How To Retire Early - Our Plan For Financial Independence
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- čas přidán 27. 01. 2014
- Want to know why we do the things we do? Our goal is retire extremely early by saving 75% of our income. If you're interested in financial independence definitely check out Mr. Money Mustache (link below).
You don't need a high income to retire early. But, you are going to need to give up a lot of "things" for financial freedom. Some people think living without luxury isn't living, we think living without time isn't living. We just want people to know they're making a choice.
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There’s no excuse to not build wealth, there’s so much opportunities to earn money these days.
The best way to earn money is by crypto trading, it will amaze you to see how much these traders make daily with just little effort.
@@henryjones6303 I won’t call it little effort, the research and analysis that goes into it is really active.
The profits is fantastic but it don’t come easily, I currently earned over $150 trade profit daily, I’m still an amateur compared to what most professional make in minutes. Trading can be quite lucrative when done with the right skills.
@@aureliocantos8466 I totally agree with you bud, it’s one reason I opted for an expert Frost Hilda who’s been handling my trades for a while now, and the profits are mind blowing, if I had know how easy it is to double thousands of dollars in minutes trading crypto then I won’t have to go through so much in life.
I’ve always been a holder, I don’t actively trade daily, I can’t handle the risks.
This video introduced me to FI and started my entire journey.. Today, I'm sitting 20 months away from retiring at age 35.
That's amazing, congratulations!
less than a year left!
How’s that journey going with the latest Covid environment?
@@FilamentFriday it postponed my journey by at least 1.5 years. This post is kinda old, I moved away from index ETFs and into fixed income / real estate
@@gersonadr2 im 4 years away from retiring at 2024 at age 40 with around 1 mil (considering 10% market return), will check back later to see if i really did lol
"To have the freedom to do what you want", that's the key away for me here. Exploring possibilities and working on projects need this freedom. Thanks guys.
Isn't it weird when you get people's reactions. They think you're crazy when you say you're going to retire at 30-35. I am with you guys 100%. I am 24 and want to build up an empire of something, by the time I'm 30. I am not waiting on my social security for when I'm 65-70..
It's ridiculous to retire when you have only 15 yrs left.
*****
Oh awesome! Nice to see that My generation does think about stuff like this!. I've been looking into Passive Income (making your money work for you) versus Active income (9-5 job).
The same mantra I have been finding with my research is always live well below your means. If you make 4k per month, live on 2k.. also live debt free. There's this really good video on Dave Ramsey's page about buying a car cash throughout your lifetime. It's REALLY good!..
haha sorry for the long post, but this topic really interest me :p
+Grace Faith SO few people live by this, but also there are SO few people who are debt free and worry free, keep it up, it WILL pay off. I tell my friends all the time, save, learn about passive income, learn how to invest, because in 25 years time, the world will have changed so much, the cost of living will continue to rise and wages wont keep up with them, of course my friends don't listen, at all, but, it makes me happy to know that me and my partner will be able to relax in our 30s and not worry about when the next paycheck will come in. Keep up the good work and dont ever lose sight of your goals !
Whoever invented the retire old system was not thinking of the worker obviously.
Recently I got into the youtube financial niche, and I’ve taken a deep dive into investing, particularly dividend growth investment as it interests me. Tried several methods trying to figure out the best approach to building my portfolio. So far, I’m making progress with the help of my financial advisor. Back to the video, wonderful job there, always look forward to your next content.
It’s almost the same situation here. The difference is that I got off early enough to know that financial planning would help me go a long way. I’m in my 60’s and reaping off my hardwork.
Came across Alec Payden at an investment webinar. You can get all the information you need, just leave him a message if you have inquiries Alecpayden (a) g ma il. Com....you can look him up if you like.
I don’t make that much, but I sure do make enough. However, it will not be a bad idea to hear from a professional.
Great advice! Loved everything about this video. Thanks for sharing guys.
Seriously first financial channel I ever watch got me into FIRE. Now I watch y’all’s old videos just to get motivates again.
I watched you guys all those years ago because of the travel that you did. Then stuck around because of the financials. You two were my first exposure to FI and at the time time did not really understand it all that much but everything you had to say resonated with me. Thanks again starting me on a path towards FI and ultimately Freedom.
So glad I'm not the only person who thinks this way about saving.
Great to see another joined the movement and is succeeding!
