Early retirement without a fortune

[oracle]

Real life examples of pretty much what was mentioned in the post

Investing is not the path to wealth

Bankrate profiled four people who managed early retirement at ages ranging from 33 to 52. None of them had the advantages of a family fortune, a lottery jackpot or an initial public offering, or IPO, windfall to support them. Instead, these retirees learned the importance of patient savings and cost-cutting while ignoring risky bets and avoiding trendy get-rich-quick schemes.

Read full article here

It seems like to gain financial independence two things keep getting mentioned again and again.

1) Save as much as you can from your income
2) Watch your expenses and avoid unnecessary spending.

I tend to agree. Because you could be the best investor in the world and compound your money at 20% but if you are not in control of your expenses and spend 101% of your income you could still end up broke.

Cheers,
Oracle.

 

[redwing]

hows Jacob

That is about $115 per week

Jacob lived on about $7,000 a year -- $1,000 of which went to sports hobbies, while the rest covered his basic expenses.

 

[oracle]

hows Jacob

That is about $115 per week

Yeah I agree. That's like an extreme example of cutting costs.

Two objectives of the post were one to signify the importance of savings when embarking on the path of financial freedom and secondly getting people to have a good hard think about how much is enough before you quit the rat race. There are people who have happily retired on $50K pa.

Cheers,
Oracle.

 

[Truly Exotic]

this is what my friend is facing, and asked me recently

"ive made some good investment decisions, and risks, I now earn $1200 per week in my pocket doing nothing, I hate my job, whats stopping me from retiring now and living in bali?"

and I asked myself, "yeah, what is stopping him!"

but the other side of me said "FFS you are only 27! go out and do something!!!! but what!!"

 

[Indifference]

Firstly, this article is US based and the cost of living is quite different to Australia, especially for significant purchases such as housing, cars, clothing and major household items. For example you can buy a brand new Ford Mustang V6 starting from $22,600 whilst an equivalent new car in Australia runs at over $35K (Ford XT Falcon). Or a case of beer for that BBQ at $14-$20 as opposed to $35-$45 in Australia. Or a median house which runs at under $300K as opposed to ~$400K+ Accordingly, the amount required to fund a comfortable lifestyle in the US is lower than that required in Australia.

I could live comfortably in the US on $50K /yr, if home is owned outright and no lingering consumer debt. I would not be nearly as comfortable trying to do the same in Australia and profer that $50K would provide a "somewhat adequate" rather than "comfortable" retirement standard.

The emphasis upon controlling expenditure rather than just income is a good one. It is amazing how easily we can reel in expenses without much of an impact on quality of life. Things such as buying in bulk, selective shopping (outlets rather than retail), dining out on those "discount days", being more self-sufficient etc.... All of which are easily achievable if you are retired because you have more time and everyday is a weekend.... When working & time poor, we tend to pay a premium for things to either save time or fit activities around our work schedule. Ie. many things tend to be more expensive on Fri/Sat/Sun rather than mid-week.

Great discussion topic BTW.

 

[Angel]

There are many many people living perfectly happily on $50K per annum. Last time I checked any stats, 20% of the population was living on above-average incomes and the other 80% were living on below-average incomes. One thing we can do is to determine what we want to do or have in retiremet, then work out what that costs in today's dollars. That will tell us what we require as an income for living a satisfying lifestyle.

If the banks and Super fund managers have determined that a couple can live comfortably on just over $50K per annum, imagine how much more spending money a single person would have with that income.

 

[redwing]

How about retiring earlier and richer by moving to Malaysia, Thailand or Indonesia

 

[MTR]

Hi RW
Good point.
The English sell up and live in Spain, dirt cheap, however from what I see is they eventually sell up in Spain after a couple of years coz they miss their family and friends.

MTR

 

[MTR]

Yeah I agree. That's like an extreme example of cutting costs.

Two objectives of the post were one to signify the importance of savings when embarking on the path of financial freedom and secondly getting people to have a good hard think about how much is enough before you quit the rat race. There are people who have happily retired on $50K pa.

Cheers,
Oracle.

Hi Oracle

I think it is also a case of balance.​

I always find it strange when I meet people who watch every penny and do not enjoy today as they are too concerned about the future.

It the same story ..... "I will be happy when...... etc etc.

Travelling, enjoying a nice glass of wine (not the cheap stuff), live in the moment I say.

MTR

 

[Indifference]

There are many many people living perfectly happily on $50K per annum. Last time I checked any stats, 20% of the population was living on above-average incomes and the other 80% were living on below-average incomes. One thing we can do is to determine what we want to do or have in retiremet, then work out what that costs in today's dollars. That will tell us what we require as an income for living a satisfying lifestyle.

If the banks and Super fund managers have determined that a couple can live comfortably on just over $50K per annum, imagine how much more spending money a single person would have with that income.

Yes, I agree there are many people living on 50K, but I doubt they would explain their financial circumstances & lifestyle as "comfortable". I suggest that they would say "adequate" or "modest" particularly when it comes time to say, buy a new car, fridge, TV, washer or overseas holiday.

............There are people who have happily retired on $50K pa.

