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The New Retirement Plan: Save Almost Everything, Spend Virtually Nothing (WSJ)

entremet

entremet

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Oct 26, 2017
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Paywalled but I'll put some key excerpts.

This whole article is about the FIRE movement. FIRE stands for Financial Independent Retire Early. It's been pretty big of late on internet personal finance blogs. The biggest name in the movement is Mr. Money Mustache.

They espouse extreme frugality in the name of financial independence. It's a rather neat movement. Don't know if I could ever do it myself, though. They are super frugal.

Sylvia Hall wants to retire at age 40. Her dream has a price: brown bananas.

The 38-year-old Seattle lawyer is on a strict budget as she tries to hit her goal of amassing $2 million in assets by 2020. That means saving about 70% of her after-tax income and setting firm spending limits in every part of her life.


She looks for brown bananas and other soon-to-be discarded items from fruit and vegetable stands to help keep her grocery bills around $75 a month. She walks to work so she doesn't have to spend money on gas. She borrows Netflix passwords from friends so she doesn't have to spend much on entertainment.

"The idea of not having to wait to 65 to start living on my own terms appealed to me," she said.

For a new generation of Americans, the traditional retirement age of 65 is getting old. Some of the youngest members of the U.S. workforce are saving aggressively and spending little so they can leave work decades ahead of schedule, defying the career arc that typically defines adult life.
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"It gives people more control over their lives and time," said Grant Sabatier, 33, who writes a blog about the topic called Millennial Money. "We live in uncertain times and financial empowerment provides a path out."

The downside of FIRE is its inherent paradox: For those seeking financial security, early retirement can be risky. Since many early retirees rely solely on income from stocks, bonds or real estate for living expenses, sudden market downturns can pose a threat to their plans. At the same time, these people have to forecast their cost of living for decades. This means prolonged periods of high inflation can wreck their forecasts and budgets.

The self-reliance and thrift embodied by FIRE have roots in American history. Elements of the philosophy can be found in Ben Franklin's 1758 classic "The Way to Wealth," Ralph Waldo Emerson's 1841 essay "Self-Reliance" and Henry David Thoreau's "Walden," an 1854 book about living simply in a cabin he built near Concord, Mass.
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https://www.wsj.com/articles/the-ne...virtually-nothing-1541217688?mod=hp_lead_pos5

Here's her monthly budget. I rounded it off.

Total Spending: 2500
Mortgage: 900
401K: 4500
Groceries: 75
Restaurants: 50
Gas: 20
Electricity:20
Total Taxes: 3500


Any FIRE adherents in ERA?
 
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Tuck

Tuck

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Oct 25, 2017
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I'd rather not waste my 20s and 30s just so I can retire at 40 tbh.

Especially since my body is crumbling around me and I probably wont be able to do the things I want to do by then
 
jsnepo

jsnepo

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Tuck said:
I'd rather not waste my 20s and 30s just so I can retire at 40 tbh.

Especially since my body is crumbling around me and I probably wont be able to do the things I want to do by then
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This. I'm in my 30s but I am already feeling that my body is weakening.
 

Deleted member 25108

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Ive pretty much accepted that Ill work till i die.

Im more concerned about making sure that I get paid more for less work the older I get at this point.
 
Br3wnor

Br3wnor

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Fuck that, I could die tomorrow and would hate to live like that just for the goal of retiring early. I also have a pension so I want to put 35 years in so my package is as good as it can be while also allowing me to retire at 66.
 
gozu

gozu

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There are tons of activities that can ONLY be enjoyed when you're 20 or 30 something.

If none of them appeal to you, and if you are genetically predisposed to live a long life, Then FIRE absolutely makes sense and you definitely will not regret it.

If you are a woman and you want children, you must have them before age 40 for minimal risk (to mother and child). Having a child after doing FIRE will mean you're doing it in advanced maternal age and it is definitely not ideal. Your body can recover a lot better at 20 than at 40.

