Comment by jrochkind1
9 years ago
Really? In the U.S.? Case study? Without kids and if you don't really spend any money on recreation or vacations (before or after retirement), maybe. Or if you somehow have a job that will give you a pension (with health insurance?) at 50, sure!
I suggest just reading MMM. It's all about savings rate. As an example, I live in Brooklyn, NY (one of the most expensive places to live in the U.S.) In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career.
Assume someone making $50k lives in not NYC, I imagine this scenario could be a lot better.
For a more extreme version of MMM, read http://earlyretirementextreme.com/. This guy (Jacob, who MMM mentioned in this interview) never earned much money (never over $50k prior to becoming financially independent), and retired after working 5 years. With a little creativity, most people can retire far sooner than standard retirement age.
> In 2016, I spent $32k ($24k was rent!) Assuming a $50k income, that'd be a ~36% savings rate, which requires a 23 year career.
Assuming a $50k income post-tax
Knocking off 18k for 401k and 5.5k for a Traditional IRA dramatically reduces the tax liability. I recognize 50k-32k = 18k (so the full 23.5k can't be executed in this case), but it makes a significant difference regardless.
And there are methods to pull this money out well before the standard ages without penalty, such as Substantially Equal Periodic Payments (SEPP).
You are forgetting taxes (FICA, state and federal income taxes, etc), which would eat up a significant portion of those savings.