cross-posted from: https://lemmy.world/post/33704049
Wanted to add, “Fuck Cars!!”
Car payments for decades of one’s life are not the way to go.
cross-posted from: https://lemmy.world/post/33704049
Wanted to add, “Fuck Cars!!”
Car payments for decades of one’s life are not the way to go.
Now tell me how a guy making under 100k per year 2015-2025 accumulates enough calital to retire
🤷 I don’t know anything about that guy’s circumstances (what country he’s in, what he’s invested in, etc.) beyond what he wrote in the thread. All I know is that his claims aren’t as implausible as you’re trying to imply they are.
(I could take a guess that his monthly spending is probably $2k, give or take a few hundred, if that gives you some idea of how it’s done.)
Right and I am assuming that it is impossible…
Assume 90k US mid cost of living city. 63k net, let’s say he can make it work on 40k.
That’s 23kx10=230k
Let’s say he is investment guru. That’s noe 350k
Now tell me where in us you are “retiring” on this cash
I think the maths there is that 63k income then you spend 21k on living expenses and you can save the rest. Then you retire in a decade.
But I think mortgages might complicate this, in a good way. If you are paying a mortgage that is a repayment you can expect to stop paying at some point, so your living costs will drop when that happens.
You’re not paying $27k in taxes when you’re maxing out your 401k, IRA, and HSA and thus lowering your AGI by $34,800. In fact, between that and the other deductions and credits, the taxable income would be closer to $40k and total tax owed would be more like $5k.
“Mak[ing] it work on $40k” means he has roughly $45k/year ($3750/month) to invest.
Absolutely not. Dipshits who think they’re “gurus” lose their shirts. Let’s assume the guy put it in SPY (an S&P 500 index ETF).
According to https://www.stoculator.com/ (which kinda sucks, but was the first calculator I found that could both do periodic investments and use actual historical stock market returns instead of assuming a fixed rate of return), $1 initial + $3750/month invested into SPY starting 10 years ago would be worth $971,047.99 today. That’s within a rounding error of $1M, which is how much you need for that $40k annual spending at a 4% safe withdrawal rate (SWR).
To the same place he was “mak[ing] it work on $40k.” His spending in retirement doesn’t have to change, and thus neither do his living circumstances.
But even if we assume he got 1m you are talking about all locked up in tax sheltered accounts:
How is he living on this money between age 30-65? Taking penalties on withdrawal?
Also, even if he got 1million in cash, 43k is the rate on tbills, but that will be taxed so it closer to 35k cash to spend.
Where in the US can person live a decent quality of life on 35k with out owning a home outright?
Note that while you are living on 35k your million nest egg is being eaten by Inflation. How is that supposed to last 30 years before retirement?
The math does not work.
First of all, you forgot about the IRA (and got the numbers of the other two wrong). 401k ($23,500) + IRA ($7,000) + HSA ($4,300) = $34,800. Being able to contribute ~$8k to an HSA would imply that you’re talking about a whole family instead of a single person, which might in turn imply access to even more tax-sheltered investment space in the form of the spouse’s IRA had maybe even 401k, if both partners work.
Second, HSAs aren’t just a retirement account, they’re the best kind because you can pay your medical bills out of pocket, save up your receipts, and then cash them in for tax-free withdrawals after you retire (even before age 65, because you’re just getting reimbursed for your previous medical expenses, not taking a distribution).
There are several strategies to access retirement funds “early”, including a Roth conversion ladder or 72(t) Substantially Equal Periodic Payments.
Also, you’re right that not all the money fits in the tax-sheltered accounts; specifically; $45k - $34,800 = $10,200/year would get invested in a taxable account. That adds up to plenty of non-early-withdrawal-penalized assets to tide a person over in the first few years of retirement, before their Roth pipeline has a chance to kick in.
What do “cash” or “tbills” have to do with anything? We’re talking about investing in the stock market – specifically the S&P 500 in this hypothetical example – and that doesn’t change in retirement. You stay invested in stocks! The notion of the stock market having a 10% average stock market returns (and inflation averaging 3%, causing net returns of 7%) is already built in to the concept of a “Safe Withdrawal Rate.”
Figuring that out was a prerequisite for being able to save all the money up to begin with. You yourself assumed it as a given: “let’s say he can make it work on 40k.” If we can assume he can figure it out in year 1, we can also assume he can continue to figure it out (in inflation-adjusted terms) in year 10 and beyond.
