How to Retire in Your 30's

I was reading the "how to" section on My Google the other day when I logged on and saw a link that promised how to retire in your 30's. Knowing that such a promise is ridiculous except for a very, very, very small fraction of the people out there, I clicked through for some amusement. I wasn't disappointed. Here are their tips on how to retire before 40:

• Define the dream, while documenting the reality.
• Make a LOT of money.
• Lower your expenses.
• Invest wisely.
• Keep your eye on the mark.

Wow. This is really revolutionary stuff. Think Money magazine is aware of this wealth of knowledge? Maybe I could use it to write my own guide to early retirement. It would go something like this:

• Earn $10 million by age 39.
• Spend only $1 million up to age 39.

I'm a genius!!!!!!!! ;-)

But wait, there's more from this piece. They give some additional tips -- some of which are good. Let's look at them one at a time (in green below):

While you will almost certainly want to work somewhere like New York or San Francisco while you are earning your retirement, it is entirely impractical to retire there. Your goal is to sock away savings while living in an expensive city, then move somewhere cheaper. There are plenty of wonderful, affordable places to live in the US, or you can reach your retirement level even faster by moving to a cheaper country. There are entire colonies of retired Americans in cities like San Miguel de Allende, Mexico.

I'd suggest a bit of a different strategy if you want to maximize your retirement savings including:

Both work in and retire to a lower cost-of-living city. Believe it or not, there are great-paying jobs outside of New York or San Francisco. Your goal is not to sock away savings while living in an expensive city, then move somewhere cheaper, but rather to live in a place that maximizes your income potential less your cost of living (and that you enjoy, of course).

I do like their idea of retiring in a foreign country. Lots of advantages to doing this, especially for those people who want to live the high life but don't quite have the high life savings stashed away.

Consider the single life, at least until you retire. To achieve an early retirement, a period of sacrifice and hard work is mandatory, and finding a partner who shares your ambition sufficiently to make that sacrifice will be difficult. Furthermore, finding someone who shares your vision for geographic relocation and kids, and will maintain that vision, is doubly difficult. You can pursue relationships at leisure once you are retired, and you will have more time and energy to focus on your career while you are earning.

I'm trying not to burst out in laughter here. Obviously, this is not from a serious financial site.

In fact, the opposite of what they imply is true. The stats show that married people have higher net worths. If you're really intent on retiring so quickly, why not find a like-minded mate who's pulling down $250,000 a year like you are and then you can really save up the big bucks? ;-)

Consider not having children. This approach to early retirement almost certainly rules out the enormous expense of having and raising children. This is a decision you will need to make carefully. If you decide in haste, it may be a decision you come to regret.

The wisdom flowing from this piece is almost unbearable.

Yes, it's true that kids cost a ton -- up to $250,000 BEFORE college costs are factored in. But it's also true, and any parent can tell you this, that kids are more important than money.

Finally, the piece does give some decent advice that I can agree with 100%:

The #1 reason people in high paying salaried jobs are still working hard when they are fifty is because they can't keep their spending under control. To soothe their agony regarding their dull, demanding job, they placate themselves with toys that fail to make them happy: a penthouse apartment, a fancy car, a diamond ring. Resist the massive pressure to dress, eat and shop like your peers, and live a modest lifestyle.

Yes, spending less than you make is the way that almost anyone can become wealthy. And no matter how much you earn, if you spend more than that, you're going backwards.

Enough of this nonsense. I've written a realistic simple guide to retiring early, so check it out if you're interested in leaving the workforce before 65. However, most people won't be able to (or want to ) retire early. For them, a better post is the Free Money Finance Guide to Saving for Retirement.

Comments

[Kira]

College Student Financials (http://www.hberry.net/) found a similar article and it too says basically, make a crapload of money and don't spend any of it! You gotta wonder about people who hate to work so much that they work their butts off just to stop working. I would much rather just get a job that I actually like, since apparently in either plan you are going to be living like church mice.

[thc]

Everyone has an opinion and there is no silver bullet, no magic pill and no single right way to acheive financial independence. That said, there's plenty of crap being doled out on financial blogs as well. Before following any of this so-called advice, consider the credentials of its source.