Hey Veeky Forums

>tfw my brother is 32 and is an executive making 250k a year
>lives off like 30k a year

I know what he's doing now. Jelly as fuck desu.

man i get FI, but I dont get the RE part

people hate working so much they would rather just never do it again?
first off, if you have capital gains income, why not just work some anyway, for something you like but just pays less
second, this seems to require dumping nearly everything into US stock indices, what if the market crashes? you really think 4% is safe?

There are options to mitigate that. You can take on part-time work if you choose, or you can tighten your belt, or you can build up a cushion during good years to prepare for bad ones.

There was a study done awhile back called the Trinity Study. It mapped out the historical likelihood of success of the 4% drawdown number based on every 30-year period since the 1930s. The study concluded that there was a 95% historical success rate. If you wanted to make it closer to 100% successful, you could make it a 3% drawdown, but a lot of people seem to think that's overkill.

Obviously, this doesn't account for something truly devastating, like a countrywide economic collapse, but if that happens you're fucked anyway, so there's not much you can do about it.

Congratulations, you just figured out why people work their entire lives in order to retire.

$25k is dog shit and people like Mr. Money Mustache are either happy living in poverty or misrepresenting their financials. I know for a fact that MMM does occasional contracting work for supplemental income which he doesn't include in his yearly income blogs. Somehow he still considers himself retired, even though he relies on that supplemental income to provide for his family.

Your stated goal is to retire in five years. This is possible only if you're willing to live in poverty, able to start and sell a successful business, or through gambling (either in a casino or on the stock market).

Google "firecalc" you can run sims

You do know that 25k is just an example, right? If you want more, you just have to save more. it might take you a few more years, but if you want a more luxurious lifestyle, then you can justify working those extra years to afford it. Personally, I could live quite well on $25k annually without ever feeling impoverished.

You are right, though. MMM makes quite a bit more than he lets on, though he says he doesn''t need the extra income, and I believe him. The blog alone pulls in $400k in revenue per year.

My question for you is: what are you going to do with your time when you're 40 y/o, retired and living on 30-35 k a year. That's not enough money to allow you to travel comfortably, especially with a family, or to spend discretionary income on anything meaningful. Basically what you'll be doing is vegetating in your shitty apartment with internet access and thousands of hours on your hands. That sounds miserable to me!

$25k is a convenient example because it's achievable in a short amount of time by someone with a high income. When you start using realistic numbers you end up seeing that it takes decades of dedicated saving to achieve financial independence.

Your contrived example has someone earning $100k after-tax, saving 75% of that, it still takes them 9 years, and even then they only have enough because they're somehow able to avoid capital gains tax on the drawdown.

Double that person's spending (for instance, give them a wife and kids) and it'll take them 18 years to reach financial independence. Include capital gains tax in the drawdown and you can add on a few more years of saving to compensate. You assumed they have a fully-paid off house - most people don't magically get those, they take out a mortgage and spend 15-30 years paying it off. Now you're up to 40 years of saving, just like everyone else in the middle class.

With a paid-off condo in a relatively low-cost of living area, I'd probably be spending ~8k/year in housing costs with utilities. That leaves 27k of the hypothetical 35k. Feeding yourself doesn't cost a whole lot, especially when you're a good cook, so that's maybe another 6k, with 2k for eating out. another 8k, so we're down to 19k. My discretionary income is minimal, and I generally don't need more "stuff" in my life than I can manage, so I don't really buy many things for pleasure anymore. I'll admit I don't have much wanderlust, but there are a few places in the world I'd like to see, preferably before I'm too old to enjoy them. I figure I could probably afford one or two of those trips per year on 19k. Sure, I probably won't stay at a resort where they play CNN in English in the lobby, but that's fine by me.

I'd probably write more, I think, and definitely read more (free libraries FTW). And I'd want to spend more time with friends and family. Hell, maybe I'd even do some charity work, like Meals on Wheels or some shit. I could explore my passion for cooking, which goes hand-in-hand with spending more time with people... or I'd do nothing, and that's fine, too. The ultimate point is that I would decide what to do with my life; I wouldn't have to do something I hate just to live.

I wasn't implying that he magically had a house, I just didn't want to overcomplicate the example.

Also, you can buy a decent piece of property most places for 100-200k these days. I don't think somebody making 100k would need a 30-year mortgage on something like that. You're talking a couple of extra years at most.

And yes, I suppose if you want to marry someone who doesn't work and have three kids, then this plan is going to be a bit harder to pull off, but that doesn't make it a dumb idea in general.