Retire At 30

[Mean Mr. Mustard]

Originally Posted by CaptainYooh

This should be a pretty easy calculation. Think of a realistic amount you need to sustain your desired retirement lifestyle. For argument sake, let's use $10,000 per month, after tax or $14,000 before tax. Multiply it by 12 months = $168,000. This is what you need to receive annually for the rest of your life. Then, make some reasonable assumption about interest rate you can safely count on from a good income-producing security of some kind (REIT, bond, income properties etc.). Again, for this example, let's use 5% return. Capitalize your desired pre-tax income: $168,000/0.05 = $3,360,000. This is what you need to have invested as a nest egg to assure $14,000 income for the rest of your life assuming that your investment safely delivers 5% return. The moment you have that amount (or equivalent) in the bank – call it quits and go fishing.

What the heck are you planning on doing when you are retired that it will cost you 120,000 per year? You are saying that you will need to save over three million dollars, for the average family in Calgary, that would involve saving all of their money for the next 35 years.... before taxes. Such a ridiculous number to use.

Also, how boring would life be having retired at 30 years of age?

[chemgear]

Originally Posted by Mean Mr. Mustard

Also, how boring would life be having retired at 30 years of age?

Are you kidding? It would not be boring at all!

[polak]

Originally Posted by chemgear

Are you kidding? It would not be boring at all!

Only if you had the 14,000 a month to live off.

Being 30 and living off 3 grand a month, while doable, would probably get tiring quite quickly as you wouldn't be able to go travel and do whatever you want. You'd still have to budget like a normal person but you would have a lot more free time at home.... which eventually you would probably spend working to some capacity.

[Slava]

Originally Posted by Mean Mr. Mustard

What the heck are you planning on doing when you are retired that it will cost you 120,000 per year? You are saying that you will need to save over three million dollars, for the average family in Calgary, that would involve saving all of their money for the next 35 years.... before taxes. Such a ridiculous number to use.

Also, how boring would life be having retired at 30 years of age?

Depends on when you are planning to retire. If its in say 30 years then with inflation that figure doesn't look quite as crazy.

[CaptainYooh]

Originally Posted by Mean Mr. Mustard

What the heck are you planning on doing when you are retired that it will cost you 120,000 per year? You are saying that you will need to save over three million dollars, for the average family in Calgary, that would involve saving all of their money for the next 35 years.... before taxes. Such a ridiculous number to use....

You may start by investing in your reading comprehension.

I used the $10,000 after tax number as an easy example and suggested that people should use their own income number they are comfortable with.

Now, to how ridiculous it really is, I don't know. If we have to start paying more taxes (which it looks like we will soon), paying more for health care (which it looks like we will) and receiving little or no CPP in a decade or two (which it looks like we will), then my $10,000 after-tax number may be too small, actually.

[flamefan74]

Originally Posted by darklord700

Year 1 Salary 58K Stash 5K
Year 2 Salary 58K Stash 18K (23K)
Year 3 Salary 67K Stash 44K (67K)
Year 4 Salary 127K Stash 83K (150K) – Girlfriend started working
Year 5 Salary 160K Stash 100K (250K)
Year 6 Salary 165K Stash 115K (365K)
Year 7 Salary 165K Stash 125K (490K)
Year 8 Salary 195K Stash 110K (600K) – Works 4 day week (20% paycut)
Year 9 Salary 110K Stash 120K (720K) – Quit Full Time Work

I organized Mr. Moushtash's timeline a bit above. The stash numbers I supposed are portfolio growth plus savings and the numbers in brackets are cumulative networth.

Say for year 3, salary was 67K before tax but savings and growth (based on a 23K portfolio) amounted to 44K. I find it these numbers hard to reconcile or duplicate.

I think milliondollarjourney a better guidline as the author detailes the savings and investment strategy every month.

I have the same issue with the numbers. It gets better if he was investing the money in Canada. He was being paid in USD, but the exchange rate during the late 90's/early 2000's was 40%+. Not sure if he could do that, but its a thought.

[CliffFletcher]

Originally Posted by polak

Being 30 and living off 3 grand a month, while doable, would probably get tiring quite quickly as you wouldn't be able to go travel and do whatever you want. You'd still have to budget like a normal person but you would have a lot more free time at home.... which eventually you would probably spend working to some capacity.

The average Canadian 30-year-old doesn't make much more than $3 thousand a month.

[Mean Mr. Mustard]

Originally Posted by CaptainYooh

You may start by investing in your reading comprehension.

I used the $10,000 after tax number as an easy example and suggested that people should use their own income number they are comfortable with.

Now, to how ridiculous it really is, I don't know. If we have to start paying more taxes (which it looks like we will soon), paying more for health care (which it looks like we will) and receiving little or no CPP in a decade or two (which it looks like we will), then my $10,000 after-tax number may be too small, actually.

The 10,000 is really extravagantly high though, all things considered, especially since in order to retire, one should have their house paid off and be clear of any significant debts.

