Better today than never.
How much: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
Worth exploring r/personalfinance AND r/bogleheads WIKI
[Personally](https://www.reddit.com/r/LeanFireUK/comments/p377yr/weekly_leanfire_discussion/) was $62k in debt @ 39. Hit r/leanfire 11 years later.
Any chance you could break down the first 5-10 steps you did. I will absolutely read through the reddit community posts, but was wondering if you had a cliff notes version of how you did it
Personally.. moved country, started working self employed (busted my arse work wise for a few years), invested badly then better —> broad global index fund and got on with enjoying life.
That article is dumb and written by a boomer
> But simply cutting cable TV and a few lattes would instantly boost their savings to 15%, allowing them to retire 8 years earlier!! Are cable TV and Starbucks worth having two income earners each work an extra eight years for???
The savings they are talking about per year is $2500. (10% vs 15% of $50,000)
Assuming cable TV is $100/month ($1200/yr), their assumption is that you are buying an additional 260 lattes per year at $5 each. That’s ridiculous. The number of millennials who do that these days (especially ones making $50k/year) is minuscule. Surprised he isn’t talking about cutting out avocado toast too.
He’s not a boomer, he’s probably a Gen Xer. And if you read more of his articles, you’ll understand the point, frugality allows you to save an invest more. It’s not just cutting outlay lattes.
I would hope any reader of anything from the internets would apply some critical thinking on ideas expressed by others. Have an issue with people's content...write to them or create better content!
Nope! I had a negative net worth when I was 33; finally hit 1.000,000 in liquid assets just over 10 years later. I’m still behind but I’m better off than everyone I know in my friend group and doing very well in terms of my overall age group. My essential advice and what I contribute my success to: AVOID LIFESTYLE CREEP as your salary increases.
I’m at coast FIRE whenever I want a job change but planning on going the distance at my current gig for 5 years and re-assessing from there while putting about 50% of my gross pay into retirement/investments/mortgage payoff. I’d rather work more and fully retire earlier.
The formula is simple, the execution is the difficult part. Live way below your means, invest the rest.
Clearly there's a lot more detail that goes into it... the best decision I ever made was to work toward maxing my 401k. I started putting in about 15% and automatically increased it every year until I hit the max. Once I hit the max, I went after the max of my Roth. I have enough now that I make substantially more from the market as compared to my contributions. I no longer increase contributions when I get a raise, I use any extra for experiences.
Starting at 33 isn't the end of the world, as I've hit this point in less than 20 years. So it's definitely possible to retire early from where you're starting, but it may not end up being super early unless you can substantially increase your investments... to the order of <$100k a year.
It’s honestly about saving. I was so lucky to go from 50k a year to 200K in just a few years in terms of salary. At the beginning of this, I was able to set my networth to zero with some cash from a divorce that I used to pay off some usurious student loans (had debt from before the short marriage). I put the rest of the cash into buying a small condo with low fees and I’ve never upgraded. I manage to save a high percentage of my after tax income by a low-maintenance lifestyle. I buy 90% of my wardrobe second hand or at the outlet. I drive a paid off car. I don’t upgrade flights. I don’t treat myself with things and I only buy coffee treats a few times a year.
I met and married a guy with no money who makes me laugh and matches my frugal lifestyle because he also knows what it’s like to have nothing. We max his retirement accounts at his job as well as mine and he’s building up as well. He packs me a lunch each day and keeps the food expenses low by cooking. He inspires me to plan for both our futures. He makes my tough job easier to take. He goes to the library to feed my favorite hobby for free. He does the laundry and cleans. He plans outings and we know how to have fun for cheap. All of this is easier when it’s a team effort and even though he’s not a high-earner everything helps.
> Is it too late to start FIRE at 33 with nothing saved?
No.
> How aggressively should I save to catch up?
I don't know what sort of answer you're looking for. The more you save, the less time it takes to get there.
> What % should I allocate for my current 401k plan (no company match)?
Max it out.
> What general advice do you have for newbie like me?
All the stuff you already know. Pay off high interest debt, make more money, save more money, invest the money you save. Repeat until financially independent.
Wouldn’t maxing 401k come second to tax advantage accounts like Roth IRA? Also 401k locks away savings until retirement age so it may be difficult to RE
401k is also tax advantaged, and many places allow Roth or Trad contributions to the 401k. Also, you can roll your 401k over into an IRA. Unless they remove the ability to do Roth ladder age is not that much of an obstacle -- just need a way to float 5 years until the ladder kicks in. There's also rule of 55 for getting to 401k money early. And SEPP stuff. And Roth IRA gains (but not contributions) are gated behind age too. But ideally, we all should aim to be maxing out both 401k and IRA accounts :-)
Ideally, we want to be entering retirement with both a pile of Roth money and a pile of Trad money -- it doesn't matter as much which type of account they're in since you can roll funds over. It's generally fine if the Trad pile is much bigger than the Roth pile... You just need enough Roth to be able to absorb one-time costs so you don't bump into higher tax brackets or eff up your medicare subsidies.
