Popular Search Q&A

I enjoy looking at the search terms people used when stumbling on to my site.  Most make sense, others are just funny.  I thought it would be fun to directly answer some of the recent questions that were asked, which Google decided to send to me.

How do I retire by 35?

Assuming you start saving at 22 with no debt, you have 13 years to save enough money to live on for the rest of your life.  Since you will be very young at retirement and you don’t want to gamble on how long you will live, you won’t want to draw down your account.  To accomplish this, you should use a maximum of a 3% safe withdrawal rate. (If you don’t know what a SWR is, read the next question).

Let’s use real numbers going forward, and you can fill in your own numbers on your own.  Let’s say you need $30,000/year to get by.  This means you need $1,000,000 to retire at 35.  Assuming you make $100,000 and spend $30,000, this means you are saving $70,000.  Multiply this by 13 years of savings, you have $910,000.  Looks like you will need to work until 36, make more money, or spend less money. (Of course, that money could grow during those 13 years, allowing you to reach your goal).

Simply by dropping your spending to $28,000/year, you now only need $933,000 in savings to retire.  At a $100,000, that’s $72,000 in savings per year, which amounts to $936,000.  Congratulations, you made it.

Now if you don’t make $100,000, that’s OK.  You just need to either work a bit longer, or get spending down.  My target is now less than $36,000/year for my family of 4, so if you’re solo or even without kids, you should be able to get well below $30,000/year.

Ultimately, assuming constant wages, 13 years to save, and a 3% SWR – You need to save 72% of your income to retire by 35.

What is a retirement “safe withdrawal rate”

The SWR is the rate you can withdrawal from retirement savings and have it last until death.  For early retirement, you can’t afford to draw down the account so you will need to be very conservative.  A good tool for this is at FIRECalc.com.  There you’ll see that a 3% SWR most likely will make you very rich over the next 60 years, but going higher than 3% starts to get dangerous because a few bad years early on could send you spiraling down.  I encourage you to read that website and play with the FIRECalc tool.

Things that are good about retiring early

I’ve already written about what I plan to do in early retirement.  I think the most important thing, though, is that you have time for yourself and the things that matter to you. You can always choose to work if you want, but it’s now a choice.

It also gives you the challenge (and reward) of learning self-reliance.  You likely won’t have the money to pay others to do simple tasks like tune-up your bike, fix your plumbing, cook from scratch, or insulate your house.  You can learn to do those things on your own.

What is the LendingClub.com minimum spend?

LendingClub.com is a peer-to-peer lending outlet, that allows you to invest in other people’s debt.  So far I’ve had very good returns (15.7%).  I’ve written about it a little, and plan to provide more regular updates as I become an expert in peer-to-peer lending.

The minimum investment is only $25.

Am I as successful as my peers?

That’s for you to decide, but first I recommend you define successful.  For me, I consider myself financially successful, which was my goal for a long time.  I’ve come to realize I’m very unsuccessful in other areas – which I plan to correct.

Is boredom normal during early retirement?

There was a good discussion about boredom in early retirement here.  I suspect that boredom is common in early retirement for those that did not plan ahead in what they want to do in retirement.  If you have a list of skills you want to learn, people you want to spend more time with, books you want to read, and charities you want to support – I doubt highly that boredom is possible.  Or, at minimum, worse than if you were at a cubicle.

What is the expected growth of savings if you start when you’re 18?

If you’re 18, I’m happy you’re asking this question and that you found my site.  No one knows for sure what the future will return, but I’m assuming 6% growth, with 3% inflation.  Which means an effective return of only 3%.  Any upside to this will be great, but I wouldn’t count on it.  The worlds economy is built on growth, and growth is slowing down dramatically.

How can i teach my kids to not be consumerist?

I’m still trying to figure that out.  Consumerism is all around us, and it’s hard to keep it away from your kids.  I suggest you start by turning off the TV.  Second, have regular discussion with your kids about consumerism and why you’re against it.  Discuss the environmental impacts.  Discuss the true time-value of money, and what that new gadget costs in terms of time.  Encourage other activities that have a positive impact on the world.  And, of course, lead by example.

Can I retire early?

Yes, you can.  Set a goal, do the math, and start saving.

Should I quit my high-paying, unrewarding job?

It depends.  If you’re 2 years away from retirement, then stick around.  2-3 years is not much in total time, and the freedom of financial independence will help you forget about the unrewarding job.

If you are not close to retirement, then get out.  Most people spend half their waking hours (or more) at their job, it’s positively unforgivable to do that in misery.  Make sure to read Your Money or Your Life to understand the concept of life-energy, and how you’re trading your life away for money at a job you don’t enjoy.

 

I hope you enjoyed the Q&A. If I keep getting new interesting questions, I’ll do this again.


25 Responses to Popular Search Q&A

  1. Anonymous says:

    I retired early (38 years old)!  I returned to work after 7 years because I needed more stimulus.  My goal was to be financially independent before I turned 40, I was really wanting to leave my job.  I now enjoy my career, but will retire (again) in 6 years.  I think I have a better plan for retirement this time. 

  2. Great Q&A! Many people say kids get more and more expensive as they get older. Do you have any plan for that?

    • admin says:

      I do, sort of. I have several hedges against increasing costs for my kids as I get older.