Also, who says this doesn’t include home ownership? My ‘FIRE journey’ involved buying a house in a decent part of a decent city in year 1, which happened to be during the Great Recession, so my mortgage + taxes + insurance are still <$1000/month to this day. Granted, that circumstance no longer exists, but that doesn’t mean there aren’t other ways to make ownership (or otherwise hedging against rent inflation) happen, such as “house hacking” or living on a boat.
By the way, owning a home “outright” is generally mathematically inferior to carrying a mortgage and using the money you would’ve spent paying off the loan early to buy more stocks instead.
Again, accounting for inflation is already built into the concept of the 4% SWR. In all but the worst-case scenarios, your investment returns are not only likely to outpace inflation, they’re likely to outpace your $40k annual withdrawal and your net worth is likely to continue to go up in retirement, not down.
And there it is. Now these numbers can make some sense
Along with unprecedented bull market fueled by quantitative easing.
You are out of touch to understand housing right is likely 3x of what you paid, which stretches this 10 year horizon by another decade.
Furthermore, 401k limit in 2015 was 18k and IRA was also lower and you had to qualify for that too
again, 90k in 2015, this limit would be lower. to get HSA, requires a certain health plan too. HSA Is the king retirement plan after 401k match is maxed
My point being you are using cherry picked, best case scenario fact pattern to base your argument and even that requires a dash of luck. Sure some people could make it work but we are so far into the weeds lol this can’t be serious
The math just does not work unless, you the income is higher and the bag is larger.
And this is essentially the classic class advice: quit being poor pleb
For context, the median individual income in 2015 for men working full time was 50k, I am pretty sure 90k is top 15%
We are literally talking top of income earners even geting a chance to play the game…
PS nice touch removing the comment, i stand by my assertion, that dude was trolling
“I can deny reality as long as I write it in bold text!” – sure, Jan.
Look, you wanted to be informed, and I informed you. I did the math – correctly – for you. You wanted to know how the math worked for somebody who did the thing starting a decade ago such that they could be retired today, and I told you how it worked for somebody who started a decade ago such that they could be retired today. How it works for somebody starting today who wants to be retired ten years from now might involve slightly different tactics (especially with the Orange Dipshit trying his best to wreck the country in new and unanticipated ways), but that’s not really the point.
What part of “granted, that circumstance no longer exists, but that doesn’t mean there aren’t other ways to make ownership (or otherwise hedging against rent inflation) happen, such as “house hacking” or living on a boat” did you not understand?
You are not entitled to disingenuously quote half an argument, ignore the other half, and use that to pretend you won. Argue in good faith or don’t argue at all.
If I hadn’t done what I did back then, I would be doing something else now instead (probably living on a boat) to keep my costs low. But I sure as Hell wouldn’t be paying $3K a month on housing! And more to the point, I can guarantee you that the other guy isn’t either, even without asking him or knowing anything else about his situation.
Hey, guess what: go back and re-read the earlier comments and you’ll notice that you were the one who set that simplifying assumption, not me. My initial ballpark guess was that the guy’s yearly spend was closer to $24k than $40k. Obviously a normal person’s career progression is going to have their income gradually increasing over time, not starting at exactly $90k/year and not varying by even a cent for a decade, and my initial explanation took that into account and lowered my guess at his spending accordingly.
Setting your own simplifying assumptions for somebody to use and then bitching that the math “doesn’t work” because you moved the goalposts for precision is another example of a bad-faith argument to which you are not entitled.
No, it’s literally the opposite. The advice is “learn to be happy with the amount of money you have.” The amount of money you actually have, that is, not the (much larger) amount of money you think you have because you fail to plan for the future.
You’re just pulling preconceived notions out of your ass and ignoring what me and the other guy are actually telling you. This isn’t ‘prosperity gospel’ shit; central features of the FIRE mindset are things like:
If you think that stuff has any resemblance to “quit being poor, pleb,” I don’t know what to tell you – you’re just illiterate or something. ¯\_ (ツ)_/¯
What it really boils down to is 21st century Stoicism and learning to avoid the Diderot Effect/hedonic adaptation – you reduce your spending until the math does work such that you have a very high savings rate, even if that means, IDK, living in a tiny apartment with multiple roommates or something. And then accepting that and figuring out how to be happy about it anyway.
Removed by mod