My Plan To Retire Faster Than 99% Of People

[@RunningonFIRE]

I write the free F.I.R.E.Friday weekly newsletter to help more people reach findings freedom: running-on-fire.com

[@alisonwilson9399]

You are the best FIRE yotuber! Great presenting style. Very clear & easy to understand.

[@RunningonFIRE]

Woah, thank you so much! I still feel like I have so much to improve, that means a TON

[@cvzphotography]

20k annual expenses? Living in a van?

[@RunningonFIRE]

Nope, just with roommates :) I'll do a full expenses breakdown soon-ish!

[@jackester6742]

I live in a van. My annual cost of living is 13k.

[@RunningonFIRE]

@jackester6742 that's awesome! Goes to show I could be spending even less!

[@banderson5586]

As someone who is planning to retire between 40-42, I have to ask, how are you planning to pay for health insurance? 20k may be fine if you live very, very frugally but there's no way that's sustainable as you age.

[@RunningonFIRE]

Yeah, great question! I'll probably have high deductible insurance to keep costs low, and I'm maxing out my health savings account Hoping that, by old age when I really need it, my money will have snow-balled And truthfully, I'll probably overshoot the 500k target. Congrats on the ultra speedy retirement plan! You'll be part of the 1% :)

[@joemonroe9456]

If you take care of yourself, you don't need "sick care" insurance.

[@reinsama5436]

Inflation

[@Hiraeth-zq8ze]

@@joemonroe9456yes you do. You can be in great shape and still get sick. Parkinson’s, dimensia, Alzheimer’s and many diseases don’t care about how good your health is. That’s not including the risk of injuries that you can suffer.

[@TheFirstRealChewy]

​​@@joemonroe9456 I take it that you are inexperienced when it comes to healthcare. I use to think that way when I was younger. After having an unexpected, emergency surgery, I realized the financial bullet I dodged by having good health insurance. I still had to pay about $3K out of pocket but the thousands the healthcare covered had me feeling like it paid for itself in one go. The reality is that things happen, sometimes at no fault of your own. Just think about it, you don't pay for homeowners insurance because you don't take care of your house. A friend of mine had a stroke and he was in the best shape of his life. Eat right, run all the time, etc.

[@CaedenV]

Your lifestyle expenses are $20k... But I wonder if that is actually comprehensive and realistic for the long term. 1) sharing a small space with a bunch of people is fun in your 20s and you are gone at work all day every day. But when you are retired and picking up hobbies will you need more space and money for hobbies? Do you plan to ever get married or have a family where you will want more private space? As you age and get more particular about your environment will you want more control over your environment? Those housing costs are likely to rise substantially until you are in a house where your house payment is flat until it is paid off. 2) on $20k you are likely low enough income where you can get dirt cheap or free health care. But as lifestyle expands, or if the family grows, then your expenses and income requirements will likely grow past the free Healthcare offerings. I would want to make sure that your finances are in a place where you are able to afford both your and your employers payment for your current level of Healthcare because in all likelihood you won't be able to avoid Healthcare costs forever. 3) other than making sure to get your full employer match, I'm curious about why you would max out your 401k... That seems... Inefficient? Wouldn't it be better to max out things like an HSA or Roth where there are tax free and penalty free avenues to get all (or a significant portion) of your balance out before retirement age? Or maybe there is a 401k loophole I'm missing? 4) make sure that you are accounting for inflation and lifestyle growth over time. Starting with a number that accounts for those other costs as your starting point, make sure you are accounting for an average of 3% inflation and 2-4% lifestyle growth every year. The 4% rule still assumes that you are planning to die after 30ish years of retirement, so if you have 50+ years of retirement ahead of you, then you may want a more conservative 2% number, or move to dividend investing where the return is more consistent and not directly tied to account value. The reason why this is important is because you are planning to actually retire and not actively work. You don't want to be turning 40 and have life changes that demand more income only to find that you have a 10 year work experience gap and can't compete with peers who have 20 years of current experience. That would be a nightmare! Make sure you have enough to retire once and actually retire. Don't aim at a poverty income and expect to remain in poverty until your 401k becomes available at actual retirement age. Your lifestyle expectations will lilely rise over time to at least lower middle class. Assuming you won't would be a bit shortsighted.

[@RunningonFIRE]

Hey, lots of great points! It means a lot you'd put so much time into writing this. Let me clarify a few points! 1) Yes, my current lifestyle is a bit extreme. But that's party because I live in an insanely expensive area! I could live much more comfortably (without spending much more) just by moving. But you are right; I may save a little more than the minimum! 2) Healthcare is huge. I want to make a dedicated video on this. This will likely be my biggest new expense after retiring. 3) 401(k) still has plenty of tax benefits. But yes, there is a loophole! Look up Roth laddering; I'll make a video on it one day but I haven't yet! 4) You're absolutely right about inflation. That's factored into my investment projections :) And, to be totally honest... it's unlikely I won't be doing ANY work. I get bored! Even if it's just this meager KZbin channel or part-time work (or maybe even a full-time job!). I want to be ABLE to retire early, but I will probably make at least SOME money. Thanks for all the thought and care!

