How this 23 year old is saving to retire at 40.

[msmerymac]

www.businessinsider.com/exactly-how-this-23-year-old-is-saving-to-retire-at-40-2015-3

@shoegal!

Basically he is planning to save $900k in both tax advantaged vehicles and invest outside of retirement fund (to gain access at age 40). Similar to MMM, I suppose, although this guy says he is not as extreme, and admits he wants to be "financially independent" to work on what he wants to work on at that time. 

Nothing earth shattering, I just thought anyone on the early retirement track or MMM fans would enjoy it.

[v]

This is from Business Insider, so I can't say I'm surprised about the lack of real content here but -- what part of this is worthy of profiling him? He's doing well for his age, sure, but it doesn't seem like he's doing anything all that interesting. Except for calling saving $900,000 by age 40 enough to "retire" on. (Note: I hope that's $900,000 in today's dollars?)

[thefield]

How much money does he make?

While I'm all for saving early and taking advantage of compound interest, this doesn't sound like a very fun way to spend your 20's and 30's.

[hamster]

I made $12 an hour at 23.... All I could afford was $50 in my IRA....

[panicked]

Mar 4, 2015 15:45:14 GMT -5 hamster said:

I made $12 an hour at 23.... All I could afford was $50 in my IRA....

You had an IRA, which puts you well ahead of me at that age.

[msmerymac]

Mar 4, 2015 15:24:14 GMT -5 thefield said:

How much money does he make?

While I'm all for saving early and taking advantage of compound interest, this doesn't sound like a very fun way to spend your 20's and 30's.

It says he's trying to build his business to make $90k per year. He's saving $25k per year into retirement investments. 

So after taxes and retirement, he's probably living on $40k/year. 4% of $900k is $36k. 

No, it's not fun. It wouldn't be my choice. But it's feasible, especially if he's never adapted to spending like he has a higher income. 

And he admits to having some splurges, unlike MMM and his olive oil diet.

[sicilygirl]

He's the co-host of a podcast that I heard about on here and listen to sometimes called "Listen, Money Matters." I actually just listened to their episode about this last night on my way home from work. He seems like a nice enough guy, but they give terrible advice pretty regularly. The last time I listened, they were actually discussing early retirement in general, and the other co-host suggested that the best way to do this was to take out a 401(k) loan and borrow on a margin account from your IRA. Obviously, neither of those options make any sense at all...

Both guys admit they're not experts in personal finance, but they sure do give out advice anyway. I also heard a tax episode a little while back when they had a supposed tax "expert" on the show, and I was just left scratching my head at most of his information. It was either super basic stuff or just flat out wrong.

[thefield]

"Trying to build business to make $90k/year" doesn't sound to me like he's actually making $90k/year yet.

[tacosforlife]

I really hate articles like this. I'm sure part of it is jealousy, but seriously, it's just not realistic for most people. Who the fuck can save $25,000 per year at age 23? Fuck that guy.

#bitterbetty

[sicilygirl]

Mar 4, 2015 16:15:25 GMT -5 thefield said:

"Trying to build business to make $90k/year" doesn't sound to me like he's actually making $90k/year yet.

I'm pretty sure he said he makes between $4,900 and $8,500 per month from his website.  But that's gross, and he has business expenses to cover and also has to pay SE tax.

[thefield]

Thanks for the clarification, sicilygirl. The radio show sounds like it would be fun to listen to. Hopefully not too many people are actually following their advice.

[Deleted]

This guy is a slack ass.

H and I joke that if we understood the concept of early retirement in our 20s we would already be retired. /tosses hair

Seriously, I do like that this type of stuff is "getting out there," since the idea of leaving traditional work early due to financial independence is something that I personally only thought the über rich could do. I just assumed (always dangerous) that everyone "had" to work until they were in their late 50s / early 60s....or longer. Unless they won the lotto or had inheritances flying at them or SOMETHING.

It makes me happy to hear the gospel of financial independence being shared!!!!!!

[AAM2012]

Well yeah shoegirl if I knew what I knew now at 20 then I would be rich too!

But seriously I remember when I got my first "real" job at 21 and my dad repeatedly told me to save for retirement and I even shadowed with a fellow employee who told me the same thing. I have been saving for retirement since day 1 and have gotten between 6-10% match and I still feel like there is no way I could retire early. But my income wasn't $90k in my early 20's so obviously that makes a big difference...oh and the fact that I'm not willing to eat beans and rice for dinner every night.

I'm not seeing why this person was chosen for the article other than to make him more money via his blog/podcast. He looks like a wannabe MMM Jr.