I really enjoyed watching this video. Excellent presentation of why it all boils down to savings rate and personal choices!
I love finance videos. They motivate me so much. I hope that everybody succeeds in their goals.
It suddenly makes sense! Thank you, and good luck!
Thanks y'all for sharing your journey with us!
Beautifully said guys, we are on team with the time/money thing. Great!
You guys are GREAT. Thanks for inspiring us!
God bless!
Interesting video, looking forward to seeing more!
the making an 18650 battery video brought me to your channel, the debit card and credit card videos were super thought provoking! the video about making the breakfast sandwich reminded me to cook at home, and this is the video that convinced me to subscribe you channel! I love this video and keep making more!
+Wayne Wood Awesome! It's always interesting to hear how people find us.
You guys seems to be having fun. Keep up the good work
Los Admiramos Mucho Chicos! Desde Hace 3 años los seguimos, y nuestro Goal va en buen Camino, y ahora que mire su video que ya se retiraron me dan mucho mas Animo! 👏👏
this vid was so inspiring thank you ive also been reading mr money mustache lol its doable my husband and I starting planning this we are 24 and we are thinking we may b able to "retire" by 35 with a few rental houses and minimal spending look foward to following you guys!
You inspire us. Good job!
Oh my gosh so glad I found you guys, SUBSCRIBED!
I really enjoyed the video. Your goals are different from my personal retirement goals. (I like my smart phone) but I like how you broke it down so that it could include a lot of different options towards different goals.
landdoom1 Thanks! Glad it was helpful to someone.
Very well put at why you're doing it.
I just watched two of your videos, a saw horse comparison and this one, and loved them both. You have a new subscriber. Keep up the good work!
DURGANBUILT Thanks! Glad to have you along for the ride.
Heh, just like me. :)
Ha! Me three!
Love the channel thank you guys
So glad that you make Tithing and charitable giving a priority. It shows that you are not cheap or stingy, you are good stewards with what you have and content to live within your means so that you may live an abundant life and not be slaves to debt. I am cheering for you.
Lords Knight Thank you for the encouragement!
The only problem with your plan is health care which makes it impossible to live on so little, especially as you get older. Remember, if you run out of money when you're older you may not be able to go back to work to earn more. Other than that, great job! A high rate of savings is cool and it's great that you guys have figured that out relatively young...welcome to the club! Don't forget to look into the awesome tax benefits of a low income/high savings rate like the form 8880 savers credit which can completely wipe out any income tax liability.
Great advice... it is all in the choices you make. Wish info like this and investing by the common person would have more available 30 years ago.
"Out of the Box" thinking... very interesting.
This video has honestly changed my life. I wonder why this video isn't all that popular. Or why haven't I seen a video like this ever in my life.
Unfortunately, I learned these lessons way late and didn't even start saving until my late 30s. Now I'm 47 and almost debt free (within 3 yrs) and I'm currently saving 35% of my income which I'll increase to 60% after my mortgage is paid off. I will retire when I reach my goal of $750k, hopefully by age 55, and spend the rest of my days traveling. I really wish I'd been smarter with money when I was younger and not purchased new cars and such. Most of us think we need that crap and that we have all the time in the world to save when we're older, but I'm here to tell you, time is extremely limited and if you want to spend more of it doing things you enjoy, start saving now. It doesn't matter if you're 22 and fresh out of college or in your 50s, start saving as much of your income as you can afford to right now and increase it every time your pay increases.
Awesome perspective. Cheers
great video!
Smart phones have gotten to the point of near-necessity. I had a blackberry-style phone for years, only upgraded a few months ago. Phone was $200, plan for 1 person is $40/month, 1-time accessories were $30 I think. Smaller house/rent, cutting back on restaurants, and cheaper and fewer car purchases are the real money savers.
excellent video...amazing thinking...got it what actually I want to know.. thanks
I like you guys even though I'm, like your grandpa. You be on the right track and You be good people, yeah!
Great vid! I am 28 and wish I was more intentional about saving when I first started wkrking.
+Nates Homestead Lifestyle Thanks!
+Nates Homestead Lifestyle if that's something you are interested in, the time to start is always today. Doesn't matter how old. Even starting at 10-20% of your income will give you a helping hand later on.
Well put together video....
I am not going to act like I know them to say this is a good plan for them or not. However, this isn't news or surprising. What it comes down to is what they think will achieve maximum happiness and there is a reason why so many people don't do this.