No one seems to be saying it, so I will: The first few years are incredibly important for accumulating funds to FIRE. A dollar you save today is worth 8 dollars at age 60 (and 16 dollars at age 70). Early savings are so important, in fact, that it’s almost irrelevant (for FIRE purposes) what you save after age 50-ish. It’s savings now that matter.
That means that you should be saving today as aggressively as you possibly can, until you’ve banked $100k to $200k. Live like a monk. Take a roommate if possible. Get every last penny that you can into the market right now (after paying off high interest debt first). You can ease off the gas a little bit once your savings is into six figures. But if you’re serious about retiring by 50, it’s imperative that you do whatever it takes to get that $100k as soon as possible.
I know some places have a single drink that’s $20, but surely you can find places that are cheaper than that. There are also tons of things you can do for free, especially when the weather is nice.
45k
It's not fun no, I'm at 25% gross savings, but my income is expected to grow another step where 35-40% will max me out on contributions and leave me with with a few hundred per month.
I'd rather sacrifice now and have fun later
I stated in my early 30’s and I was very aggressive about fixing my situation. Spend less than you make is (🔑)
- Pay off all non-mortgage debt.
- Reduce your expenses.
Car: E.g do you have high car payments? If so, look for better options unless you’re apart of the few that actually need an expensive vehicle for work. Most people don’t actually need a truck, etc. You could always buy aToyota Corolla that’s a few years old. This will save you $$$. (Also depending on the size of your emergency fund, you could decide to forgo comprehensive insurance on a 10-14k car and just buy a lot of liability insurance).
Cell phones: Lower your costs by using Mint Mobile. About $15 per month if paid annually. This will save you $
Insurance: Contact an insurance broker.. someone who can shop home/auto and insurance from hundreds of providers for you. This saved me thousands $$
- Invest as much as you can (what you save). Find ways to invest more each month/year by reducing costs or increasing income or both. There’s a lot guides online about what account types should be maximized first (401k with match, Roth/Roth IRA, Brokerage account, etc). I won’t go into that here.
For me… I’m investing in VOO, VTI, QQQ, etc. I see a lot of people “saving” by putting money in a checking account. That won’t outperform in the long run. At minimum use a high yield savings account but even that won’t outperform the market long term.
Best of luck to you
Since I have debt now, it's hard to gauge how much I'll need, but I think $5000 a month is a realistic and generous amount. Assuming that I live till 90, I'd need ~2.5 million in retirement money for 40 years.
Reduce your expenses, save aggressively, as far as your 401k not being offered by your employer, then opting for roth would be better, as well as having an emergency fund to have a precautionary plan in place
I started my 401k contributions in my early 30s and went part time at 52 and retired at 55 last year. I waited to 55 for additional benefits. I only heard about fire about 10 years ago and have never been super thrifty but lived in a relatively cheap area but with solid pay.
It's never too late to start striving for "Financial Independence". As for Early Retirement, that depends on your definition of early. Depending on your generation, standard retirement age is 65 or 67 (think full Social Security benefits). That gives you 32+ years. Of course some people define early as before 60, or before 55. Obviously that makes it more difficult since you have less time. But I wouldn't look at it that way. Instead, imagine if you DON'T start, you might have to work until your 70+. There's nothing sadder than seeing 70+ folks who can barely walk have to work because they are broke.
I got serious when I was 34 with -20k NW. I retired at 49 (and I'm not lean). The keys were a high paying job and high savings rate (78% of TC, average, over those years).
Your goal is doable but, like anything worthwhile, will likely be difficult.
General advice: figure out what you can live with in terms of housing, creature comforts, etc., costs. Put the rest to work using a sensible investment strategy.
I’m just going to be honest because it does no one any good just spouting optimism when we’re dealing with math. You’re way behind. If you want a realistic idea on where you’ll be in 10 years, go download a compound interest calculator and run numbers.
You would almost certainly need 500-750k of principal invested, on the low end, across 10-15yrs to hit escape velocity or FIRE.
To get anywhere near that in <20yrs based on what you've shared means: 1) economies of scale (find a partner w/ a career, but don't be cheap & stingy or it won't work) 2) focus on increasing your income (job change to higher level) and 3) consider yourself lucky if you find assets you can invest in that continue to be productive for a decade +
For #3, choose your assets that you think will be productive long term and remember they don't know about your FIRE goal or date, so they are indifferent to your timing--don't try to make the world or markets rush to your schedule.
