Retire at 30 - Easier Than You Think?

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In one of the more interesting books I've read recently, the author managed to do just this. He worked as a research assistant for a few years after receiving a PhD in physics, and claims that anyone can retire early after investing 75% of one's income in stocks, bonds, and other assets after just a few years of work and then living a radically limited lifestyle.

The book is Early Retirement Extreme: A philosophical and practical guide to financial independence by a fellow named Jacob Lund Fisker, who claims to live on a mere $7,000 per year.

He does this by maintaining miniscule housing costs (a few hundred dollars per month), keeping a vegetable garden, and not wasting money on restaurants, alcohol, nice clothing, and the other expenses that young professionals get tripped up in.

What do you get in return for all these sacrifices? Being able to live the lifestyle of a "Renaissance Man" who can pursue employment and projects based on how enjoyable they are rather than the income that they generate.

There are a few important things to keep in mind about this book/lifestyle:

  • "Retirement" here does not mean "to do nothing and live on a golf course," as it does for most people. It simply means the ability to comfortably live on such a limited income that you can pursue whatever interests you have.
  • This book is not a "cookbook" that will give you a set plan to achieve and implement this lifestyle, although there are many ideas. It's more of a philosophy book that espouses a "do it yourself" ethic and defends a non-consumerist lifestyle.
  • It's clearly best suited for a certain type of person: independent, naturally curious, and perhaps most importantly, the support of a spouse/partner who puts up with it. I can't imagine trying to date and meet women while doing this, although the author is married.
  • A major criticism of this lifestyle is that it would require you to make inordinate sacrifices at a young age. This may be true, but the alternative may be to stay locked to a job you don't like in order to buy things you don't need before retiring as an old man. This actually seems much worse.

    Personally, I don't think that I'm going to be subsisting on a diet of lentils and a life of no travel any time soon. But this book has forced me to re-think my lifestyle in some important ways, namely in terms of thinking of each dollar I have as being one step nearer to financial independence rather than as a means to buy something.

    A good summary of this philosophy is here.

    Monkeys, what do you think? Is this something you would consider trying, or do you want another yacht to water ski behind?

Comments (24)

Jul 7, 2012

I turn 30 today... maybe I can use these tips to retire by 40 :)

At least I already have the "limited lifestyle" down

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Jul 8, 2012

Why would anyone want to retire at 30? 99% of the people haven't even accomplished anything to retire even if they have the money.

Here to learn and hopefully pass on some knowledge as well. SB if I helped.

    • 1
Jul 8, 2012
That_Aston:

Why would anyone want to retire at 30? 99% of the people haven't even accomplished anything to retire even if they have the money.

Like I said above, the goal is not to "retire" in the conventional way that we think about retirement. Rather, the goal is to be financially independent to the point where you can take on whatever jobs and projects you'd like without being concerned about how much they pay. From the website:

http://earlyretirementextreme.com/frequently-asked...
Q: I think 30 is way too young to be retired!
A: Could it be that you're stuck in the conventional "school-career-retire-die" way of thinking about life? If so, you need to read a bit more of this site because that's NOT the kind of retirement ERE is about. Here retirement is used in the "becoming financially independent and using that freedom to pursue other interests"-sense. Incidentally, this is not a new idea. Rather it is an old and somewhat forgotten idea. If you read biographies of people like Ben Franklin or Joseph Conrad, you will often see that they "retired" from one profession to take up another interest. Being financially independent and also well-rounded and possessing more than one skill made that possib

Jul 8, 2012
Hayek:
That_Aston:

Why would anyone want to retire at 30? 99% of the people haven't even accomplished anything to retire even if they have the money.

Like I said above, the goal is not to "retire" in the conventional way that we think about retirement. Rather, the goal is to be financially independent to the point where you can take on whatever jobs and projects you'd like without being concerned about how much they pay. From the website:

http://earlyretirementextreme.com/frequently-asked...
Q: I think 30 is way too young to be retired!
A: Could it be that you're stuck in the conventional "school-career-retire-die" way of thinking about life? If so, you need to read a bit more of this site because that's NOT the kind of retirement ERE is about. Here retirement is used in the "becoming financially independent and using that freedom to pursue other interests"-sense. Incidentally, this is not a new idea. Rather it is an old and somewhat forgotten idea. If you read biographies of people like Ben Franklin or Joseph Conrad, you will often see that they "retired" from one profession to take up another interest. Being financially independent and also well-rounded and possessing more than one skill made that possib

My mistake. I skimmed over and didn't read everything.

Here to learn and hopefully pass on some knowledge as well. SB if I helped.

Jul 8, 2012

It's actually easier than you think. Most of us on these forums can easily put away $35K per year. Assuming you put away $30K a year for 15 years and earn 11%, you're looking at having $1.4M by the time you're 35. That should easily clear you $100K a year in income to live off of.

Jul 8, 2012

Earn 11% p.a. for 15 years? That's a ridiculously high return even for professional investors...

Jul 8, 2012

What about having kids? That alone will cost you an arm and a leg. Even for one person, 7K a year is really pushing it. While the philosophy is sound, the time frame is too short. Stocks only generate 8-10% return over a really long time, like 30-40 years. You also don't have to "retire" if you find something you enjoy to do. Look at Buffett, he's 82, and he doesn't plan to retire yet.

Jul 8, 2012

I think there is a happy medium -- one can work hard for 10-15 years in a high-paying role and put away enough money to, for example, purchase some properties and generate income off of rent payments. Then you can work a regular 40-hr job, have plenty of time for your passions and interests, and still draw from both your salary and your investments. That seems pretty nice.

    • 1
Jul 8, 2012

Capital gains tax is a biotch

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Jul 8, 2012
R0bin:

Capital gains tax is a biotch

There are ways to pay 0 taxes ya know.