You basically have to believe that the life you living as a minimalist is the best that the life has to offer for you. If you firmly believe this, then go for it. Seeing that they are under 30, I would still suggest them to see what is REALLY out there. If you only had a 'boring' desk job and you think that's what a workplace is, then you either don't believe that you can become someone more successful (even outside of money that you make), or you are lying to yourself thinking that you know what it feels like to work as a difference maker in the company/organization that you are part of.
Unless you made so much money that you have the freedom to travel, learn, make and create as much as you want, there are so much limitation on what you experience as 'freedom' with a budget. I agree you shouldn't trade your time just for sake of working to cover your expenses but the POINT is to have a job where you aren't told what to do all the time. If you are talented, you get to work to travel, learn, make, and create. On top of this, you make more than enough money to cover unexpected cost (injury, accident, etc), not waste time on small details, be able to give back to community, take risks, and trade money to save time. I'd say reach that level of success where you can dictate what you do at your work and what you do outside of work first. If you've never experienced this, then you really are missing out on what life has to offer for you in terms of maximum happiness.
The amount of excuses in the comment section are laughable. this all CAN be done, if you WANT it to be done, its a lot easier to complain and say that someone is wrong because you dont want to put any of this into practice. Not to mention that most people, drink, party, smoke, buy things they dont need, have cars they dont need instead of taking public transport, pay for cable, have an unlimited data plan on their phone, go clothes shopping when they dont need it, buy new shoes frequently and arent saving anything right now. If you REALLY want something, you'll make sure you acquire it, this is why there are so few people who are rich and/or debt free, and so many people who complain that it isnt possible, simply because they have no interest in putting in the work required.
+TheMatban +1 great comment!
this works well if you don't have kids or major medical expenses
+mac1bc, I easily spend more money on beer than I do my kid; not because I drink a lot of beer, but because raising children is much less expensive than people will have you believe. With the single exception of people who pay for expensive child care, people who complain about the expense of parenting are just doing it wrong.
+Stu A yes child care is one expense, then you have clothes and food items. I'm not saying it's expensive but it is another expense you need to plan for.
Great comment. Excuses are the killers of achieving your goals.
you guys are awesome!!
Youd Thanks!
I wish I'd had this sort of vision to refer to back in the day... I felt like a veritable KING retiring at the age of 54! While I STILL feel like a king (because I'm retired, dontcha know) I don't feel quite as accomplished. I hope you manage to pull this off. I will say this, you do have the right idea when it comes to used things. I would also suggest that buying a car can also provide a way to save money, for instance, twice now I have bought really nice cars that I paid cash for, one I owned for 13 years and it was still a good car when I sold it. Both cars had two things in common they both have salvaged titles AND cost me roughly half of a non repaired car in a comparable condition. With a trusted mechanic to look over a lightly damaged car that has been repaired you can save big money, and if you are handy, and find a lightly damaged car to repair yourself; you can save far more! In my first 20 years of driving and owning a variety of cars I had car loans on three cars, and two motorcycles. In the LAST 20 years of driving I have had zero car loans and two salvaged cars in that time.
I really like your way of thinking.
If you think you can do a thing or think you can't do a thing, you're right. - Henry Ford
Fantastic video! Timely, useful info delivered with candor and wit-- oh yeah. Just subscribed. (it was the *please* that did it. ;-)) You guys are great.
Sustainable135 Thanks! Glad to have you along for the ride :)
If only I could save all the money I send back to my family, I would have probably retired by now:). Anyways, I so agree with your philosophy, "Spend frugally on things I do not care about and extravagantly on things I do care about". In my case, I invest in to my family, quite extravagantly:) pretty much with all my earnings. Being frugal is not difficult when you love some one so deeply:). Investing in human lives equivalent investing in to eternity. Anyways, you do inspire me guys on being even more conscientious about my daily financial choices. Keep up the good work!
That sounds very good and I never thought of it, thanks for the wakeup, now to look into investments and that kind of stuff.
Well done.
Just wanted to let you know that I ended up here from Mathias Wandels channel. Saw one of your comments and thought I would check you out.
Joseph Henry Awesome! Thanks for checking it out.
Awesome, we have so much in common!!!!
Found your channel on a sawhorse comparison video... found this video and you're easily subbed now.