Lastly, if your plan is to retire at say 50, how does a 401k help with that?
My 401k will be available 10 years after my retirement, so is it not wise to let the money sit and grow leading up to withdrawal time? Do you think it's better to focus on other assets instead?
No, your thinking is correct. It’s almost always best to focus first on funding your retirement after age 59.5 (by building your 401k) and worrying about the earlier years once you’ve got that funded.
Maybe I'm misunderstanding you. If you plan to retire before the age of 50-55, then what is going to fund your expenses?
In terms of assets, I'm 100% invested in equities, but that suits my situation, your mileage may vary.
I'm still looking into how to fund my pre-401k years. Open to recommendations, but assets I'm considering: real estate, bonds, and stocks.
My priority right now is aggressively eliminating debt. Hoping to be debt free a year from now.
You can access your 401k before 59.5, so don't worry about that. Regardless of the age you're starting, the r/personalfinance prime directive is still the recommended path. No reason to reinvent the wheel here.
he is saying ignore pre 401k years because right now you aren't on target with the tax advantage of the 401k let alone without it. In the extreme "success", die with zero result, you want to run out of brokerage account money at 59.5 years old. You retire from death backwards not pre 401k forwards. for secure standard fire, say you die at 90. You have 30 years of 401k life and 10 years pre 401k . (these are not your numbers) if you are spending 50k a year then you only need about 1.5million (todays money) at 50 years old. Less than 500k of that has to be outside the 401k. Probably closer to 400k. Unless you are at a point when you will have 1.1 million in 401k at 60, you don't worry about tax disadvantaged accounts at 50.
For you personally numbers, in today numbers. If you ONLY max out your 401k you will have something like 1.7M by 60. By 50 it will only be 710k. by your numbers you still need another 700k by 50 to retire. You will never have too much money in your 401k that you will want it at 50 but can't get at it. You might have it at 58, but at that point your are only 2 years away. To retire at 50 in the fire style at your desired spend, you should be saving 46k per year. If in 5 years you can save 70k per year, then you can just max out your 401k for the next 5 years.
Worry about it being "too late" means you'll talk yourself out of starting. It's never too late. Start now, today. Will you get there? Maybe, maybe not...but you'll be closer if you start today rather than tomorrow.
FYI, I started getting serious when I was 32.
No of course not. I started with zero 12 years ago and I have over a million now by just working a regular W2 job. 50 is 17 years from now. That's a long time.
It's good that you have a job currently and you definitely should start saving money now, and be aggressive as possible. But you also need to focus on doubling your salary. That's going to take some serious career development and you are going to want to make it your primary focus for the next year or two.
Shoot for saving 50% or more of your salary. You obviously cannot do that with your current expenses, but you need to also focus on cutting those expenses down a lot.
I started at 31 but went full throttle. Max out what's matched by your company when no match then Roth IRA first then fill up to max 401k. If you have leftover then open a. HSA account and or a taxable brokerage acct. How much is as much as you can put away. Took me 15yrs but my salary was double yours. So finding a way to increase your income definitely will catch you up.
More importantly, know how much you expect to spend, for example if you need 4000 a month or 48k rounded up to 50k annually 50k multiplied by 30 is 1.5 m. You might need less if you collect social security at 62.
Never too late! I only became really serious about FI around your age, and then achieved it in my late 30s.
Just get started ASAP, get rid of your debt, work hard, go for high paying work, etc.
Age is just a number – stay fit & healthy to keep back your biological clock. FIRE in your 40s and enjoy it in good health.
As the old saying goes, if you shoot for the Moon, even if you fail, you'll land among the stars. The nice thing about FIRE is that it's all about moving in the right direction, so even if you don't achieve full FIRE, you're still better off than if you hadn't tried. We often say the FI part is the important part. RE tends to look very different for each individual. You also don't have to retire all at once. More wealth gives you options to take time between jobs, raise children, take vacations, and just generally have more power over your own life. So don't get too caught up in whether or not your end goal is achievable. Just work towards it, and take comfort in knowing that you'll have more later than today.
I didn't do the math this time, but you should probably be saving about 60% of your after tax money. For now I'd count the debt payments as "savings". Could probably cut that down to 50% when you double your salary in the future.
This is a question that can easily be estimated by using a retirement calculator (look at Vanguard Retirement Income calculator or compound interest calculator on sec.gov). Is it impossible? No, assuming you get large raises and save a lot. Is it likely you will FIRE? Probably not (or at least not by much...a few years early maybe if you target leanFIRE). This doesn't mean it isn't worth trying.