If you are a man, having children at 40 is not very risky, so no problem other than the lack of energy to keep up with your kids in their teens.

Therefore FIRE discriminates against mothers and incentivizes women to have less children. This is not a good thing. We need a 2.2 birthrate to keep the population stable. Immigrants have been helping, but who knows how long that'll last with all the white xenophobia raging on.
 
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FeliciaFelix

FeliciaFelix

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Mr Money Mustache is someone I occasionally follow but there's something dubious about an ex Google employee with 200,000 saved in Betterment preaching that people should live like monks.
 
demosthenes

demosthenes

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Oct 25, 2017
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My plan is to soft retire at 55. I contribute to my IRA, my 401k, and invest other money. Hopefully I can achieve that goal!

I haven't sacraficed my 20s or 30s though.
 
skeptem

skeptem

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It's hard with kids, but we always strive to hit our budgets. Most months we save around 50% while still contributing to 401k through work. Most of that savings goes into vanguard accounts, some goes towards principal on house, some stays in savings account..

I would do this if I were single.... Though maybe not to the freegan level.
 
Skel1ingt0n

Skel1ingt0n

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If you're eating spoiled fruit and borrowing Netflix password and, I assume, otherwise just being a boring bum with family and friends during your 20s and 30s, you're not living your life.

Don't get me wrong, I'm all for saving and saving aggressively. I was dirt fucking poor in HS and college, and try very hard to save something decent each year - a luxury I didn't have for a long time. And while I could absolutely save more, I do agree that most probably don't save enough.

But I also get to drive a nice car, I live in a house my wife loves, and I get to buy whatever video games I want whenever I want them. Why rush into retirement if I can't even do simple things like that?
 
Fireblend

Fireblend

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I wouldn't want to waste some of the best years of my life just so I could retire at 40. It probably helps that I really enjoy my work so retirement isn't really a super high priority goal for me.
 
Bumrush

Bumrush

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My wife and I are excellent savers, but to me, there's a massive gap between being a good saver and doing the things that it (often) takes to adhere to FIRE.

I believe you should enjoy your 20s and 30s first and foremost, and if you can retire early through solid planning, more power to you.
 
cebri

cebri

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You can save quite a lot of money and still enjoy life. I save around 30% of my total income and I've still been able to travel to Jordan, Turkey and France this yesr. Just dont waste money in stupid things.
 
Amory

Amory

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Retiring at 40 is kind of a dumb goal if it means you have to suffer throughout your younger years imo unless you truly hate working

Whats the plan for the back half of your life? You're going to get bored.
 

Airegin

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Dec 10, 2017
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If I saved 70% of my salary I'd only have $140k in 10 years. I'd have to work more than 140 years to reach $2 million.
 
Dodongo

Dodongo

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40 is just too early to retire. I wouldn't be able to handle that.

Frugality is cool though! Definitely save all you can
 
Zip

Zip

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So what about for those people who wouldn't even have 2 million in pre-tax income before they hit 40+? I mean, that's an average of $100,000 per year assuming the person works uninterrupted from age 20 to 40. Pre-tax.

I mean, I'm ignoring investment returns, but I highly doubt that covers the difference. The average for people to earn in a year is more like, what, $50,000?

Borrowing Netflix passwords is not a ticket to success. Especially laughable in that even that small piece falls apart if applied to a larger scale.

Garbage articles always just showing off a wealthy person who realized that they were earning much more than they needed to spend and decided to save it for a little while instead.
 
AngmarsKing701

AngmarsKing701

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Oct 26, 2017
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$2M at age 65 yes. $2M at age 40... she gonna be looking for work in her mid 50s.

Edit: I should provide more context than that. If she's looking to simply walk away from all work and live off that $2M for the rest of her life, she has a long think coming. That $2M is going to earn (if we assume 5% average returns on investments), about $100K per year. Take home on that is gonna be $80k-ish after taxes. Not bad. She can live on that. Can she travel the world and go on crazy vacations non-stop and live it up? Probably not.

