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My head is exploding as I read about yet another young fire blogger hitting her FI number enabling her to retire at 30. I’m virtually fist-pumping her while also wincing at the same time.
Why Anyone Who is ABLE to Retire at 30 is a Badass
Assuming you built your wealth yourself, if you can amass enough money to live a comfortable-for-you lifestyle to never work again, you are a total badass.
Most Americans don’t have enough money to sustain themselves past one missed paycheck, yet here you are, optimizing your income and spending so that you can live a life of freedom. This takes years of discipline, vision and a level of maturity most adults don’t have.
Also, to retire in your early 30’s means you spent a good portion of your 20s, focused on earning and saving, This is a time when most of us are still dancing on bars and dropping a good portion of their meager salaries on booze (or was this just me?).
Personally, my 20’s were a write off. I was a late bloomer, so didn’t even finish my education until I was 27, then I started my first job with a wackload of debt and a brand new car loan.
I was also still living with my mother.
Debt? About $40K.
So for you to retire at 30 having amassed enough to do so is an achievement that I consider monumental.
Hats off to you!
I still don’t think you should retire at 30
Now that you know how highly I think of you, here’s why I wince at your choices and rationale.
Deciding at 30 how you will need to live off when you’re 50 and older is naive. I know you’ve spent a lot of time thinking through geo-arbitrage strategies and sequence of return risks. You’re smart, and you’ve no doubt thought through a plan for any conceivable situation (including a global pandemic).
However, there’s one thing you don’t have yet – experience with aging.
When you retire at 30, you are projecting a lifestyle onto your older self who may not feel the same way you do now about living on the cheap.
As you age, be prepared to have…
- Less energy to travel and ‘geo-arbitrage’ your way out of bad financial years.
- Less tolerance for change and uncertainty
- Less ability to sleep well in new or strange places
- Less tolerance for things like flying (especially in economy class), living in 3rd world countries or trying to navigate medical bills in a foreign language
- Less physical strength, mobility and mental acuity
You may also have….
- A desire for more comfort and safety…to grow roots or get a dog.
- A curiosity to try things that cost money – golf, tennis, archery, boating, crossfit (who knows)
- A marriage that falls apart, a child, or both. Or multiples of both!
- An unexpected curve ball like a lawsuit, robbery or worse – hopefully none of these happen, but expect life to serve you a shit sandwich or two
When you choose an income for your 50+ year-old self, 20 years in advance, you put her into a box. A box where she can’t experience many things life has to offer because she’s resigned herself to a small budget she chose when she was younger and a lot more naive.
But that’s not the worst of it.
What happens if god-forbid, you get a cancer diagnosis in your 60s? Your parents are gone, you have no kids, and you have to live in Thailand because you don’t have health insurance in your home country.
Aging isn’t just about catastrophes. It’s the little things…
I think the most surprising thing I’ve noticed about aging isn’t big things like hip replacements or a heart attack (I’ve never had either). It’s the little things like declining eyesight and memory.
Everything hurts a little more than it used to, and I need a chiropractor more often. I’m also more sensitive to noise, light and the things I witness around me.
Keep in mind, I’m only 50 and I’m very fit, healthy and active, so its not as though I’ve spent a lifetime neglecting my health. I am maniacal about my health, but even still – you can’t escape the aging process.
While I do want to spend my retirement years traveling, I couldn’t imagine doing it without a few more comforts than I would have needed in my 30s.
I hope you’ve budgeted for aging, because it ain’t cheap
I certainly don’t want to discourage anyone from chasing financial independence and enjoying a life of adventure and authenticity. I 100% think you should do that!
But what I also know, is that you simply have no idea what your needs will be when you get older. That said, I’m also pretty sure, your $40K per year budget probably won’t cover them.
I can always get another job
Can you? Speaking again from the perspective of a 50-something professional, finding work isn’t as smooth sailing as it is in your 30s. You’ve been out of the workforce for 20 years. Your skills are dated, you’re not even sure you could tolerate a boss again after years of freedom.
And then there’s that other niggly issue… agism.
You may be able to jump back into the workforce in the next 5 years completely unscathed if you need to, but don’t assume that will be the case when you’re getting up there in age.
I can’t predict what the world will be like when you turn 50, 20-ish years from now, but I can tell you what it’s like right now. Women in their 50’s are the least likely to land a job, especially during and after a recession. Their highest earning years are now behind them, and that’s assuming no gaps in their resume.
You also won’t have many professional contacts if you leave your career in your 30s. Most people find their next gig through extended professional networks. You will still no-doubt have a wonderful network of fellow early retirees and expats, but they’re going to be less useful when it comes to a job search.
So if you shouldn’t retire at 30, then when?
There’s no exact answer here, but I would say that you either need to be a little older or a lot wealthier than just having a $1 million portfolio. Projecting a $40k annual income for yourself (based on the 4% rule), for the rest of your life, seems absolutely terrifying to me.
I can’t say what’s right for anyone else, but I can say that if my 30-year-old self decided that I wouldn’t need anymore to live on then what I was spending in that moment, I would not be happy today.
Not only would I feel incredibly limited financially (and therefore constantly stressed about money), I’d also feel as though I made a poor decision based on a limited life experience.
When I was 30, I was making $60K a year working at JDSU, a company that anyone with an interest in tech stocks at the time would be familiar with. I was lucky enough to have a ton of stock that had not yet tanked. For a 30-year old, I felt rich! Looking back, I really wasn’t.
Your experience with money and life are extremely limited at 30.
As a 50-year-old, I could live off a meager $60K a year if I had to, but it wouldn’t be fun. I’d have to think through every purchase carefully and I certainly wouldn’t own my own home.
But more importantly, I think a lifetime of minding my money to stay on budget and constantly being nervous about having enough in down years would make me more miserable than having to work at a job I didn’t love for another 10 years.
I still think you should reach for FI
Saving enough to cover your basic living expenses for the foreseeable future, is a such a smart move. It gives you the power of choice in so many ways, which is what financial independence is all about.
However, nothing can prepare you for life the way living does. There are no algorithms that will predict mental health issues, chronic disease, hip replacements, heart break, trauma, divorce, babies, or simply changes of heart. You just have to live your life and let it unfold.
For that reason, I urge you not to toss your hard won career out the window at the age of 30, just because you had a bad work experience. Go part time, find a job where you can work from home, take a few years off or just a 6-month sabbatical.
Whatever you do, don’t assume you know what you’ll want to live on when you’re older. You simply have no idea who that person will be, and she may end up resenting you for putting her in a financial box.