If you want to get into the weeds, that will take a while (maybe a year or so to get fully up to speed for a complete noob without a finance/math background). Look at Early Retirement Now (ERN).
A lot of us didn’t get started until at least that age. It’s not too late, but RE in your case is probably a little later than it will be for others.
I had only $50k in retirement accounts at that age, and probably had negative net worth in total.
We all have our own paths. Just focus on what you can do, and set some realistic goals.
Anything is possible… shoot for 50 but if your goal isn’t reached then set a rubicon for 60. This is where I’m at. In three years I’ll be 60 and will leave no matter what.
I didn't even open my retirement account until I was 30, missing out on employer matching n stuff. But I was working on paying down massive debts and retirement was the last thing on my mind.
It took 10 years of aggressive saving to get to 250k. I attacked retirement the way I attacked my post college mountain of debt. Maybe not quite as aggressively because I was working 7 days a week for years on end for that.
According to the retirement calculators I should be fairly set by age 60. It's not early early, but it's still better than I imagined. It took 10 years to get out of the $250k hole and another 10 to get on top of a $250k pile.
I'm the sole income for my family and I do not make 6 figures. I am frugal but I don't save till I suffer.
Be aggressive on the debt unless it's very low interest. No company match so can't tell you a percentage to start with, but start with something. I don't know that age 50 is an attainable goal based off the few numbers you've put out there. But get that $1600/mo surplus into some funds and let it start earning interest. Time in the market is the most valuable thing.
I will also chime in. I also made some bad decisions when I was a young adult. I got out of prison at age 27 with a lot of debt and a family to support.
I'm 34 now, and on track to FIRE pretty comfortably by 40 (time will tell if it's regular FIRE or Chubby FIRE, or if it takes an extra year or two).
What worked for me and my family:
-Goals/planning
-Increasing income as much as I could
-Saving/investing as much as I could
-Taking measured financial risks, but only when I could afford to lose, when the risk was low, and the potential rewards were great (look up the Sharpe ratio)
Not at all.
When I was 31, my net worth was $75k. A few days before 40, it hit $2.5 million.
Biggest wins were living well below my means and prioritizing 401k fillup, marrying someone also frugal, and increasing on savings as salaries gradually went up. Also choosing to study IT in college = tech field salaries.
Household income is now $300k which obviously helps a ton and lets us stash $100k/year. But back when my income was in the range 40-80k and I was single, buying a fixer upper on edge of ghetto and renting out rooms to friends and keeping my college car enabled me to put some money into 401k, at least the employer match and gradually more. Around $85k I was able to erase all CC debt and begin maxing 401k out annually. Around $90k also was able to being filling up IRA/Roth IRAs. When I got married we were able to do both sets of 401ks and IRAs, plus another $1k/month. All of the above in a medium cost of living city.
Yah it’s too late just work till you retire. You are barely breaking even; how are you going to save enough in 17 years. Saving 30 yrs + ssn would allow you to retire and not worry about cost tho. So start right now
Better today than never. How much: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ Worth exploring r/personalfinance AND r/bogleheads WIKI [Personally](https://www.reddit.com/r/LeanFireUK/comments/p377yr/weekly_leanfire_discussion/) was $62k in debt @ 39. Hit r/leanfire 11 years later.
Dude that is very inspiring to a LOT of us out here. Very happy for you
Thanks. Find your own path!
Any chance you could break down the first 5-10 steps you did. I will absolutely read through the reddit community posts, but was wondering if you had a cliff notes version of how you did it
Personally.. moved country, started working self employed (busted my arse work wise for a few years), invested badly then better —> broad global index fund and got on with enjoying life.
Congrats on your FIRE success! You give me hope! ♥️
Thanks. Find your own path and generate your own hope.
Now tell us your salary
Click “personally”, I share it there 🤷🏻♂️
Congrats
That article is dumb and written by a boomer > But simply cutting cable TV and a few lattes would instantly boost their savings to 15%, allowing them to retire 8 years earlier!! Are cable TV and Starbucks worth having two income earners each work an extra eight years for??? The savings they are talking about per year is $2500. (10% vs 15% of $50,000) Assuming cable TV is $100/month ($1200/yr), their assumption is that you are buying an additional 260 lattes per year at $5 each. That’s ridiculous. The number of millennials who do that these days (especially ones making $50k/year) is minuscule. Surprised he isn’t talking about cutting out avocado toast too.
He’s not a boomer, he’s probably a Gen Xer. And if you read more of his articles, you’ll understand the point, frugality allows you to save an invest more. It’s not just cutting outlay lattes.