[@liamdm0465]

I think this is mathematically incorrect. But it really isn't that far off. This doesn't account for unexpected expenses that can eat away at your retirement funds. Probably better to use the money you're making in the stock market to develop passive streams of income. I think your really need to budget twice the amount of money that you would normally live off. Also this has not accounted for capital gains tax, so your money is like 20 % less valuable.

[@RunningonFIRE]

Hey, thanks for the input, let me provide some clarification! My video this Saturday will provide more detail about unexpected expenses; you are right that they should be budgeted for. Budgeting twice as much seems pretty extreme though... I am also definitely investing those savings in the stock market!! And there is no capital gains tax if you make less than $47,000 per year, so not worried about that either!

[@soc789]

Wow, I didn’t find fire until 35.

[@RunningonFIRE]

Hey, it's never too late to retire early! Glad you found it now; many people never find it!

[@TheFirstRealChewy]

4% rule is really for a 30 year retirement. $20K a year? Is that before taxes? That said, you won't pay much in taxes. I think the minum we would need is about $60K after taxes.

[@RunningonFIRE]

It's true that the original study was for 30 years. People have run the analysis for 50 years and it's still usually safe. $20k is after taxes, but using retirement accounts I think I could keep taxes super low. I'll have to run the analysis when I decide where I want to live after FI. I've got a whole video coming out this Saturday on more of these details!

[@writerjake727]

Who wants to be 30 years old, living with 2 roommates and never eating out or going on vacation for the rest of your life? What use is retiring if all you do is sit around playing video games while everybody you know is busy working? Why not work for an extra 15-20 years and retire with the same investment amount, while living with your family in your own place and actually enjoying your youth a bit?

[@joemonroe9456]

You don't need to eat out or go on expensive vacations to enjoy life. Some people value freedom over overpriced entertainment.

[@writerjake727]

@@joemonroe9456 there are a thousand different retirement plans. To me, I'd rather work til I was 70 and have fun on the weekends than retire at 30 living with roommates and being so frugal I never enjoyed life. Just my take.

[@lilsaint91]

the use is that you are able to sit around playing video games while everyone else you know is still working

[@RunningonFIRE]

Great question! Working an extra 15-20 years at this job sounds not super fun... I'd much rather travel (to cheap places) and enjoy nature (instead of playing video games). A dollar saved now is better than a dollar saved 10 years from now, so I'd rather invest in my freedom now and have the flexibility to do what I want later!

[@Stormnorman15]

You can still go on vacations and eat out. It's just called budgeting. FIRE doesn't need to be so black and white where you're unable to go do things. Its the freedom to be able to choose what you want to do without being trapped in the societal norms of a 9-5 job, paying off debt, paying someone else's mortgage, etc. if that makes sense. That's what I've gathered at least.

[@burntrubber7458]

Won't have to worry about retirement once this country collapses under the weight of foreign propaganda.

[@RunningonFIRE]

Other countries are even cheaper, I think I'd move 😅

[@Eoin_D]

Are you not already 30?

[@RunningonFIRE]

I just look extremely old 😅 I'm actually about to turn 24 believe it or not... I just grew facial hair and started balding in high school. People thought I was the gym teacher when I was 16...

[@matteog535]

Good content man! Liked and subscribed! I’ve been investing heavily too since I started 3 years ago (about 80k/year) and I’m 31, so Im planning to reach the financial freedom at 40. Question tho: where you want to keep all these money to be insured? Mostly all entities are FDIC insured up to 250k, do you split up platforms? Thanks!

[@RunningonFIRE]

Those are some serious savings, that's awesome! Really appreciate the kind words :) And great question! Since I have my money invested, FDIC doesn't apply (FDIC applies to bank accounts). SIPC does apply ($500k insurance). This really isn't my biggest concern (extremely rare that brokerages fail) but I do have my assets split; I have my retirement accounts with one provider and personal brokerage with another.

[@johnchen8888]

One of the best on retirement/personal finance! Keep your good work!

[@RunningonFIRE]

Dang, one of the best?! Much appreciated, really glad you're getting value

[@donb2527]

If you want to retire early you’ve got the wrong motivation, and will likely fail. Do what you love and find a way to monitize it, generate income doing what you love and invest that money to generate more income based on interests and your knowledge. Unless you want to invest in ETFs and make 10%/yoy where you need to save up 4-500k to generate an income just to stay alive, at which point inflation will eat away at your retirement yoy.

[@RunningonFIRE]

Hey, thanks for your concern! My thinking is it will be a lot easier to find something I love doing if I'm not worried about how much it pays :) I will probably do something in retirement though, even if it's just this KZbin channel! And I JUST posted a video about how much I think I need saved and inflation and all that, so I hope you check that one out!