Would you retire at 30 and live frugally?
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Invested in what ? What's the magic trick that won't leave you with nothing in the next 10 years.
Investing in an index fund can net you an income of between 3-10% per year on average. I think most people estimate between 4 and 6 % when talking about retirement. This post ignores providing any monetary values but your question makes it seem like investing is magical and arcane and will inevitably go to zero but that's simply not the case.
If you had 100 dollars in investments every year, on average, you could spend 4 dollars and that 100 bucks would never disappear. You'd have a 4 dollar income for as long as you live; let's call that your permanent income. If you had 1 million in investments you'd have a permanent income of 40k. At some point, you have enough money in investments that you could quit your job and live within your means for forever.
At some point you have so much money you could never spend your entire permanent income even if you live an extravagant lifestyle and you have to reinvest the returns by buying more assets (which then further increases your permanent income).
We should tax that second group of people more. I'd argue out of existence as there should be a cap in the amount of wealth a person should be allowed to have.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
I'd continue to work. I want to do more in my retirement than just stay at home.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
100% I would do that but that's a bit unfair because:
- I make enough money to splurge more than I need to, namely eating out, and I would happily never eat at a restaurant again if it meant I got 40 hours of my week back for the rest of my life.
- I would spend the next 60 years of my life doing all the hobbies I want to do. I have stories I want to write, video games I want to make, furniture I want to craft, themed parties I want to throw, a TTRPG I'm working on, a card game (gods to make a card game before I croak!). Even if I did what I plan to do which is sell all of that at the lowest price I could (including giving as much of it away for free as possible) inevitably some of those things will make me a bit of money. Enough I'd hope to splurge into an international trip every now and then or keep my PC rig rather new.
I just don't expect to stop working in retirement, I just plan to work doing stuff I love instead of stuff that pays well.
So if anyone in the comments is a wealthy person or dying with no heirs feel free to send me enough money to retire. I would love to create things for people for the rest of my life and not worry about anything but if I could afford a thing I don't need and if my hobbies are worthy of other people's time/attention.
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Living on $80 million is not living frugally. Living frugally severely limits your hobbies and travel.
You can do a lot on a frugal budget
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
65% of what I spend right now. So basically 35% below paycheck to paycheck? Seems like a bad idea to me.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
My wife and I spend about 25% of our pre-tax income on childcare. Cutting that, plus another 10% other places would be fine.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
I'd try, but my shopping addiction would get me in trouble.
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Invested in what ? What's the magic trick that won't leave you with nothing in the next 10 years.
It's...a hypothetical? A fabricated reason why you aren't given a massive lump sum of money, and instead have to live off dividends? The "what" doesn't matter.
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Living on $80 million is not living frugally. Living frugally severely limits your hobbies and travel.
I guess I have a different understanding of frugal. For me, you can be rich and yet frugal, only spending money on the needs and occasional wants. Some people don't even show that they're net worth increased. I forgot the name of the person, but he worked as a janitor throughout his life. When he passed away, to his family's utter surprise, he left $8 million from his investment account to his family. The guy could have cashed in the investment profits and lived lavishly but he didn't.
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Investing in an index fund can net you an income of between 3-10% per year on average. I think most people estimate between 4 and 6 % when talking about retirement. This post ignores providing any monetary values but your question makes it seem like investing is magical and arcane and will inevitably go to zero but that's simply not the case.
If you had 100 dollars in investments every year, on average, you could spend 4 dollars and that 100 bucks would never disappear. You'd have a 4 dollar income for as long as you live; let's call that your permanent income. If you had 1 million in investments you'd have a permanent income of 40k. At some point, you have enough money in investments that you could quit your job and live within your means for forever.
At some point you have so much money you could never spend your entire permanent income even if you live an extravagant lifestyle and you have to reinvest the returns by buying more assets (which then further increases your permanent income).
We should tax that second group of people more. I'd argue out of existence as there should be a cap in the amount of wealth a person should be allowed to have.
wrote last edited by [email protected]I tell you something about investing. If enough people invest there is thing called TV that they can make announcement and push indexes down by 50% in an hour and let them go back in 10 years so from your 100 bucks you will have 50 bucks and from your 4 dollars you will have 2 dollars per year. That saying you saved your 500 thousands in let's say 10 years now work 5 more years to go back to 500 thousand because you just lost 250k in an hour. You stand no chance when they want slaves. Million is for pussies they fuck everyday.
