Comment by microcentury
16 years ago
"At my salary level, and with my expected advancement path, I could comfortably retire in my thirties."
I've heard this or statements like it in quite a few articles over the years, but I've never actually met a retired thirties business consultant. Do they exist and am I just missing them? The only ones I know are well into their thirties, working 70+ hours a week, and looking forward to making even larger boatloads in their forties.
They think they will retire in their thirties, but they never have enough.
"At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have...
Enough."
http://www.johnboglemedia.com/component/content/article/1-la...
Their fixed costs keep rising. When you are 22, you think that $100,000 a year (rising with inflation) is heaps. But by 30, you buy your first yacht, and it takes $50,000 a year just to keep it in the dock.
While that's true, the cause of this is a salary that compounds faster than inflation. If you make 10% more each year it's almost impossible to retire anywhere near the salary you had 5 years ago without saving a huge percentage of your income.
EX: Ignoring inflation, if you get a 10% rase a year and get a 10%ROI on your investments every year then you need to save 40% of your income to for 35 years to retire on what you made 5 years before you retired. (Assuming you can live safely on 4.5% of your capital / year)
LOL. There's a huge difference between a hedge fund manager and a management consultant. Perhaps the billionaire will never think he has enough, but the consultant will actually, in legitimate and reasonable terms, not have enough. They really don't make much money for the hours they put in. Factoring travel, they work as much as an investment banker and essentially earn what a banker would earn without his bonus.
Hedge fund managers are to management consultants what wolves are to sheep. Please don't compare the two. One is a master, the other nothing but a slave.
That actually undermines his main point -- that he stuck to his "morals" and forgone the "large" hush money check at the end. If he was making enough to retire by his 30s then $16k wasn't that significant of an amount. That means the didn't really lose a lot so his "moral" stance is more symbolic, and not the tough financial decision that article might imply.
I don't think that was his main point. He had, after all, just said that he was willing to compromise his morals to the extent of continuing to work with BCG despite the dishonesty it involved -- because the amount of money potentially involved was so large. "I think I’ve come to the conclusion that having a father who can pay for a top-notch education outweighs the disadvantage of being raised by a hypocrite. Sticking with the job for the sake of a paycheck passes the children test."
So I'd say his main point wasn't "look at me, I stuck to my morals" but "I'm corruptible but not infinitely corruptible". (The reason for mentioning the $16k in the title isn't to say "look how much money I turned down" but to say "look how much money they offered me for this".)
I would tend to concur, as this was my initial reading as well.
> The reason for mentioning the $16k in the title isn't to say "look how much money I turned down" but to say "look how much money they offered me for this".
Right. It's to emphasize the fact that not only were they morally corrupt and doing horrible things, they were incompetent to the extent they though they could shut him up with a measly 16 grand.
If he gets a book deal out of this he'll be laughing pretty damn hard at a bribe attempt that, really, isn't even a house payment.
Eh, maybe. Numerologically, I think you're right, but you do have to keep in mind that a $16,000 lump sum has a lot more subjective value going out the door to an uncertain future and a zero income - at least, temporarily - than it does in the course of making six figures at a stable job.
I'm not saying he had any reason to suspect he wouldn't be able to find another job, and even quickly, but it probably wouldn't pay nearly as much and there was no guarantee of that. It's just the depressive state accompanying the sensation of having been fired, even if it's from something you hate in concrete terms.
I don't think numerology means what you think it means: http://en.wikipedia.org/wiki/Numerology
1 reply →
The whole moral thing is questionable, if he would have taken his leave that would be one thing but the company initiated the termination, not the author.
Depends. If you are making $300,000 a year and live like you are making $15,000 a year (and save the rest), then you can retire at 30.
Most people aren't willing to be this frugal, however. It seems some people making this much even have trouble "making ends meet", because they buy so much crap that they can't afford. Ah, consumerism.
(In the interest of fairness, I am almost as bad -- I love buying stuff. I just stop when I don't have any more money... and I might even be able to retire before I'm 90 :)
The problem here is in the matter of status symbols. A quick tale for you: A consultant who gave me my start in the industry once had his car break down before an initial meeting with a client(Mercedes). He had to borrow his son's tricked-out VW boy-racer to get to the meeting on time. As he pulled into the meeting the clients were exiting their cars and saw him parking. He said the meeting never even really got started, as they had already pre-judged him.
There are lots of little cues like this. The car you drive, the cut of your suit, the watch you wear. It's funny because this is an industry that everyone is aware is awash with charlatans, so everyone is looking for clues that the person they're speaking to is credible. Which is something that can obviously be hacked. Having said that, it does basically work. A guy wearing a huge Rolex is probably faking it, for example, it's just too obvious.
4 replies →
> If you are making $300,000 a year and live like you are making $15,000 a year
It's possible if your employer is paying for your relocation. In 2004 (IIRC) I went on training teams for clients of ours continuously for about two months (with a brief stop at home in the middle). Not only I accumulated a respectable mileage, I spent about a third of what I usually spend in my home town (São Paulo, Brazil).
I'm 40, married for the second time, with a 14 year-old boy from the first marriage and would not be able to reduce my expenditures to that level, but it's quite doable if you are in your 20's.
buffet: "don't save sex for old age" http://www.fool.com/investing/value/2009/12/03/warren-buffet...
1 reply →
I forget his name at the moment, but the author of "The Management Myth" retired early from management consulting to write a book on philosophy.
To summarize in English: Stewart started an unnamed firm, and tried to exit mid-bubble four years later; his partners didn't want to buy his equity, so he sued them. By the time he got his shares bought three years later the firm had imploded.
http://paul.kedrosky.com/archives/2006/05/12/the_myth_of_the...
It's not true, is why.
After 10-15 years at one of the top consultancies you could have completed outright the major capital purchases of your life (e.g. a house or two, maybe a boat) and could downshift to something much less stressful but you certainly couldn't stop working altogether. And these houses would be nice, sure, but we're not talking mansions with helicopter pads and servants here. Basically you would be established in a solid upper-middle-class lifestyle, but you would still need to work to maintain it.
The consulting business pays very good wages, but you don't get to build any significant equity - what you need to retire on - until and unless you make partner.
To be able to afford something does not mean you can afford the upkeep of it.
If you live frugal a little goes a very long way.
Exactly.
A good consultant could probably retire at 55 having set up his family well, private education for the kids, a bit of a trust fund, a comfortable retirement and bit of an interitance and so on. But as I say, this is not what most people would consider "rich". There's a good bit in Wall Street where Gordon Gekko is trying to explain this to Bud Fox. $100k salary and flying business class everywhere is not the same as $50M in the bank and a private jet.
1 reply →
Which you should be within 15 years...
Hah, every newbie analyst thinks he or she is sure to make partner. Maybe 1% actually do.
1 reply →
Agreed. The only retired consultants I've met had white hair (most didn't even have hair).