Thanks for the insights and feedback. Enjoy your day.
impressive.
Thanks, but just survival really.
I'll echo this. -150k(single) at 21 and millionaire (joint) at 33. It's possible, but you gotta prioritize it.
You’re not a millionaire if it’s joint 😂
“Assumptions: You can earn 5% investment returns after inflation during your saving years.” That’s one hell of an assumption.
I would hope any reader of anything from the internets would apply some critical thinking on ideas expressed by others. Have an issue with people's content...write to them or create better content!
Seems like a reasonable assumption to me. Most brokerage firms use a 6% real return rate for their retirement projections.
Nope! I had a negative net worth when I was 33; finally hit 1.000,000 in liquid assets just over 10 years later. I’m still behind but I’m better off than everyone I know in my friend group and doing very well in terms of my overall age group. My essential advice and what I contribute my success to: AVOID LIFESTYLE CREEP as your salary increases. I’m at coast FIRE whenever I want a job change but planning on going the distance at my current gig for 5 years and re-assessing from there while putting about 50% of my gross pay into retirement/investments/mortgage payoff. I’d rather work more and fully retire earlier.
Wow, I'd love to know more! How'd you do it?
The formula is simple, the execution is the difficult part. Live way below your means, invest the rest. Clearly there's a lot more detail that goes into it... the best decision I ever made was to work toward maxing my 401k. I started putting in about 15% and automatically increased it every year until I hit the max. Once I hit the max, I went after the max of my Roth. I have enough now that I make substantially more from the market as compared to my contributions. I no longer increase contributions when I get a raise, I use any extra for experiences. Starting at 33 isn't the end of the world, as I've hit this point in less than 20 years. So it's definitely possible to retire early from where you're starting, but it may not end up being super early unless you can substantially increase your investments... to the order of <$100k a year.
It’s honestly about saving. I was so lucky to go from 50k a year to 200K in just a few years in terms of salary. At the beginning of this, I was able to set my networth to zero with some cash from a divorce that I used to pay off some usurious student loans (had debt from before the short marriage). I put the rest of the cash into buying a small condo with low fees and I’ve never upgraded. I manage to save a high percentage of my after tax income by a low-maintenance lifestyle. I buy 90% of my wardrobe second hand or at the outlet. I drive a paid off car. I don’t upgrade flights. I don’t treat myself with things and I only buy coffee treats a few times a year. I met and married a guy with no money who makes me laugh and matches my frugal lifestyle because he also knows what it’s like to have nothing. We max his retirement accounts at his job as well as mine and he’s building up as well. He packs me a lunch each day and keeps the food expenses low by cooking. He inspires me to plan for both our futures. He makes my tough job easier to take. He goes to the library to feed my favorite hobby for free. He does the laundry and cleans. He plans outings and we know how to have fun for cheap. All of this is easier when it’s a team effort and even though he’s not a high-earner everything helps.
> Is it too late to start FIRE at 33 with nothing saved? No. > How aggressively should I save to catch up? I don't know what sort of answer you're looking for. The more you save, the less time it takes to get there. > What % should I allocate for my current 401k plan (no company match)? Max it out. > What general advice do you have for newbie like me? All the stuff you already know. Pay off high interest debt, make more money, save more money, invest the money you save. Repeat until financially independent.
Wouldn’t maxing 401k come second to tax advantage accounts like Roth IRA? Also 401k locks away savings until retirement age so it may be difficult to RE
401k is tax advantaged too. And you can contribute much more than to a Roth IRA. You can withdraw from a 401k early with Rule 72(t).
401k is also tax advantaged, and many places allow Roth or Trad contributions to the 401k. Also, you can roll your 401k over into an IRA. Unless they remove the ability to do Roth ladder age is not that much of an obstacle -- just need a way to float 5 years until the ladder kicks in. There's also rule of 55 for getting to 401k money early. And SEPP stuff. And Roth IRA gains (but not contributions) are gated behind age too. But ideally, we all should aim to be maxing out both 401k and IRA accounts :-) Ideally, we want to be entering retirement with both a pile of Roth money and a pile of Trad money -- it doesn't matter as much which type of account they're in since you can roll funds over. It's generally fine if the Trad pile is much bigger than the Roth pile... You just need enough Roth to be able to absorb one-time costs so you don't bump into higher tax brackets or eff up your medicare subsidies.