[v]

Mar 4, 2015 18:26:32 GMT -5 @shoegal said:

This guy is a slack ass.

H and I joke that if we understood the concept of early retirement in our 20s we would already be retired. /tosses hair

Seriously, I do like that this type of stuff is "getting out there," since the idea of leaving traditional work early due to financial independence is something that I personally only thought the über rich could do. I just assumed (always dangerous) that everyone "had" to work until they were in their late 50s / early 60s....or longer. Unless they won the lotto or had inheritances flying at them or SOMETHING.

It makes me happy to hear the gospel of financial independence being shared!!!!!!

I actually think it is a dangerous gospel in many people's hands. It would be easy to be fucked over by parents who need help, long-term care needs, paying for kids' educations/weddings/etc., an ill-timed recession, etc. There are a lot of ways that retiring at age 40 because you have $900k in the bank can backfire. Particularly if you don't have the substantial blog income that there people do.

It will work great for some people, but will be a disaster for others.

[Deleted]

Mar 5, 2015 9:01:57 GMT -5 v said:

Mar 4, 2015 18:26:32 GMT -5 @shoegal said:

This guy is a slack ass.

H and I joke that if we understood the concept of early retirement in our 20s we would already be retired. /tosses hair

Seriously, I do like that this type of stuff is "getting out there," since the idea of leaving traditional work early due to financial independence is something that I personally only thought the über rich could do. I just assumed (always dangerous) that everyone "had" to work until they were in their late 50s / early 60s....or longer. Unless they won the lotto or had inheritances flying at them or SOMETHING.

It makes me happy to hear the gospel of financial independence being shared!!!!!!

I actually think it is a dangerous gospel in many people's hands. It would be easy to be fucked over by parents who need help, long-term care needs, paying for kids' educations/weddings/etc., an ill-timed recession, etc. There are a lot of ways that retiring at age 40 because you have $900k in the bank can backfire. Particularly if you don't have the substantial blog income that there people do.

It will work great for some people, but will be a disaster for others.

That is relevant for ANY financial plan though. Life can take any turn it might, and all we can do is set the goals that are right for us and work towards them.

I see far more dangerous approaches to finance in the "average saver"... Someone with 900k saved is not going broke overnight. I clearly have a different take on this philosophy, though.

[v]

Mar 5, 2015 10:26:06 GMT -5 @littlemoxie said:

Mar 4, 2015 16:19:38 GMT -5 tacosforlife said:

I really hate articles like this. I'm sure part of it is jealousy, but seriously, it's just not realistic for most people. Who the fuck can save $25,000 per year at age 23? Fuck that guy.

#bitterbetty

What happens when he needs to spend some of that money on the wedding?  Or his girlfriend will be totally OK with a JOP?  Or if they have kids that require a bit more care?  

Quite frankly, I can't imagine anything happening that would make me want to take back all the experiences and traveling I did in my 20s, just so I can switch jobs at 40 (which is what he wants to do, not really "retire").

But I don't get early retirement, so maybe this is just not my cup of tea.  I like working and I like what I do and I want to climb the ladder and then stay there and enjoy it for a while.  I'd be bored if I retired (unless I had 15 million or something crazy so that I could basically do all the expensive things for 30+ years without worrying, plus funding my kids colleges).  I also like doing enjoyable things (within reason) now.  I mean, sure we could save more if we never traveled, but why put that off?  I promise you I was better off going to Macchu Picchu at 26 than all the 60+ year olds there that could barely walk up the stairs.  No matter how great of shape you're in, the body deteriorates.

Let's be honest though -- 900,000 at the 4% safe withdrawal rate gives him $36,000 a year to live on.  He may not be going to Macchu Picchu at 26, but he probably isn't going at 60 either.

Hey, different strokes for different folks.  I do wonder how his wants and needs will change as he makes his way into adulthood. Which is why I don't particularly care to listen to advice from a 23 year old about things like this.

[nessness]

Mar 4, 2015 16:19:38 GMT -5 tacosforlife said:

I really hate articles like this. I'm sure part of it is jealousy, but seriously, it's just not realistic for most people. Who the fuck can save $25,000 per year at age 23? Fuck that guy.

#bitterbetty

I was making $26k per year at 23. So...not me.

[audette]

Mar 5, 2015 10:59:25 GMT -5 v said:

Mar 5, 2015 10:26:06 GMT -5 @littlemoxie said:

What happens when he needs to spend some of that money on the wedding?  Or his girlfriend will be totally OK with a JOP?  Or if they have kids that require a bit more care?  

