mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from May 2010. If there's an old post from Eddie you'd like to see up again shoot me a message.
We spend a lot of time on this site discussing how much money it would take to retire now, how much you plan to have when you walk away, and so on. I always get a chuckle out of these posts, because I know how different my actual walkaway number was from the number I had in my head when I got started. I don't bring that fact up much, because I'm not interested in being the catalyst for someone to lower their expectations/aspirations in life. I know what worked for me, and I'm satisfied with it, but I realize some people will strive for more.
I think for most of us starting out (and I know for a fact this was the case for me), somewhere around $10 million is the number. When I got started in the business, I was convinced that as soon as I accumulated $10 million, I was out. That was $10 million cash, mind you. The number in your mind might be higher or lower, but it's probably somewhere in that neighborhood.
This is going to come as a shock to many of you, but Business Week just published a fairly extensive study that might shine the harsh light of reality on your walkaway number. They found that Harvard MBA grads made more money over the span of their career than graduates from any other MBA program. The estimated career earnings for an MBA from the #1 business school in the nation? $3.87 million.
Now $4 million is nothing to sneeze at. And I can already hear some of you making the argument that the study includes MBAs from all career fields and that Wall Street naturally skews higher. That could very well be the case. But realistically, by how much more? Here is the complete table of the various B-schools and their respective earnings.
My point in this is that your actual walkaway number is probably going to be a lot lower than you think. And that's a good thing. Because it might alleviate some of the undue pressure you put on yourself. I always made good money on the Street, but it wasn't until I gave myself an expiration date that things really went my way monumentally. And the biggest component of my decision to punch out was my coming to terms with the fact that I wasn't going to have $10 million in cash when I did it.
The importance of being realistic about earning potential can't be overstated, especially in the current regulatory environment. Does that mean you should settle for less, or aim lower? Absolutely not. There is no shortage of young people making millions of dollars per year in the U.S. Just recognize the potential that exists in your current career path and if that doesn't meet your expectations/aspirations, change your path.
Here's a little something to get you started. It'll save you $100,000 and two years of your life. Something to think about.
Guys, please don't take this post in a negative light, because that's not how it's meant. Laboring under false assumptions leads to massive disappointment, and being realistic about your career path is truly liberating. Never forget that there are outliers in every field, and the outlier might be you. Never lose sight of the fact that, even if you only make a couple million bucks over the course of your career, it's still a shitload of money. Manage it (and your career) accordingly.
P.S. If you're the outlier (or think you might be), I'd love to hear about it in the comments.
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