Mistrblank Awesome, thanks!
this is how I found the channel too!
We are a 1% club my guy 9/10 people refuse to save any money at all idk how ppl blow through their paychecks blows my mind but I’m on the same mission but I got a mortgage to pay off still that I’m grinding for keep stacking and chasing them goals 💪
The average premiums for health insurance for a family in 2018 was $1,168.00/month. So don't forget to through THAT in there. This one thing is keeping me from retiring RIGHT NOW. Basically, I am stuck working until I can get medicare...or I need a windfall of about $200K to cover me.
Awesome info, where I'm at, 40 and just retired from military, took a major pay cut but didn't matter because we are debt and mortgage free. Everything has changed since we payed our mortgage off. Mistakes we made: 30 year loan and second, refinanced to a 15 year biweekly. Payed extra $600 month. I got fed up and payed all my savings on house except IRA and six month emergency fund. Since then our savings has grown what seems like exponentially. The bigger take way, we didn't need a 2500 square foot house! Family of four with son who is leaving for collage, (payed for by CA disabled VET program), leaves us with this huge house and three empty rooms full of "stuff/ junk/waste". Now pay cash for everything but the funny thing is we don't need anything. I have never felt more free in my life. Dreaming of selling everything and moving to Uruguay or Ecuador, passports in hand! Make the sacrifices and leave the rat race.
Great video guys, thanks.
This is a great philosophy for building money for retirement and then living by the same frugality. The only other point I would make on this video is that it is based upon a retirement period of 25 years (i.e. spend $25k for 25 years = $625k). Therefore, if you retire after 17 years after spending $25k and saving $25k per year and you started work at 25, then you retire at age 42 and you can live on $25k for 25 years to age 67. Then what do you do when the money runs out and you are still skinny but healthy?
I am just saying that you need to think about it ...
This is Gold. I've only seen two videos from this channel including this one and I love it already. Subscribed!
Nice!
Great video guys. I love this subject matter.
I stumbled upon the early retirement community about a year ago and haven't looked back. I'm currently 30 and plan to retire by 40. Our (me and my pregnant wife) current savings rate is 40% - I'm hoping to get this to 50% by year end and steadily increase it from there.
Good luck with your goal!
Thanks, you too!
Nice video. Good plan! As you're saving up your nest egg (maybe you talk about this in another video), how do you plan to invest the nest egg money to produce ongoing income?
Hey Mike and Lauren, I like your videos editing. Which softwares are you guys using?
30th? damn i thought i was crazy for having my house paid off for by 30....
They missed the boat and will return to work later in life
Heather Malakas only if they want to. Some people do get bored. My grandfather can't stand being retired so he "works" full time housesitting for my uncle and caring for my cousins. If they get bored they have the freedom to do little gigs and stuff. They have the freedom to travel which most people will never have because they live of social security.
This was great, I have been researching "your path to financial freedom" for a while now, and I think this has helped. Ever heard of - Ferapt Freedom Fanboy - (do a google search ) ? Ive heard some interesting things about it and my brother in law got great results with it.
inspiring
EXACTLY!!!!!!!!!!!!!!!!!!
I was about to call BS on this vid when they cited the $1.125 million requirement. But their point was to debunk it. BRAVO.
I know for a fact I don't need that much. MY BILLS happen to be all paid off. My utilities amount to only $1000 PER MONTH. $250 play money is included in that.
I don't need $1.2 million.
this is my goal in life, and my motto is "Live, don't survive"
great video, thank you for sharing, you guys have great channel. I just wanted to add that people need to include taxes in their calculations. Example with $50k income. I live in Brooklyn NY, so total income tax will be $11,968(smartasset.com), so after taxes you have $38,032.00 in your pocket, if you chose to save $5K, then you have $33,032 left to spend, some of these spendings will be work related (lunch, clothes, commute etc.), so let's say you will need only $30k. Because if you will get you income from Index funds(dividends or capital gains) or some other passive sources, your taxes will be way lower than W2 taxes.So income tax could be zero or very low, so you would not need to replace $45K, because 26% of that amount goes to taxes anyways, you would need something like $30k-$35k to maintain the same life style. That way you can get to FI way faster, just based on your income tax.
