Being rich is not determined by how much you have. It is determined by how little you need.
The more you “need”, the more you will need.
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Yup. And the more you have, the more you need to maintain. Time increases in value as you get older, so that cost to maintain will go up quickly.
Doesn’t mean you shouldn’t have or want stuff, but I suspect we can all look around at what we do have and recognize that our attention is often drawn most to the things we spent the least on.
My Dad always used to say, “it’s not how much you make, it’s how much you save”.
We have always lived well below our means but just majorly upgraded with our new house. Retirement in 5 years not going to happen. Targeting age 55 (2036), but we’ll see what life throws at us.
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A good example may be car purchases; how often is that driven by status-seeking rather than actual need?
I am reminded of my billionaire boss Tom Bata in this regard. The only car he owned was an Olds 98. He did have a chauffeur for it but that was because he was constantly working so couldn’t drive as well.
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Yay grad school. I’m currently looking at 65-67.
Yay grad school for me also. Add in single income family and having a kid before leaving grad school and…me definition of “retire early” is early-mid 60s.
In my favour are being single, without kids and two parents who’ll likely leave me some money. I suspect it may be an option in my early 60s, though I’m not positive I’d want to then. I might be willing to consider senior roles at that point and be the grumpy old guy who tells people their ideas are not practical.
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I can’t think of one person in my family who retired before 70.
They are all workaholics.
Even my uncle (who is a UHNW individual) just retired at 80.
My aunt (also 80) still works (she owns a chain of pharmacies)
My parents retired at 70 (this was compulsory in the civil service).
I guess Europeans probably view working till later ages a bit differently vs North Americans.
I don’t think it will be any different with me. Aiming for 70 or so.
My wife is more like you guys. She will retire at 55 (has it all planned and is on track)
Specifically, your savings rate as a percent of income. Of course, it’s easier to save a higher percent if you make more, so all else equal making more money is helpful.
I certainly did not need to spend the 40k on my fun car, but I did anyway, and because its fun, not because I want to be status seeking. I certainly did not need the car at all. But I do have a “not fun” minivan that might be one of the greatest value options available. It’s getting old, and its getting ugly, but it has some really great cup holders in it, so I never mind driving it.
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I am only coming up with about 75k that I have spent, in total, on vehicle purchases. That ignores the vehicle my parents bought me with my college fund and the 15k inherited minivan. I seem to still have about 30K worth of steel sitting in my garage. Final net of about 2k per year (or even <4k if you add in the cost of those freebies)? That seems pretty good.
There is being rich and feeling rich
It’s easy to feel rich when your expenses are minimal
Getting rich on the other hand takes time
Both are obtainable
Rich/ wealth is just a ratio of income/ assets and expense/ liabilities. Expense is the lifestyle. Happiness is the outcome.
Understanding happiness is going to be the easiest way to become rich.
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Ok, John Lennon
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Maybe. But in the practical sense, there is a lot of free stuff out in the world to explore and do that can be pretty amazing. Much of this gets overlooked because there is no one advertising it.
I retired in my 50’s. The expense I underestimated the most was health care.
If you are seriously looking to retire early, then I strongly advise that you get a concrete estimate of how you intend to procure health insurance if you are in the USA. Look at the current costs - both premiums and out of pocket costs - for an individual or family (whichever applies to your particular situation), and do your best to extrapolate it into the future. The chunk you’ll need is likely to be eye watering if you’ve never done it.
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Any suggestions on a starting point for an annual cost?
I’ve personally used very little healthcare to date, most of my spending has been kid related. So i guess i have some appreciation for what higher cost looks like even if my expected spending personally is quite low.
I have 1k a month in my mind fwiw.
1k/ mo for premiums for a person in their 60’s (which you will eventually be) sounds ridiculously low.
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You can use the internet to get plenty of quotes on what it would cost you today. (Beware: the data gods will instantly target you with ads). You will need to supply a location, a number of members to cover, and then a particular plan or two.
I would say the $1k/ month is really low end. Modern medicine is keen on long range, continuing pharma treatments for everything from blood pressure to inflammation. By and large, those costs are left to the insured. Expect very little help, unless you get a plan with pretty high premiums. Note, that if you do that, you are joining a cohort of frequent users and the insurers are quite aware of that.
The rates scale up by age very quickly as you age. The rates for age 54 quickly double as you get to age 64. So try a few DOBs. In any event, choosing a bare minimum plan at age 40 seems prudent if you are active and in good health. It becomes way riskier at age 62. You are one pulmonary embolism away from a 7 digit charge. And even 10% of that is going to be a massive hit to the nest egg.