If people are planning on jet setting during their retirement and travelling the world then the $10,000 would be accurate, however most people when they retire consolidate, travel less and require less living space, instead occupying their time with people, not things that matter to them. Granted this is based off the traditional model of people who retire when they are in their mid 60s.

I think that as it currently stands the 120,000 per year of retirement is an egregiously high number that makes any retirement seem impossible for 95% of the population, if not more... I would actually find it difficult to spend 120,000 per year at the current time and I am 30. Granted I also don't currently have children, so that changes the equation quite a bit

[Mean Mr. Mustard]

Originally Posted by chemgear

Are you kidding? It would not be boring at all!

I enjoy going to work, finding the challenges, using my brain, advancing my skill set, interacting with people. It isn't just a means of earning another dollar in order to eventually retire. There are obviously challenging days and stress, but I would feel much more content at work than I would sitting around the house playing video games all day or whatever it is that people at 30 would do if they retired now.

[polak]

Originally Posted by CliffFletcher

The average Canadian 30-year-old doesn't make much more than $3 thousand a month.

Exactly. The average 30 year olds life minus work would be pretty boring if they couldn't spend any more money to fill that time.

[I_H8_Crawford]

Originally Posted by Mean Mr. Mustard

What the heck are you planning on doing when you are retired that it will cost you 120,000 per year? You are saying that you will need to save over three million dollars, for the average family in Calgary, that would involve saving all of their money for the next 35 years.... before taxes. Such a ridiculous number to use.

Also, how boring would life be having retired at 30 years of age?

Don't discount the magic of compound interest as well though.

If you manage to get $1 Million in investments, and assume even a 5% return/year, that is an extra $50K you are tossing back into your investments on top of whatever you throw in from your salary/income (and if the return is coming in the form of dividends for instance, you are paying significantly less tax on it too!).

I've heard the saying that the first million is by far the hardest, and I understand that now that I am trying to save up to that number. 5% on $50K isn't much. 5% on $100K... better. 5% on $500K and now you are starting to get a 2nd (3rd if you have a working spouse) income.... and it all keeps adding up for you

[blueski]

Surprised that nobody has mentioned ERE (Early Retirement Extreme). Claims to be possible in five years. Here's the gyst of it:

"Financial Independence through significantly Living Below Your Means (LBYM)
This is a key part of a web approach. Implementing ERE can lead to a significant reduction in living expenses. Combined with a median income, this results in a high savings rate. Since expenses have been reduced, financial independence is achieved in 5-10 years depending on income and expenses. ERE uses conventional retirement planning calculations except that typical savings rates are greater than 60%, compared with the normally-recommended consumer savings rate of 10-20%.

Every part of one's lifestyle can be analyzed this way, but the most substantial gains come from optimizing the top three most expensive parts of the budget (see Pareto principle). These are usually housing, food, and transportation. Rather than buying these items separately, they should be selected as a holistic shelter-food-transport system.

A typical, systems-based solution would be a small apartment or cash-bought house
within walking distance of a market that sells healthful bulk ingredients
and within walking distance of work and other amenities"
http://earlyretirementextreme.com/wi...What_is_ERE%3F

"In a home I need walls, roof, windows, and a door that can be opened and closed. I also need a place to cook, a place to eat, a place to sleep, a place for a guest, and a place to write. More space is not better. More space means a bigger house. A bigger house means more hassle, more maintenance, more work to pay for rent, mortgage, taxes, and less time for living. More space also attracts more stuff which eventually means less space. The amount of actual space in a room depends more on personal tolerance for clutter than anything else. Some things make life easier, but more things do not make life more easy. More things mean more things that can break down and more time spent fixing or replacing them. Comfort is freedom and independence. Comfort is having the sweat glands and metabolic tolerance to deal with heat and cold. It is not central heating or air conditioning which may fail or be unavailable. It is not plushy seats but a healthy back. Luxury is not expensive things. It is a healthy and capable body that moves with ease with no restraints because something is too heavy, too far, too hard, or too much. It is a content and capable mind that can think critically, solve problems, and form opinions of its own.

Success is having everything you need and doing everything you want. It is not doing everything you need to have everything you want. If so then you do not own your things, instead your things own you. I do not need to own a particular kind of vehicle. I need to go from A to B. I do not need fancy steak dinners, rare ingredients, or someone else to prepare my meals whether it is a pizza parlor, a chef, or an industrial food preprocessor. I need food to live. Food to fuel my body and brain. Luxury is not eating at 5 five star restaurants. Luxury is being able to appreciate any food. Comfort is eating the right kind and the right amount of food. Not whatever I want. Eating and moving right prevents diseases, pains, and lack of functionality. I am what I eat and I look what I do. Everybody is. It is the physiological equivalent of integrity. To say what I mean and mean what I say. This too makes life more comfortable. Money is opportunity. Opportunity is power. Power is freedom. And freedom means responsibility. Without responsibility, eventually there is no freedom, no power, no opportunities, and no money. More importantly, freedom is more than power. Power is more than opportunity. Opportunity is more than money. And money is more than something that just buys stuff. It is simple to understand but hard to remember, but do remember this if nothing else."
http://earlyretirementextreme.com/

Definately a mind shift.