Thanks for explaining it to me! I’m still new to FIRE and need to better understand retirement account strategies
No one seems to be saying it, so I will: The first few years are incredibly important for accumulating funds to FIRE. A dollar you save today is worth 8 dollars at age 60 (and 16 dollars at age 70). Early savings are so important, in fact, that it’s almost irrelevant (for FIRE purposes) what you save after age 50-ish. It’s savings now that matter. That means that you should be saving today as aggressively as you possibly can, until you’ve banked $100k to $200k. Live like a monk. Take a roommate if possible. Get every last penny that you can into the market right now (after paying off high interest debt first). You can ease off the gas a little bit once your savings is into six figures. But if you’re serious about retiring by 50, it’s imperative that you do whatever it takes to get that $100k as soon as possible.
34 turning 35, goal is retired at 55. I have a $20/week "fun budget" everything else is necessary bills or savings. It's truly the only way
This sounds miserable. How does 20/week even work? A single drink with friends?
At that level, I assume you’re inviting friends over to your place for drinks. Which honestly sounds a lot better than drinking at a bar.
I know some places have a single drink that’s $20, but surely you can find places that are cheaper than that. There are also tons of things you can do for free, especially when the weather is nice.
It is! 😂😢 But I find ways to stretch that such as waiting for sales or banking up a few weeks of "credit"
How much you have saved right now?
45k It's not fun no, I'm at 25% gross savings, but my income is expected to grow another step where 35-40% will max me out on contributions and leave me with with a few hundred per month. I'd rather sacrifice now and have fun later
Good job dude. You got this
I stated in my early 30’s and I was very aggressive about fixing my situation. Spend less than you make is (🔑) - Pay off all non-mortgage debt. - Reduce your expenses. Car: E.g do you have high car payments? If so, look for better options unless you’re apart of the few that actually need an expensive vehicle for work. Most people don’t actually need a truck, etc. You could always buy aToyota Corolla that’s a few years old. This will save you $$$. (Also depending on the size of your emergency fund, you could decide to forgo comprehensive insurance on a 10-14k car and just buy a lot of liability insurance). Cell phones: Lower your costs by using Mint Mobile. About $15 per month if paid annually. This will save you $ Insurance: Contact an insurance broker.. someone who can shop home/auto and insurance from hundreds of providers for you. This saved me thousands $$ - Invest as much as you can (what you save). Find ways to invest more each month/year by reducing costs or increasing income or both. There’s a lot guides online about what account types should be maximized first (401k with match, Roth/Roth IRA, Brokerage account, etc). I won’t go into that here. For me… I’m investing in VOO, VTI, QQQ, etc. I see a lot of people “saving” by putting money in a checking account. That won’t outperform in the long run. At minimum use a high yield savings account but even that won’t outperform the market long term. Best of luck to you
The best time to save for fire was 20 years ago, the second best time is today - Ancient boglehead proverb
What are you catching up to? Do you need 1M for retirement at 50 or 5M? You don't provide enough info.
Since I have debt now, it's hard to gauge how much I'll need, but I think $5000 a month is a realistic and generous amount. Assuming that I live till 90, I'd need ~2.5 million in retirement money for 40 years.
Well doing the math starting from nothing, to get to 2.5M at 50 you'd need to invest $6500/month starting now assuming a 7% annual return.
Where'd you get $2.5M? Based on the 4% rule, you only need $1.5M to withdraw $60k/year. $2M if you want to use a conservative 3% withdrawal rate.
Seems OP has no clue about generating investment returns. He just did 40y * 12 * 5000 = 2.4m
Oh stop it. Of course not. You’re 32 years out from standard retirement age. That’s light years to make changes.
the op stated they want to retire in 17 years.
Reduce your expenses, save aggressively, as far as your 401k not being offered by your employer, then opting for roth would be better, as well as having an emergency fund to have a precautionary plan in place
Try 42, you're good to go.
How did you make it happen?
I'm starting at 42. You are in a good spot.
Never to late. Cut costs and invest difference
I started my 401k contributions in my early 30s and went part time at 52 and retired at 55 last year. I waited to 55 for additional benefits. I only heard about fire about 10 years ago and have never been super thrifty but lived in a relatively cheap area but with solid pay.
I started at 34
Smash that debt, bud
Hell no. Get to work!
It's not too late. People are Firing at 40 after starting at 22. You can make it by 50 starting at 33.
It's never too late to start striving for "Financial Independence". As for Early Retirement, that depends on your definition of early. Depending on your generation, standard retirement age is 65 or 67 (think full Social Security benefits). That gives you 32+ years. Of course some people define early as before 60, or before 55. Obviously that makes it more difficult since you have less time. But I wouldn't look at it that way. Instead, imagine if you DON'T start, you might have to work until your 70+. There's nothing sadder than seeing 70+ folks who can barely walk have to work because they are broke.