I also think it might be easier to make more money than save more, if you income is on a lower side. You can invest in the market and also in yourself (books, courses, seminars etc). It's nice if you can save $20 a month by using a dumb phone, but you can learn a new skill and get a raise or get a job that pays more, like $10K or $20K a year in extra income can make process easier and you can keep your smart phone :). I prefer to focus on how to make more money: side hustles, online business, investments and biggest expenses first -taxes, rent, eating out/lunch, transportation etc. Just calculate your annual expenses by a category and start with the highest.
Mike and Lauren thank you for your work and positive energy, it's pretty cool to see how you guys growing and keep doing fun videos about personal finance.
This just popped up in my feed,l used to follow you two up till about 5 years ago. I was wandering what you have been doing since?
You are a funny and beautiful couple! Good luck! Greetings from Romania!
I admire your savings strategy. I have two questions...1.) do you pay taxes? $50K would require you to pay taxes, wouldn't it? 2.) What about a medical plan/expenses?
Well, I am 15. And people already say I am a nerd. You just made much worse. Oh well. At least I will be able to think about my future now!
Plane crashers o
Go through my saved and created playlists.
I love all of your video's. I was wondering if you could do a video on what types stocks/bonds you invest in. I'm 40 years old and I want to retire in 10 years. I have taking the needed steps to free up $400 bucks a month to invest, however I'm not sure where to put that money. I have a Roth Ira and have some money invested , however I wanted to know where to put it going forward , for greater returns. Thanks
Anna Mals I would recommend mutual funds as opposed to single stock
MnL great vid peppy n cheap two words I love-- But if poss can u talk about the banks to avoid that are set for bail-ins? Just sum comsen stuff about actually keeping the money u save?
great !!!
4296 US Dollars a year is minimum salary in Lithuania. Imagine how mutch time would it take to save some money to retire early, not to mention that all the things seem really expensive here.
+Krawiakin Lietuva! Jo neimanoma butu.. :(
Have you started a college/education fund for Hudson? I'd be interested in your strategy or suggestions for these.
Im putting away 12% of my salary in a 401k. I was thinking this morning in cranking it up to 20 to 22% that way I have less cash to throw away. I am mid 30s and would like to retire sooner. I dont have a pension plan at work but my employeer matchs us 6%. I still have a minute on your video to go but good info.
Lauren, you're an exquisite creature :)
assets! Passive income producing assets! Thats key!!
great stuff. mr money mustache talks about retiring in 7 years if you have a plan. I would personally prefer to invest in a duplex each year to two years, by moving after 12-24 months into the next duplex until i get to 4 duplexes total replacing your 20k-30k income. Also there are some homes in dallas and houston area for 50k that are not war zones and receive 750-800 rent a month.
Our plan is to do a mix of stocks and real estate. Unfortunately we don't have many duplexes here in florida.
How did you guys invest your money? I planning on a Roth IRA account... what are you thoughts? thanks for the video!🙋
Everyone is retired, its just the case that what you do in your life makes you happy.
hell yeah!
Right!?!
These extreme early retirement videos propagated by many assumptions never seem to die.
I'm all for cutting expense and making your financial life more efficient but I think
I need to clarify some of the assumptions behind this math.
During the accumulation phase, it is simply using average returns of the stock market and
average inflation. During distribution it is using the 4% rule.
Average historic return might be around 10% and average inflation might be
around 3%. The combination is about (1.1 / 1.03) = 1.06796 or around 6.8%. Notice that
inflation itself is compounding. Notice there's no tax in this equation. Therefore, even
if the assumption were met during your accumulation phase, unless all of your investments
can produce tax free returns, it will fall short. So tax is the first problem.
Second problem. Average returns may not happen during your accumulation phase.
Goal of getting this done by 30 is a major challenge because the time period is rather short
for most people. A lot of people went through college and many majors end up taking 5 years
instead of 4. You start earning full time income at around 23 so that leaves only about 7
years. There are plenty of 7 year periods which the stock market has not produced negative
returns and many more which the returns were negative after inflation.
The first 2 problems aren't that bad because you can see obviously that the plan failed by the
time you reach 30 so you simply keep working until you hit that magic number of 25 times of
your expense.
Then the plan is to switch to a balance fund of about 50% stocks and 50% bonds. Supposedly
by historic returns after inflation, a person can withdrawal 4% of the balance in the first
year and increase the withdrawal every year by the rate of inflation and the result was that
96% of the time the portfolio lasted _30 years_. Notice that if the first 2 hurdles were met,
and you happily quit at age 30, there's a 4% chance you will run out of money by the time you
are 60. You won't be eligible for social security because of the age and you also may not
have 10 years of work record so you may never get it even at age 70. In fact, you may not even
get medicare at age 65. The 4% chance is based on the past and may not be the case in the future.