      First, much of my investments are in dividend stocks that consistently grow their dividends. Which means, my income should grow over time also, as long as I don’t need to pull out capital.

      Second, I’m planning on learning several trades over the next few years of retirement. If costs increase beyond my expectation, I can work part time in one of the trades I enjoy marketing myself on Craiglist. Actually, I may do that anyway because it sounds fun.

      Third, I do own an online business that makes a small income. I plan to grow that in retirement, but only where i find it interesting. I’m not planning to call myself retired only to work 50 hours per week on my computer.

      Fourth, I plan to continue to drive other costs down in retirement. Eating should get cheaper because I’ll have time to prepare more meals. Transportation should get cheaper. Entertainment should also be cheaper because I’ll partake in more engaging free activities and less costly frills that I only do because I’m too tired from work.

      If all else fails, I’ll just have to move to Thailand. :)

  3. What a fun way to build a post. A+ to you on creativity!

  4. Really, for 18 year-olds you figure a 6% ROI? Is that basically an ultra-conservative planning tool, or a real prediction? I can’t believe that world growth will only be 6% over the next 25 years or so. With the stock market averaging over 10% since inception, I think that we will definitely see de-leveraging over time, but I think 8% should be conservative enough for someone that can go 90% equities?

    • admin says:

      I’m sticking with a 6% long-term forecast. Of course, no one knows for sure.

      The 10% return is based on two industrial revolutions, the first with machine automation and the second with computer technology. If there’s a third industrial revolution, I don’t know what it will be but then you can expect the higher numbers.

      The global economy is based on growth. If there’s no source of growth, the economy will stumble. I believe that’s what we’ve seen in “the lost decade” and what we’re seeing again now. Even the recovery of 2010-2011 was based mostly on increase P/E, and not on increased earnings.

  5. Dana says:

    Hi!

    Found your blog through the Summer Team on Yakezie. Really like your idea of the Q&A – Good luck with the challenge!

  6. Very interesting idea for an article. It seems like there are a lot of people who want to retire super early, only to wind up bored once retirement comes.

    • To be bored in retirement means they have over-identified themselves with their career. I am healthily detached from my career. That is not to say I don’t enjoy and even need challenges – but there are much more challenging things in the real world.

  7. I can’t wait to hear more about your experiences with Lending Club. We’ve been Prosper lenders for quite some time (from before they had to go through accreditation) and think it would be interesting to compare notes.

  8. I enjoy following the stories of people that wish to retire early. I think that the term “retirement” is subjective. My father “retired” a few years ago, but now does things he enjoys like take care of people’s yards, and bar tends – he loves talking to people. If you add up all the time he spends, he’s probably working full time…but he’s officially retired, and loving it!

    I’m glad I found your site via Yakezie Summer team 4!

    • Thanks, and welcome. I see myself doing similar activities in retirement, but with a focus on learning more specialty trades such as auto repair, bicycle repair, macro-economics, and education reform.

  9. Hi there! I enjoyed reading your post. The idea of retiring early is just so amazing for me. I’m 36 and I’m only starting on my financial education. How I wish that I had financial guidance when I was younger. I would not have wasted so much time and money but of course regrets are of no use that’s why I’m doing my best to correct my mistakes and I hope that I can still achieve my goal of financial independence. As they say, better late than never.
    Good luck with your goal!

  10. People want power along with money. If my job gives me power over a lot of people (bossing around)then even if my nest is build and secured, I will probably not take early retirement.

    • Some people want power. I had power and gave it away – not something I ever desired. I quit that job.

      In the corporate world, I found it was rather easy to acquire power. You simply needed to do the job well, and be decisive. The alternative path was to dress well and play the corporate game. I was extremely good at the first path, not so good at the second. I’ve actually considered writing a book called “The Psychopath’s Guide To Corporate Success” because any psychopath can easily gain power. All it takes is a little human detachment and lack of empathy. The same is true in politics.

  11. Excellent article. I think this is a great way to find inspiration for new articles, and you are directly communicating with your audience too. Great way to connect.

  12. 1step says:

    Good article. I am in the corporate world right now and completely agree about the politics. I’ve seen people rise with more skill for the gab than actual work, and very few others with actual skill. Perhaps it’s just my insular view, but I can’t imagine it’s much different at many other companies. Blazing your own path is perhaps the sanest choice.

  13. All we have is our own insular views, but there’s enough satire out there about office politics that it must be true.

  14. […] Brave New Life responds to the most popular search terms that lead to their blog. Great concept. Popular Search Q & A […]

  15. Very interesting to see the incoming searches and what a great idea to answer them directly!

  16. That’s such a clever idea for an article. I might have to borrow it. :)

  17. […] Source Getting to Know my Summer Yakezie Group Members Better Edition 1) Brave New Life did a Popular Search Q&A for the search questions that bring people to his blog 2) The Power of Money is something Matt of […]

  18. Florence says:

    I was curious if you ever considered changing the structure of your website?
    Its very well written; I love what youve got to say. But maybe you could a little more in the way
    of content so people could connect with it better.
    Youve got an awful lot of text for only having one or two images.
    Maybe you could space it out better?

  19. Hello everyone, it’s my first visit at this web site, and post is genuinely fruitful for me, keep up posting these types of articles.

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