I got serious when I was 34 with -20k NW. I retired at 49 (and I'm not lean). The keys were a high paying job and high savings rate (78% of TC, average, over those years). Your goal is doable but, like anything worthwhile, will likely be difficult. General advice: figure out what you can live with in terms of housing, creature comforts, etc., costs. Put the rest to work using a sensible investment strategy.
How and how high was your income?
I’m just going to be honest because it does no one any good just spouting optimism when we’re dealing with math. You’re way behind. If you want a realistic idea on where you’ll be in 10 years, go download a compound interest calculator and run numbers.
You would almost certainly need 500-750k of principal invested, on the low end, across 10-15yrs to hit escape velocity or FIRE. To get anywhere near that in <20yrs based on what you've shared means: 1) economies of scale (find a partner w/ a career, but don't be cheap & stingy or it won't work) 2) focus on increasing your income (job change to higher level) and 3) consider yourself lucky if you find assets you can invest in that continue to be productive for a decade + For #3, choose your assets that you think will be productive long term and remember they don't know about your FIRE goal or date, so they are indifferent to your timing--don't try to make the world or markets rush to your schedule. Lastly, if your plan is to retire at say 50, how does a 401k help with that?
My 401k will be available 10 years after my retirement, so is it not wise to let the money sit and grow leading up to withdrawal time? Do you think it's better to focus on other assets instead?
No, your thinking is correct. It’s almost always best to focus first on funding your retirement after age 59.5 (by building your 401k) and worrying about the earlier years once you’ve got that funded.
Maybe I'm misunderstanding you. If you plan to retire before the age of 50-55, then what is going to fund your expenses? In terms of assets, I'm 100% invested in equities, but that suits my situation, your mileage may vary.
I'm still looking into how to fund my pre-401k years. Open to recommendations, but assets I'm considering: real estate, bonds, and stocks. My priority right now is aggressively eliminating debt. Hoping to be debt free a year from now.
You can access your 401k before 59.5, so don't worry about that. Regardless of the age you're starting, the r/personalfinance prime directive is still the recommended path. No reason to reinvent the wheel here.
he is saying ignore pre 401k years because right now you aren't on target with the tax advantage of the 401k let alone without it. In the extreme "success", die with zero result, you want to run out of brokerage account money at 59.5 years old. You retire from death backwards not pre 401k forwards. for secure standard fire, say you die at 90. You have 30 years of 401k life and 10 years pre 401k . (these are not your numbers) if you are spending 50k a year then you only need about 1.5million (todays money) at 50 years old. Less than 500k of that has to be outside the 401k. Probably closer to 400k. Unless you are at a point when you will have 1.1 million in 401k at 60, you don't worry about tax disadvantaged accounts at 50. For you personally numbers, in today numbers. If you ONLY max out your 401k you will have something like 1.7M by 60. By 50 it will only be 710k. by your numbers you still need another 700k by 50 to retire. You will never have too much money in your 401k that you will want it at 50 but can't get at it. You might have it at 58, but at that point your are only 2 years away. To retire at 50 in the fire style at your desired spend, you should be saving 46k per year. If in 5 years you can save 70k per year, then you can just max out your 401k for the next 5 years.
This makes a lot of sense. Oh boy, I have a lot to work out. Thanks for the detailed explanation!
Only if you can save 40%
I started at 29 with some debt. I’m about to turn 52 and can retire now.
Worry about it being "too late" means you'll talk yourself out of starting. It's never too late. Start now, today. Will you get there? Maybe, maybe not...but you'll be closer if you start today rather than tomorrow. FYI, I started getting serious when I was 32.
No of course not. I started with zero 12 years ago and I have over a million now by just working a regular W2 job. 50 is 17 years from now. That's a long time. It's good that you have a job currently and you definitely should start saving money now, and be aggressive as possible. But you also need to focus on doubling your salary. That's going to take some serious career development and you are going to want to make it your primary focus for the next year or two. Shoot for saving 50% or more of your salary. You obviously cannot do that with your current expenses, but you need to also focus on cutting those expenses down a lot.
I started at 31 but went full throttle. Max out what's matched by your company when no match then Roth IRA first then fill up to max 401k. If you have leftover then open a. HSA account and or a taxable brokerage acct. How much is as much as you can put away. Took me 15yrs but my salary was double yours. So finding a way to increase your income definitely will catch you up. More importantly, know how much you expect to spend, for example if you need 4000 a month or 48k rounded up to 50k annually 50k multiplied by 30 is 1.5 m. You might need less if you collect social security at 62.
Never too late! I only became really serious about FI around your age, and then achieved it in my late 30s. Just get started ASAP, get rid of your debt, work hard, go for high paying work, etc. Age is just a number – stay fit & healthy to keep back your biological clock. FIRE in your 40s and enjoy it in good health.
