE blogs recommend saving enough that you can live on your investments. Simulation models suggest you can safely withdraw 4%/year from a portfolio heavily invested in equities and still come out okay in something like 95% of the scenarios for a 30 year retirement. Inflation is already considered in this number: you gradually increase the dollar amount with inflation over time. As an added margin of safety, a lot of the community recommends going down to a 3.5% or 3% withdrawal rate, or supplementing income in ‘retirement’ with a low stress low paying fun job (e.g., giving bike tours in your city). As a result, they recommend accumulating a portfolio until it’s large enough to cover 25x (4%) to 33x (3%) of your annual spend.

Since it’s a ratio, you can get there by either cutting expenses, increasing the portfolio, or both. A few go to extremes to cut expenses down to $20K/year (allowing you to retire on a portfolio of only $500K), but the vast majority of people go the other way cutting expenses a little bit, but primarily focusing on building the portfolio. The common mantra is to build the life you want, then save for that. If you believe you need to spend $60K/year to live the life you want (i.e., budgeting for food, shelter, medical, leisure, etc.), that implies a portfolio of $1.5 million at the 4% rule, or $2 million at the 3% rule. It’ll be less if you plan to work in retirement. Kick ass at work for twenty years in a high paying field, and that’s certainly attainable with some reasonable market returns.

It’s really not that crazy of an idea. It intersects nicely with the idea of minimalism in general. All too often, people start spending money like crazy in their 30s and 40s because they’re earning money hand over fist at work. People overspend on cars, houses, vacations, daily conveniences, etc., when they would be perfectly happy with less. Time is the only truly limited resource on this planet, and the FIRE movement seeks to maximize this while still providing financial security.
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Old 09-18-2018, 10:00 AM
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Quote:
Originally Posted by Gonzo View Post
i'd rather have a short comfortable retirement than a long stressful one eating rice and beans
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Originally Posted by GargoyleWaiting View Post
Most of these FIRE people seem to prefer a short stressful working life, followed by a long stressful retirement.
These responses seems a little unfair imo. A lot of the people doing this enjoy things that aren't particularly expensive, like hiking and camping. They also cook most of their own meals, I think a lot of people would be surprised at how much savings that creates. If you view cooking as a chore then sure, you'd hate it, but if you enjoy cooking this is not a problem at all.

They're not gonna retire early and live in NYC in a 300 sqft studio and live off rice and beans, they're going to move to the Po' and buy a decent sized house for $200K and be able to buy decent groceries for a reasonable price.

To be clear, I didn't read the rest of the linked Forbes article but I've read plenty of other things related to FIRE, most notably Mister Money Mustache. That dude's an exceptional case of having a very high income at a time when the market did great things though. Also his blog makes him boat loads of money, it started off really interesting and slowly devolved into him scamming his audience for money imo.
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Old 09-18-2018, 10:05 AM
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Quote:
Originally Posted by Sredni Vashtar View Post
I think it's a great idea to try to minimize the number of hours you spend working. Working is basically the same thing as being in prison. And being free of that prison is worth some discomforts...
I mostly like working. I like to be useful and feel productive. (and yes, I think that helping keep a P&C insurance company running is actually useful -- we make a "product" that legitimately helps people and helps society cope with risk) Most of my work is reasonably interesting. Most of my colleagues are pleasant. This isn't prison.
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