Quite frankly, I can't imagine anything happening that would make me want to take back all the experiences and traveling I did in my 20s, just so I can switch jobs at 40 (which is what he wants to do, not really "retire").

But I don't get early retirement, so maybe this is just not my cup of tea.  I like working and I like what I do and I want to climb the ladder and then stay there and enjoy it for a while.  I'd be bored if I retired (unless I had 15 million or something crazy so that I could basically do all the expensive things for 30+ years without worrying, plus funding my kids colleges).  I also like doing enjoyable things (within reason) now.  I mean, sure we could save more if we never traveled, but why put that off?  I promise you I was better off going to Macchu Picchu at 26 than all the 60+ year olds there that could barely walk up the stairs.  No matter how great of shape you're in, the body deteriorates.

Let's be honest though -- 900,000 at the 4% safe withdrawal rate gives him $36,000 a year to live on.  He may not be going to Macchu Picchu at 26, but he probably isn't going at 60 either.

Hey, different strokes for different folks.  I do wonder how his wants and needs will change as he makes his way into adulthood. Which is why I don't particularly care to listen to advice from a 23 year old about things like this.

Well, he calls it "financial independence", so I'm not sure his plan is to live on just the $36k.  DH and I save money outside of retirement with the thinking that it would give us the option of downshifting our careers and earning less without it being disastrous for our household.  Maybe one of us will go back to school, or one of us will decide to follow a dream and end up in a very poorly paying field, or whatever else...  If we have investments that would get us $36k/year, and could then follow some dream job that would earn $15-25k/year, suddenly, that dream job is an option we can consider, because we would be living on more than just that dream job's income.

[h]

Mar 5, 2015 11:24:10 GMT -5 milsaroo said:

Mar 5, 2015 11:14:23 GMT -5 audette said:

Well, he calls it "financial independence", so I'm not sure his plan is to live on just the $36k. 

This is the take I got on it as well.

So he wants to be wealthy by 40? Awesome. Who doesn't? I can't imagine he will actually retire on that, though, and he already runs his own company and blogs for a living, so it is not like he's working for the man now. I am curious about what will change if he turns 40.

I also wonder if he plans to have kids. Because talk about throwing a wrench into plans like this.

[v]

Mar 5, 2015 11:28:28 GMT -5 h said:

Mar 5, 2015 11:24:10 GMT -5 milsaroo said:

This is the take I got on it as well.

So he wants to be wealthy by 40? Awesome. Who doesn't? I can't imagine he will actually retire on that, though, and he already runs his own company and blogs for a living, so it is not like he's working for the man now. I am curious about what will change if he turns 40.

I also wonder if he plans to have kids. Because talk about throwing a wrench into plans like this.

Yup -- he wants kids.  But he has a plan for everything!

For example, he contemplates not only having children to support someday, but other scenarios, such as caring for elderly parents or not being able to work.

"I want to be like Batman. He's got a plan for everything," Frank says.

I do wonder how his girlfriend's income factors into this.  He says he plans to marry her, so if she's in a position that she'll earn a lot of money, that would certainly make his plan more feasible.  If not... 

[BeagleMama]

I'm glad to see this 23 year old knows that the next 17 years are going to go as he has planned.

[h]

Mar 5, 2015 11:34:35 GMT -5 v said:

Mar 5, 2015 11:28:28 GMT -5 h said:

So he wants to be wealthy by 40? Awesome. Who doesn't? I can't imagine he will actually retire on that, though, and he already runs his own company and blogs for a living, so it is not like he's working for the man now. I am curious about what will change if he turns 40.

I also wonder if he plans to have kids. Because talk about throwing a wrench into plans like this.

Yup -- he wants kids.  But he has a plan for everything!

For example, he contemplates not only having children to support someday, but other scenarios, such as caring for elderly parents or not being able to work.

"I want to be like Batman. He's got a plan for everything," Frank says.

I do wonder how his girlfriend's income factors into this.  He says he plans to marry her, so if she's in a position that she'll earn a lot of money, that would certainly make his plan more feasible.  If not... 

Batman is an eccentric billionaire. A 40 year old with $900k with which he plans to support himself, his children, and his aging parents is nothing like Batman.

This guy better be marrying well.

[h]

Mar 5, 2015 12:13:56 GMT -5 milsaroo said:

lol @ h trying to tell someone they cannot be Batman.

Well he can't. . But I don't think he even wants to be. He doesn't want to be a rich dude with a bunch of cool toys. Quite the opposite--he wants to live a relatively spartan existence, have his own money but not too much, and be prepared to take care of his own. It sounds to me like what he really wants is to be Jim Bob Duggar minus all the kids, which is decidedly less cool than being Batman.