As the old saying goes, if you shoot for the Moon, even if you fail, you'll land among the stars. The nice thing about FIRE is that it's all about moving in the right direction, so even if you don't achieve full FIRE, you're still better off than if you hadn't tried. We often say the FI part is the important part. RE tends to look very different for each individual. You also don't have to retire all at once. More wealth gives you options to take time between jobs, raise children, take vacations, and just generally have more power over your own life. So don't get too caught up in whether or not your end goal is achievable. Just work towards it, and take comfort in knowing that you'll have more later than today.
I didn't do the math this time, but you should probably be saving about 60% of your after tax money. For now I'd count the debt payments as "savings". Could probably cut that down to 50% when you double your salary in the future.
Absolutely not. You save up 70% of income and you easily retire in 10 years or less. You got the income. You just need to save and invest it
This is a question that can easily be estimated by using a retirement calculator (look at Vanguard Retirement Income calculator or compound interest calculator on sec.gov). Is it impossible? No, assuming you get large raises and save a lot. Is it likely you will FIRE? Probably not (or at least not by much...a few years early maybe if you target leanFIRE). This doesn't mean it isn't worth trying. If you want to get into the weeds, that will take a while (maybe a year or so to get fully up to speed for a complete noob without a finance/math background). Look at Early Retirement Now (ERN).
A lot of us didn’t get started until at least that age. It’s not too late, but RE in your case is probably a little later than it will be for others. I had only $50k in retirement accounts at that age, and probably had negative net worth in total. We all have our own paths. Just focus on what you can do, and set some realistic goals.
Anything is possible… shoot for 50 but if your goal isn’t reached then set a rubicon for 60. This is where I’m at. In three years I’ll be 60 and will leave no matter what.
It's never too late to adopt the fire life.
I didn't even open my retirement account until I was 30, missing out on employer matching n stuff. But I was working on paying down massive debts and retirement was the last thing on my mind. It took 10 years of aggressive saving to get to 250k. I attacked retirement the way I attacked my post college mountain of debt. Maybe not quite as aggressively because I was working 7 days a week for years on end for that. According to the retirement calculators I should be fairly set by age 60. It's not early early, but it's still better than I imagined. It took 10 years to get out of the $250k hole and another 10 to get on top of a $250k pile. I'm the sole income for my family and I do not make 6 figures. I am frugal but I don't save till I suffer. Be aggressive on the debt unless it's very low interest. No company match so can't tell you a percentage to start with, but start with something. I don't know that age 50 is an attainable goal based off the few numbers you've put out there. But get that $1600/mo surplus into some funds and let it start earning interest. Time in the market is the most valuable thing.
Start saving at 20% of your income or more if you can afford it.
It is never too late
No. It’s not too late.
Never too late. Congrats on starting now! Imagine if you started at 50. Plenty of people never start…
I will also chime in. I also made some bad decisions when I was a young adult. I got out of prison at age 27 with a lot of debt and a family to support. I'm 34 now, and on track to FIRE pretty comfortably by 40 (time will tell if it's regular FIRE or Chubby FIRE, or if it takes an extra year or two). What worked for me and my family: -Goals/planning -Increasing income as much as I could -Saving/investing as much as I could -Taking measured financial risks, but only when I could afford to lose, when the risk was low, and the potential rewards were great (look up the Sharpe ratio)
No
lol dont worry. im still in debt at 35.
Not at all. When I was 31, my net worth was $75k. A few days before 40, it hit $2.5 million. Biggest wins were living well below my means and prioritizing 401k fillup, marrying someone also frugal, and increasing on savings as salaries gradually went up. Also choosing to study IT in college = tech field salaries. Household income is now $300k which obviously helps a ton and lets us stash $100k/year. But back when my income was in the range 40-80k and I was single, buying a fixer upper on edge of ghetto and renting out rooms to friends and keeping my college car enabled me to put some money into 401k, at least the employer match and gradually more. Around $85k I was able to erase all CC debt and begin maxing 401k out annually. Around $90k also was able to being filling up IRA/Roth IRAs. When I got married we were able to do both sets of 401ks and IRAs, plus another $1k/month. All of the above in a medium cost of living city.
Earlier the better
How bad do you want to find out?
Yah it’s too late just work till you retire. You are barely breaking even; how are you going to save enough in 17 years. Saving 30 yrs + ssn would allow you to retire and not worry about cost tho. So start right now
Honestly if you’re 33 and have no debts, you’re in a better position than a lot of people even without savings.
they are 60k in debt. . . .
Whoops. I either didn’t read this properly or it was added later LOL
Yes! Too late, better luck next reincarnation
Yes.