Jul 8, 2012
Connor:
R0bin:

Capital gains tax is a biotch

There are ways to pay 0 taxes ya know.

please expound upon this

If the glove don't fit, you must acquit!

Jul 8, 2012
Connor:
R0bin:

Capital gains tax is a biotch

There are ways to pay 0 taxes ya know.

Only one viable/legal way that I know: earn no money.

Jul 8, 2012

More importantly, what will you do with all that time. If you have nothing to do, then only you realize you have so much time to kill, you can't possibly fill all the time with gardening and personal interests (unless you are a crazy mathematician).

I guess, becoming a professor at some lower tier university will be much better option. Teaching is fun and gives you a lot of time to pursue personal interests, and if you take out the burden of research, then it's effectively retirement with a modest salary.

Jul 8, 2012
floydrose:

More importantly, what will you do with all that time. If you have nothing to do, then only you realize you have so much time to kill, you can't possibly fill all the time with gardening and personal interests (unless you are a crazy mathematician).

I guess, becoming a professor at some lower tier university will be much better option. Teaching is fun and gives you a lot of time to pursue personal interests, and if you take out the burden of research, then it's effectively retirement with a modest salary.

I think one of the most difficult things about this way of living is that it really forces you to ask yourself: what would I do and money didn't matter? Most of us aren't able to really think like that.

Jul 8, 2012

This dude is actually now working in a quant focused trader role. Maybe early retirement wasn't all it's purported to be lol.

Anyway, retirement age is really a function of your savings rate, disposable income, and living costs. Those of us that are working are payed pretty well so this boils down to your savings rate and lifestyle. If, for example, you want to retire after 10 year's work you'll need to save roughly 65% of your after tax. 25 years is ~35%. To see for yourself set up an excel sheet detailing x years of savings at whatever rate and see how long it takes you to build up a principal where 80% of the capital gains can sustain your living expenses.

After that you are financially independent and free in the purest sense of the word.

Making money is art and working is art and good business is the best art - Andy Warhol

Jul 8, 2012
dwight schrute:

This dude is actually now working in a quant focused trader role. Maybe early retirement wasn't all it's purported to be lol.

Anyway, retirement age is really a function of your savings rate, disposable income, and living costs. Those of us that are working are payed pretty well so this boils down to your savings rate and lifestyle. If, for example, you want to retire after 10 year's work you'll need to save roughly 65% of your after tax. 25 years is ~35%. To see for yourself set up an excel sheet detailing x years of savings at whatever rate and see how long it takes you to build up a principal where 80% of the capital gains can sustain your living expenses.

After that you are financially independent and free in the purest sense of the word.

He provides an explanation of his decision to accept that job on his webpage (see the very bottom of the link below). It didn't seem like it was motivated by money, and it didn't see to be out of line with his philosophy:

http://earlyretirementextreme.com/frequently-asked...

Jul 8, 2012
Hayek:
dwight schrute:

This dude is actually now working in a quant focused trader role. Maybe early retirement wasn't all it's purported to be lol.

Anyway, retirement age is really a function of your savings rate, disposable income, and living costs. Those of us that are working are payed pretty well so this boils down to your savings rate and lifestyle. If, for example, you want to retire after 10 year's work you'll need to save roughly 65% of your after tax. 25 years is ~35%. To see for yourself set up an excel sheet detailing x years of savings at whatever rate and see how long it takes you to build up a principal where 80% of the capital gains can sustain your living expenses.

After that you are financially independent and free in the purest sense of the word.

He provides an explanation of his decision to accept that job on his webpage (see the very bottom of the link below). It didn't seem like it was motivated by money, and it didn't see to be out of line with his philosophy:

http://earlyretirementextreme.com/frequently-asked...

Right he explains it in the link in my post as well. I only made the remark to point out that even when you don't need to work you'll quickly go insane if you have nothing to set your mind to. I can't imagine myself retiring that early in the traditional sense. To me it seems like he just needed something new to do.

Making money is art and working is art and good business is the best art - Andy Warhol

Jul 9, 2012

I find your concept of "super-retirement" much like an austere lifestyle. Many people don't work and earn money to spend, they do it for fun and see money as a proof of their ability. This book is like a fiction to me.

Jul 9, 2012

There is a real lack of balance in this torturously frugal life-style. It actually reminds me of extremist religions where people deny themselves all the earthly pleasures of this life; to reap all the benefits in the 'after-life'. I dont think taking this approach is any less painless than doing what it takes to keep searching for something you would like to do forever anyway (Warren Buffet is a great example). I dont think there is anything revolutionary about this thinking at all.

Actually, you may as well just quit early (30) and live on lentils and lettuce in your old age instead, what is the difference? If you have to choose when to 'be free' and the options are pre-30 or post-30, this thinking may be even more restrictive than the traditional school-career-retire model. At least in the traditional one you are (theoretically) on a constant search for what would make you happy; this one assumes you will find it if you quit you traditional job at 30? What if you dont? It sounds like a lot of pressure actually.

"Dont compromise yourself; you're all you've got" - Janis Joplin

Jul 8, 2012

most of you guys would be miserable living like warren Buffett, please read his biography before using him as an example. he hasn't lived at all...

Jul 9, 2012
Relinquis:

most of you guys would be miserable living like warren Buffett, please read his biography before using him as an example. he hasn't lived at all...

Actually; I admit I dont know enough about his own reflection/motives/personal happiness to have used him as an example. I would like to retract that statement and use Oprah Winfrey. The point isnt exactly choosing someone rich to such excess; just using someone famous so we all know who it is.

"Dont compromise yourself; you're all you've got" - Janis Joplin