Yep, there probably are.... there are probably people "happily retired" on 40K, but I am definitely not one of them and believe most here aren't either, because if they were, they would "happily" get by on the pension topped up with a little bit of super.....so they probably wouldn't be into this whole investment thing.

I do however, agree that control of expenditure can potentially "bring forward" retirement as one realizes they can get by comfortably with a bit less than they originally thought.

 

[MTR]

I have a friend who has been living on about $20K per year, she retired some 20 years ago.

How does she do it?

OK, she has no children

She lives rent free as a wealthy friend who lives abroad and visits 2 times pa has had her look after his house for 23 years now. He has expensive art work and does not want anyone renting the place.

She conducts coffee readings at $80 a pop, perhaps on a good week 1 client per day, it varies.

She eats out at least once/twice a week and holidays once pa

She is one lucky person as her mother purchased a house for her which she also rents out.

She definately watches the pennies, but she tells me she is a millionaire every day, as she has a choice of doing what she wants to do everyday.

Cheers, MTR

 

[Truly Exotic]

re: comment about thailand/malaysia,

for $20k per year, you could live like a king in these countries, maids, eating out, holidays, drinking, afford anything except ferraris or live in a penthouses

you could probably live a similar lifestyle here for say $100k per year?

if I was near retirement age, that would be a great option

but for those under 40, if you could, would you though?

Id get pretty bored quickly plus id feel like im wasting my life

 

[Mr. Fabulous]

but for those under 40, if you could, would you though?

Id get pretty bored quickly plus id feel like im wasting my life

I'd do it in a heartbeat. In fact, I am beginning to look seriously into this. Stuff working, I'd rather sit at home and watch the grass grow than work.

I've always believed that if you can't find things to do if you don't work, then you live a pretty boring life.

 

[MTR]

Mr Fab
There is plenty to do and if you just want to sit and watch TV I reckon that's OK too whatever tickles your fancy, there's another world out there.

As for those thinking of living o/seas, I reckon that would be fine for 6 months of the year, but I would miss my family and friends.

Cheers, MTR

 

[geoffw]

With a daughter living the high life in Mexico on a shoestring, I'd live there for some months a year. She's on a Caribbean beach town. But young ladies get to drink for free, so there's one of her biggest cost of living items covered- but she's paying AUD70 pw for accomodation, and shares. I couldn't go down quite to her standard, but there are some good low cost options available.

I could quite happily survive on the food of just about any of the countries mentioned.

Of course we have lots of inlaws in the country.

As long as there was a good internet connection available. That would make it a lot easier to take than it used to be.

 

[HiEquity]

This has been on my mind a lot lately. I've really enjoyed this blog - someone mentioned it around here before:

http://www.mrmoneymustache.com/

Talks a lot about this sort of thing. The problem for me is that the basic assumption is always that you have a certain amount of savings / investments that aren't leveraged. If that is the case, it's fairly simple to calculate how much you need to have in the kitty before pulling the pin, depending on your spending level. But it all looks rather different when large slabs of investment debt is also thrown into the mix - not so simple anymore. Even with similarly large slabs of equity.

The vast majority of things I enjoy cost next to nothing. Time with the kids, going for a bike ride, etc etc. Seriously considering my options here but also very mindful of my broker in my ear telling me I'll never buy another property again without that salary!

How much is enough? Buggered if I know. We could comfortably live off rent today if someone could guarantee that rent would continue into the future. But there are no guarantees so I just keep working although I most likely don't need to. Just working to increase the safety margin now - and maybe buy just one more property!

 

[Mr. Fabulous]

Mr Fab
There is plenty to do

That's what I'm saying. I don't get the 'if I retired, I'd be bored silly within six months' mindset. There are an endless amount of options with regards to things to do outside of work. If people work because they enjoy it, that's different, but working because you're bored (not because you want to be there) just doesn't make any sense to me.

As far as family, I love them dearly, but I can handle not seeing them (which is already the case - I live in Brislantis and they all live in Melbourne). Making new friends O/S wouldn't be hard.

 

[Mr. Fabulous]

How much is enough? Buggered if I know.

I know exactly how much is 'enough' for me. My view is that the one thing that can never be repurchased is time. Time is priceless. It might be nice to have 'one more property' but the underlying value of that property over time would not even come remotely close to covering the cost of time lost continuing to work to buy it.

 

[The Fence]

I'd do it in a heartbeat. In fact, I am beginning to look seriously into this. Stuff working, I'd rather sit at home and watch the grass grow than work.

Grow it then mow it...now that's working

Agreed, plenty to do if not working, grow your own tucker for a start...then there is the volunteer stuff...make a difference to others' lives less fortunate.

Who said time is money...?

I really wonder about what I'd be doing when "retired", but...seriously all I want to do is go to the beach for long walks and swims and grow & mow the garden and help some others out in some way with some volunteering.

Throw in a couple of bucket list trips OS and I'd be happy with that.

 

[Mr. Fabulous]

The Fence, my bar is set pretty low as well. If I have enough, outside of the necessities, to maintain internet and buy books and records occasionally, I'm happy. I've got two dozen+ books to get through at the moment, so I'm gonna be busy for a while on those.