Currently, we face extraordinary low interest rate so half of that portfolio is nowhere near
average so there's a pretty good chance the 4% chance is more like 15% chance and maybe
even that is being optimistic. So this problem is way worse than the first 2 problems. When
combined with the fault mentioned in the video of needing to stay within the budget for a
lifetime creates a bigger problem because you may have random setbacks that didn't happen
during your accumulation phase that you didn't expect into the future.
The 4th problem is that every person's inflation rate is different and even varied depending
on what you need to spend money at their life cycle. When you are young, most of the expense
might be for housing and transportation. But as you get older, the health care cost becomes a
much more significant percentage thus your personal inflation rate tends to go up. Another
inflation killer is education expense if you want to help your kids through college. Inflation
rate is not known in advanced and inflation rate for your personal situation often can be
higher than the official numbers.
Thus, there's a need to overshoot the target beyond the 4% rule especially if you are going to
retire well before 30 years prior to your life expectancy. 4% rule was fine for people retiring
about age 60 because people may be dead by 90 or even if they survive it, at least they will have
social security and medicare by then so it isn't a complete loss. If you try this at age 30, you
are asking for trouble. To mitigate the risks somewhat, you need a lot more cash especially to
cover many years in the early retirement. But with CD rates so low, the money required to do that
is huge. There's been times in the stock market which took 15 years to recover after inflation
so imagine having to save 15 years of expense just in CD's and to overcome inflation during those
15 years. Even that's not really guaranteed...it is merely something that has happened in history.
So if 4% rule is ok at age 65 to cover the possibility of living to 95 and even that has a failure
rate of 4%, at age 30, you plan the same way and cover for 65 years of retirement is a totally different
picture. 30 years at 4% withdrawal rate implies 1.22% internal rate of return after inflation.
If you extend it to 65 years, the withdrawal rate drops to 2.237%. You need 44.7 times your expense
to do the same thing at age 30. In other words, you need 1.79 times as you though you needed by
the 4% rule at age 30. Even when returns are higher than this rate, if the returns started off
negative early in retirement, it becomes difficult to recover from even if the average return
were to regress back to the the average of about 4-5%. This is why there's a 4% failure rate at
30 years with the 4% rule. This isn't even accounting for the other issues I already mentioned
such as personal inflation rate and random events in life.
It is NOT as simple as you say. I know of others that have applied this way of living or life style. I'm 35 and retired but if I plan to live pass 75 I need spend as less as possible. your doing the same thing as before you retire, I need to be careful about how much I pend. . Also who says that working is bad for your health. At the end it all comes down to how much $ we make . If you have a high end job that makes good money your going to love it and not even think about retiring at a early age.
Thanks for sharing your journey to early retirement. The videos I watched from you guys are both informative and lively. The logic makes perfect sense. I did some number crunching and in order to make it working close to your plan, I assume you meant three things:
1) the saving % is after tax, not from your gross income.
2) your examples of saving up 50% / 65% / 80% of income to land you in self sustaining retirement fund in 17 / 10.5 / 5.5 years require an investment return ranges from 4.55% - 5.88% but this does not account for annual inflation. So, the said investment return range should be 4.55% - 5.88% above prevalent inflation rate to get a real term investment return. US is in low inflation era now but as inflation climbs, to maintain that return can get challenging.
3) your expenses are real low now but having offsprings can delay your retirement date a little.
Great that you guys are planning to invest in real estate and I hope you guys are keeping some of the future properties as revenue source instead of just flipping them. Revenue properties will boost your current income, provide a long lasting future income and enhance your tax efficiency.
I learn a lot from you guys. See you in your next episode.
Alford Lau Thanks for the comment. To answer your questions:
1. Yes that is after tax saving rate.
2. Good points. I use 7% annual return in all of my calculations. I can't predict the future, so I just use an average of 3% inflation.
3. Yes kids are going to change things, but we also didn't account for any raises or new income streams in our calculations. Real estate is a great example. We could technically be financially independent tomorrow if we found the right deal.