I have a friend at work doing this. He and his wife live very frugally with a goal of being independent before they're 50. It's not they don't plan to work; it's just that they plan to work doing something they love doing instead of working "for the man."

It is an interesting take on things. I have to admit, however, having hit 50 last year, that I've very much enjoyed being able to share some amazing places in the world with my kids and put them through college without them needing to accept crippling debt when they come out. That means I'll have to work later in life myself, but it's all about balance. I think I'd rather work longer knowing that I can play longer, instead of hording things on one side of an age limit or the other.

This woman may very well do almost nothing until she's 40, hoarding her gold as it were, and God forbid get hit by a bus or go down in a plane or some other accident.

Basically: carpe diem. Seize the day, in my opinion. You can't assume you can seize one later.
 
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Shiloh

Shiloh

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Oct 25, 2017
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cebri said:
You can save quite a lot of money and still enjoy life. I save around 30% of my total income and I've still been able to travel to Jordan, Turkey and France this yesr. Just dont waste money in stupid things.
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Not always true. If you don't have kids and a decent paying job, sure. I pay more in student loans than I do rent, but I still save. We're the lucky ones.
 
$10 Bagel

$10 Bagel

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She borrows Netflix passwords from friends so she doesn't have to spend much on entertainment.
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not everyone can be a moocher. someone has to pay

The Last Wizard said:
Sounds like it.

Why not actually get to the root of the problem instead of these backwards solutions. Wages need to rise, workers rights need to be strengthened, and corporations needs to be weakened.
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bc jeff bezos needs to never disgrace himself by using the same private jet more than once, so I have to suffer and eat rotten bananas and drink spoiled milk for the rest of my life so he and others like him can enjoy life #selfless​
 

Deleted member 9838

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Sounds awful for me personally. I can see being money focused and wanting to save but I'm also about focusing on myself in other areas and that requires money. No need to retire early. I don't want to retire. It's such a stupid ideal. I want to work till I'm old but be able to cut back on hours as I get older. No need to just stop working and be one of those lazy old people who now just sits around all day.
 
TarpitCarnivore

TarpitCarnivore

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Oct 25, 2017
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Money can't come with you, and there's always a chance your life has a sudden change. I'd rather be smart, save, but still also try and enjoy what I can now.
 
Malovis

Malovis

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Can't you rather like, plan for a high paying career and work smaller hours if you want to?
 

Deleted member 29676

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I've been part of the FIRE movement for 5-7 years now it is really strange to see how it has evolved.

It used to be built around reducing consumption because the things you buy tend not to make you really happy. You'd carefully consider whether what you're spending your money on is really improving your life, and more often than not realize it wasn't and end up with savings rates ~40-60% and be able to stop working in your early 40s.

At some point it shifted in to "don't spend anything and deny yourself things so you can stop working sooner"
 
Zip

Zip

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Shiloh said:
I'm $60 a week, and that's pretty damn cheap. My college days were $50 a week. How does one do that?!
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If you stayed away from pricey snacks, and kept meals towards fairly cheap things like beans, rice, and pasta, it's probably doable. Might even have some slight space left over to get varying ingredients or the occasional meat to keep you from going insane.

I could probably do it if I were single and no kids. But you lose that freedom as soon as someone else comes into the picture, which is another thing this article seems to ignore.
 

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O-Zips said:
If you stayed away from pricey snacks, and kept meals towards fairly cheap things like beans, rice, and pasta, it's probably doable. Might even have some slight space left over to get varying ingredients or the occasional meat to keep you from going insane.

I could probably do it if I were single and no kids. But you lose that freedom as soon as someone else comes into the picture, which is another thing this article seems to ignore.
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There are plenty of blogs of people reaching financial independence with kids including their monthly budgets. The Frugalwoods is probably the best known.
 
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