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 would, but it’s not possible since I don’t have millions of dollars in my savings account.
I wasn’t even out of school yet.
I’ve heard of people being kept back a year but damn my dude
Did a PhD. Those take time.
Yeah i figured as much but I like my jokes
The only catch is that you would have to keep your expenses at 65% of what you spend right now.
Permanently? or like, adjusted for inflation? do I get rent control?
Because 65% of what I make now will be worth a lot less in 10 years.
Probably not.
- I can’t be certain that these earnings will cover even 10% of my expenses for a lifetime, because you never know.
- I feel too young to make such a drastic decision that will tremendously limit my future.
- I prefer enjoyable work with a healthy work-life-balance over not working at all.
If anything, I’d take more risks and sacrifices to get a more fulfilling work experience.
Living frugally isn’t the problem, at least not directly.
The boredom is what would get most people.
Most people need to engage themselves in something satisfying and challenging.
The sky is the limit on hobby spending, but we’ve also never had more access to inexpensive hobbies and entertainment options.
Hobbies won’t nourish your soul for the next 40 years.
Sure. People need socialization and relationships with other people. Similar to hobbies, that can be as expensive or as inexpensive as one wants. Socialization often even combines with hobbies and recreational activities.
What else do people need? I’d say that purpose. That’s why many people choose to volunteer.
What else do people need?
Surprised I have to point this out but…
People need to be challenged. People want to test their mettle and push boundaries and produce value and be useful and show everyone what they can achieve.
When you’re in your 80s and all messed up and just sitting around waiting to die, a great collection of knitted gloves and scarves might not be very satisfying.
I’m not sure why you think hobbies can’t be challenging. Aside from various types of competitive activities, many hobbies very much involve pushing boundaries.
The founder of Myspace retired in early thirty’s after selling his company for $80 million. He travels the world and does photography. People who say they will be bored if they retire aren’t being creative enough to think of doing something else.
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.
In this hypothetical circumstance described by OP, you don’t have $80m on which to live frugally travelling the world pursuing your interest in photography.
For most people, living on 65% of their current earnings would mean a serious curtailment of their current activities. A subsistence if you will.
Besides which, most hobbies aren’t really satisfying in a way that can nourish the soul, certainly not the ones you can do at home for little or no cost anyway.
You can do a lot on a frugal budget
What does that mean? You said 65% of current earnings in the OP. Most people couldn’t pursue any significant hobbies or interests on that level of income.
65% of your spendings, addmittedly this question is mostly relevant to people that spend at least a somewhat above the median, where they can reduce their lifestyle by 35% and still live, just frugally.
I’m not sure what you mean by significant hobbies, but personally with the exception of one, all of my hobbies are cheap/free.
Sure, fine, whatever. You do you.
I think there are very few people who could spend 40 years painting warhammer figurines and call that a rewarding satisfying life.
Why are you so skeptical? I could spend 40 years doing:
- hikes
- walks in nature
- camping
- volunteer work
- going to the beach
- reading
- doing diy projects
- helping others
- learning new things
- exploring my country
- etc
There is so much more to life than work and paid services.
And yes, this is a privileged position, but that doesn’t make it wrong.
No, I live relatively lean already. 65% would mean cutting down to rice-and-beans type diet, no Internet, no investment into hobbies, no travel.
Also, there’s inflation. At 30 years old I could expect to live another 40+ years. And 65% of today’s dollars is going to get less and less valuable as the years go on.
And 65% of today’s dollars is going to get less and less valuable as the years go on.
That’s why it’s crucial to invest as early as possible. I wish I had learned more about it when I was younger.
I’d continue to work. I want to do more in my retirement than just stay at home.
100% I’d retire. I’d sell all my shit, buy a sailboat and cruise around the world for the rest of my life.
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.
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.
You’re dreaming or selling ? Retirement investment is Ponzi scheme. If you think there will be more and more people every year in your country look up birth rates. You know what is Kondratiev wave ? There is no real market right now, go make something and see how much it’s worth and for how much billionaire owned companies are selling it and why they don’t pay taxes.
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 ?
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).
Every investment is a gamble is you read terms of service, it’s hidden behind this fancy word called speculation. Bank guarantee nothing to return. You recommended some financial products that you have no idea how they work. ETFs are just money machines for bankers to get double commission from selling stocks of companies you can’t afford to hedge with real stocks and get your dividend and votes. Sometimes even to fuck you up if that’s their business strategy. You buy index so you buy nothing of value, moreover you give a knife to banker so he can stab you whenever he wants. That’s even more stupid than buying company stocks. Read more kid, I know exactly how this shit works.
My wife and I spend about 25% of our pre-tax income on childcare. Cutting that, plus another 10% other places would be fine.
No, because I’m close to 30, literally had a more favorable version of this option (enough money, relocate to a low cost-of-living country and doesn’t even have to be frugal) presented to me, and I chose not to. And I already live frugal enough that 65% would be really rough… I’m okay with a lite version though: only take fun and engaging part-time/flexi jobs, and dedicate my full time to a rewarding but not necessarily well-paid (or paid at all) career, while cutting down a bit on spending
I just felt that with all the education & things I have going for me I’d rather do something productive that contributes to society. If I literally couldn’t find a job that’s not a metaphorical meat grinder then it’s another story, but I’m not at that stage yet
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.
It is almost as if all of humanity could survive and provide for each other without psycho billionaires owning the means of production and housing!
Ah, to own a house… Wouldn’t that be neat? And imagine if it wasn’t a piece of shit produced at the lowest cost possible by overworked and underpaid builders. Hell, imagine a custom house for my particular tastes!
What a world we could live in if we just taxed the rich out of existence and owned a portion of our work place.
65% of what I spend right now. So basically 35% below paycheck to paycheck? Seems like a bad idea to me.
lol… You need like 2 million dollars and a paid off house to make it work in the US and that’s if you know how to manage money and control spending. AND no critical event happened like major illness etc
aka system is designed that vast majority of people can never ACHIEVE IT.
This is a highly pessimistic take. 2 million dollars would conservatively yield $80,000 per year. This would place you at the 70th percentile in the USA for individual income.
I won’t argue individual angle… But not having a family is sacrifice in of itself then.
My numbers did account for a family of 3.
With that being said, cashing out stocks or clipping coupons is a taxable event. Plus inflation and health insurance on a private market.
It is doable but still has risk.
Plus which 30 yo has paid off house and 2 million they earned?
Which 70 year old does either for that matter
I live frugally now.
I also just like to work. I don’t plan to ever retire.