And yes, we plan on keeping our properties as income producing investments. But most importantly we don't plan on "never working again" after retirement. For us retirement is the point at which we can choose when and how much work we want to work.
+Mike and Lauren Why 3% inflation? It is more like 7-10%
How are you calculating "saving x percent of your income"?
For example, my goal is 50%. I calculate that by taking 50% of my weighted average annual gross income (before taxes, excluding bonuses). Then I count saving as any contribution to my 401(k), company match, Roth IRA, and brokerage acct (I exclude HSA contributions).
Some people might be looking at after-tax take-home income, or including house equity into their "savings." Clarity would be appreciated.
This is smart, ur lucky u have eachother cause i would be a paid if one of u guys didnt want to do it
Not bad...I think the music in the background is a bit distracting
What about Health insurance? Did you account for that? Even if you purchase insurance yourself, the premium will keep going up. Most jobs offers health insurance so if you don't work then there goes that option.
You guys remind me of Jim and Pam from The Office.
That might be the nicest compliment we've ever received 😊
You don’t need to sit in a cubicle all day. Bar tending one or two nights a week is a good source of income.
Or driving for Lyft and Uber
This is aweseome! Congrats on your plan.
You are correct with what you've said, but with your calculations if you retire that soon you will have to live the same lifestyle you were living pre-retirement. So basically it is realistic to retire that quickly, but if you do so you will forever be living a "cheap" lifestyle.
If you would like a retirement with an increased lifestyle and not having to live forever with a "dumb phone" then you have to work a little longer. Like you said you will have the choice to keep working and make this happen. This is something very few people ever have the ability to decide.
Good Luck on all your endeavors!
Good job. I have a similar goal but I don't know how to achieve it. Isn't there a penalty for withdrawing from your retirement before a certain age? Was the 20% penalty factored into the withdraw and what is your plan to remain cash flow positive?
You may need to learn about investing and financial markets. In the video they did not mention how to manage the capital sum. if you are truly committed you will do the work required.
I love your message and I am a huge saver but you are not accounting for taxes. The reality is most people are giving 25-35% to the government.
dudes! i'll be following you, and all good mustachians should. But I have a huge question that i haven't been able to answer. How do you get the money that you want to retire early with out of the accounts? is there a special place or method that let's you deposit money into investments, but also withdraw your 4% each year in your 30's without the hefty penalties that an IRA or 401K would? is it just a taxable account? Where do you put your "nest egg" so that it is available to you in early retirement (before the age of 59 and a half)?
For example, you might want to invest in companies that pay high dividends. You would have your principal invested in these companies, and you would not touch that money nor the profits of that money. The only thing you would keep are the dividends the companies pay.
For example, there are ETFs that invest in companies with high dividend yield. Vanguard High Dividend Yield is one example of such ETFs.
So it’s pretty close to your goal date. How is it going? Any update?
Subscribed wonder how long this idea works for.... Are pan handlers technically retired?
Saving is super awesome and I like the idea behind this for sure. My only question is, doesn't inflation hurt this theory? Living off $25k in 10 years is not going to be the same as living off that same amount now.
You live off of 4% of your savings. The balance will continue to grow so your withdrawal will too consistent with average inflation.
Definitely the right direction, saving is the only way.
Not too sure of the maths on Savings rate vs Years to retirement. Single or a couple matters little as its based on the rate of saving and even though you get 'economies of scale' in some areas, as a family you have children seriously negating those economies, so leaving that alone and keeping it very simple for the sake of the demonstration which Im sure is not new to you.
Take saving 80% and retire in 5.5 years: Living at a rate of 20% your wage, leaves 80% or enough for 4 years worth. 4*5.5 years to retirement, you would save enough for 22.5 years of retirement money. Investments-wise, there isn't enough time to make substantial yield - 20 years being the minimum to get on the compound investment bandwagon. As such, if you are 30, that retirement takes you to 52.5 years old. Saving 65% and retiring in 10.5 years: each years you save enough for 2 years retirement, in 10.5 years you save enough for 21 years retirement. Same deal.
Nowadays, a male will easily see 75 and a female 80 years old.
Having said that and seeing the fun you have, how industrious and creative on revenue streams, youtube, udemy, etc, Im in no doubt you will retire early.
Best of luck and great videos.
you forgot to mention UNCLE SAM. ((example $50000 @15%tax=42500, your 10% saving rate is now $4250 annually.