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It's...a hypothetical? A fabricated reason why you aren't given a massive lump sum of money, and instead have to live off dividends? The "what" doesn't matter.
Dividends from what ? Tell me company that can't collapse in the next 10 years, you have insides from billionaires who can shit fuck your investments in couple of seconds ?
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You can do a lot on a frugal budget
That's extremely relative. Especially when compared to what you can do with $80m.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
wrote last edited by [email protected]It depends on what you mean by current spending. I'm putting almost a third of my pre-tax income into savings already. If you mean I can live off of 65% of my default post-tax salary, sure. That probably wouldn't change too much from my current expenses, and I would love the free time. If you mean 65% of what's left over after my normal contributions, then that would be pretty tough. I consider my current lifestyle to be relatively frugal, so that would be very hard.
I'm actually trying to achieve the FIRE lifestyle, so the goal is getting to the point where average post-tax returns on investments is at least annual expenses. But I can't do it by thirty.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
When I was approaching 30 I was looking forward to kids, and that wouldn’t be sufficient to raise them.
In a couple years though ….. once they are through college so I’m done with those payments and child support, living on 65% of my income would be easy.
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
No.
My mortgage and childcare are like 80% of my outgoings. Once the mortgage is gone and kids in school maybe
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I'd try, but my shopping addiction would get me in trouble.
same. keep my ass away from any store
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If you had the money to retire at 30, your savings would be invested and on an average year your earnings would cover your expenses. You would have health insurance, so no worries there. The only catch is that you would have to keep your expenses at 65% of what you spend right now. Would you take it, or would you rather work a few more years for a better lifestyle and financial security?
A 4% withdrawal rate is intended for a 30yr retirement when accounting for inflation, so you'd need to keep your expenses well below that, probably closer to 2%. But more importantly in my opinion this relies on the assumption of a mostly stable market, which over the course of a ~70yr retirement is riskier a bet to take compared to a ~30yr retirement.
Also what would you do on such a tight budget for ~70yr that you wouldn't get bored of?
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Dividends from what ? Tell me company that can't collapse in the next 10 years, you have insides from billionaires who can shit fuck your investments in couple of seconds ?
Buddy, you seem to have a problem around investments because again that's not how this works. You shouldn't be investing in individual stocks unless you like gambling or have insider information (which is supposed illegal but the US is really showing that it's not as of late). You should be invested in broad index funds, like ETFs, which track the entire market (to simplify they own a fraction of every company on the market). The market, over the long run, always goes up so you always win (although again, with the US in very interested in understanding what happens when a country collapsed, from what I read about Germany it was actually surprisingly fine if I'm not mistaken).
You seem to be looking at investing as a way to get rich quickly, a gamble that may pay off. But good investing is slow, consistent growth that guarantees a safe retirement (but also unfortunately does not give us an escape from this capitalist hell hole of permanent work).
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I tell you something about investing. If enough people invest there is thing called TV that they can make announcement and push indexes down by 50% in an hour and let them go back in 10 years so from your 100 bucks you will have 50 bucks and from your 4 dollars you will have 2 dollars per year. That saying you saved your 500 thousands in let's say 10 years now work 5 more years to go back to 500 thousand because you just lost 250k in an hour. You stand no chance when they want slaves. Million is for pussies they fuck everyday.
It seems you've been scorned from treating investing as gambling and I'm sorry to hear that but that's not how this works. Yes, markets can go down and you can lose money but:
- this is a hypothetical which doesn't care about real market considerations
- you can and should average your retirement investing against a conservative figure so in boom years you're underspending and in bust years you're still covered
This is all calculatable. The problem is we're all paying for some jackass's yacht when we should be paying for community rail and affordable housing.
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A 4% withdrawal rate is intended for a 30yr retirement when accounting for inflation, so you'd need to keep your expenses well below that, probably closer to 2%. But more importantly in my opinion this relies on the assumption of a mostly stable market, which over the course of a ~70yr retirement is riskier a bet to take compared to a ~30yr retirement.
Also what would you do on such a tight budget for ~70yr that you wouldn't get bored of?
I would definitely pursue my dream of sitting in pointless TEAMS meetings all day.