Great thread so far. I think it helps to define retirement as "Now I can do whatever I want" keep working, return to school and choose an entirely different vocation, volunteer, pursue hobbies, and so on, rather than, "I have enough money to never work again". More technically, it might be your investment nest egg now generates enough money per month to pay your current monthly expenses.

Wish I had read about ERE this in my twenties. Five years of extreme sacrifice at that age would not have changed my life at all except for the better. Even if I didn't fully go for it, it would have helped me pick a better career, home, vehicular choice(s) and hobbies. Could have retired after fifteen.

[troutman]

http://articles.mercola.com/sites/ar...etirement.aspx

Retirement Boosts Your Risk of Depression by 40 Percent

According to a new report released by the Institute of Economic Affairs (IEA),1 following an initial boost in health, retirement increases your risk of clinical depression by 40 percent while raising your chances of being diagnosed with a physical condition by 60 percent. It also:

• Reduces your likelihood of being in self-reported excellent or very good health by 40 percent
• Raises your risk of taking medication for a diagnosed physical condition by 60 percent

The study’s author, who called retirement’s impacts on health “drastic,” suggested a later retirement age may actually be preferable, noting: 2

“New research presented in this paper indicates that being retired decreases physical, mental and self-assessed health. The adverse effects increase as the number of years spent in retirement increases.”

[Street Pharmacist]

You just quoted Mercola. You should feel shame

[troutman]

Originally Posted by Street Pharmacist

You just quoted Mercola. You should feel shame

What is a Mercola? . . .

Ah, I see, an alt-med guy.

Is there more reliable evidence that retirement has negative impacts on health? Just grabbed the first one I saw.

[blueski]

Originally Posted by troutman

http://articles.mercola.com/sites/ar...etirement.aspx

Retirement Boosts Your Risk of Depression by 40 Percent

According to a new report released by the Institute of Economic Affairs (IEA),1 following an initial boost in health, retirement increases your risk of clinical depression by 40 percent while raising your chances of being diagnosed with a physical condition by 60 percent. It also:

• Reduces your likelihood of being in self-reported excellent or very good health by 40 percent
• Raises your risk of taking medication for a diagnosed physical condition by 60 percent

The study’s author, who called retirement’s impacts on health “drastic,” suggested a later retirement age may actually be preferable, noting: 2

“New research presented in this paper indicates that being retired decreases physical, mental and self-assessed health. The adverse effects increase as the number of years spent in retirement increases.”

This is the kind of retirement where you do a full stop and then live a life without any further purpose or pursuit of anything in a passionate way. I think those striving to retire in their thirties or forties won't be part of the stats you are quoting.

[troutman]

Originally Posted by blueski

This is the kind of retirement where you do a full stop and then live a life without any further purpose or pursuit of anything in a passionate way. I think those striving to retire in their thirties or forties won't be part of the stats you are quoting.

Probably - I'm not being completely serious. I do wonder what effects early retirement has on mental health (compared to normal retirement).

[Ozy_Flame]

Originally Posted by blueski

This is the kind of retirement where you do a full stop and then live a life without any further purpose or pursuit of anything in a passionate way. I think those striving to retire in their thirties or forties won't be part of the stats you are quoting.

See, this is the issue. If you "retire" in your 30s and 40s, what are you essentially retiring from? The ability to pay for yourself without a job? That's not the classic definition of retirement then, it just means you've reached a point where money isn't on your most critical of needs anymore.

[Street Pharmacist]

Dr Joseph Mercola, D.O., who practices in Schaumburg, Illinois, also operates one of the Internet's largest and most trafficked health information sites. In 2012, Mercola stated that his site had over 300,000 pages and is visited by "millions of people each day" and that his electronic newsletter has close 1,500,000 subscribers [1]. The site vigorously promotes and sells dietary supplements, many of which bear his name.

In 2011, Mercola announced the formation of Health Liberty, a nonprofit coalition whose goals include promoting organic foods and targeting fluoridation, vaccination, genetically modified foods, and the use of amalgam fillings [12]. In a video accompanying the announcement, Mercola stated that he planned to donate $1 million to catalyze the project. In addition to Mercola.com, The coalition members are:
National Vaccine Information Center (NVIC), which understates the benefits and exaggerates the risks of vaccination
Fluoride Action Network (FAN), the leading promoter of misinformation about fluoridation
Institute for Responsible Technology, which understates the benefits and exaggerates the risks of genetically modification of foods
Consumers for Dental Choice, which vigorously attacks amalgam use with misinformation, propaganda, lobbying, and lawsuits
Organic Consumers Association, which irresponsibly promotes unpasteurized milk and spreads false alarms about food irradiation, agricultural biotechnology, and vaccines.

http://www.quackwatch.com/11Ind/mercola.html


He believes AIDS is not caused by HIV virus, but by media driven fear of it...

[ernie]

So he retired at 30, except for he didn't.

All he did was change his career to something he doesn't consider work and cut his expenses. Really what that says to me is that he was in the wrong profession to begin with. Many people are not. I love my job.

That's fine of course but it isn't retiring.