[acdha]

Most of it is just lucky timing. There are a lot of people who do the exact same things but have very different results based on where exactly they fell on the economic cycle. Unless you’re in the very lucky cohort who would have been rich in any case, being set by your 40s requires things like timing the housing and stock markets pretty carefully to get the necessary returns.

[loeg]

I don't think it's accurate to say "most" of it is lucky market timing. That's certainly a component and if it goes wrong, it can throw off the retirement date by a couple years, but failing to keep your savings to income ratio high enough can throw off your retirement by four decades. For early retirement in particular, the compounding effect is smaller and the main factor (IMO) is savings rate.

Sorting people into two cohorts — "would have been rich in any case" and "other" — fails to recognize that people's individual financials fall somewhere on a continuum, and that their actions (i.e., spending) affects how much wealth they can accumulate by their 40s (or phrased alternatively, affects when they can retire).

[acdha]

> Sorting people into two cohorts — "would have been rich in any case" and "other" — fails to recognize that people's individual financials fall somewhere on a continuum, and that their actions (i.e., spending) affects how much wealth they can accumulate by their 40s (or phrased alternatively, affects when they can retire).

That wasn't a point I intended to make. What I was trying to get at is that most of us should not be comparing our returns to people who start wealthy / connected or the few outliers who were e.g. early employees at a high-return startup. That can be useful as a dream goal but it's better to have more realistic expectations.

For the main point, personal habits definitely make a big factor but your ability to maintain those high savings rates is subject to a number of things which you have little to no control over. As an example, graduating in a recession has historically correlated with lower lifetime earnings because starting salaries influenced subsequent wages and a long period languishing in a mediocre job market really cuts into your interest compounding time if your baseline is not substantially over a reasonable cost of living. Similarly, in many areas the housing market has had huge fluctuations and that's a huge impact on your savings rate since it affects both the cost of rent and your time to acquire a down payment if it's more cost effective long-term to own. You do have the option of living in a smaller/less-desirable place, etc. but that often still means things like a longer commute and the numerous costs that entails.

The other side of the luck equation is that many people have factors which make it hard to optimize for investment returns. If you have health issues, your savings rate is going to be much lower. If you have kids or a relative who needs help that will impact your housing, job, travel, etc. choices and cuts into both your absolute savings rate and especially your ability to make long-term optimizations. If you're married to someone who needs to move for job reasons (e.g. everyone in academia), your ability to time the local housing market is severely hampered. If your particular field is not continuously in strong demand (this can be out of your control: tons of laid-off web developers were competing for the same jobs circa 2001) there's going to be time transitioning, retraining, etc. and likely digging into those savings temporarily.

None of this is to say that living frugally is a bad idea or that you'd regret having done so, only that saying you can retire in 20 years is unrealistic for most people and it makes the pitch sound a bit like a scam/cult.

[loeg]

Yeah, all good points.

> None of this is to say that living frugally is a bad idea or that you'd regret having done so, only that saying you can retire in 20 years is unrealistic for most people and it makes the pitch sound a bit like a scam/cult.

I don't mean to suggest that everyone, or even most people, can retire in 20 years, and I certainly agree that such a claim is not true. Some highly paid tech workers can, and this forum's readership tends to tilt in that direction.

[acdha]

Yeah, I guess I prefer a more positive framing – the person who said that most tech workers plan to retire in their 40s makes it sound like something's wrong if you're not and I prefer a more nuanced message.

I especially like thinking about the meaning of where your money is going – some people spend money on experiences which they like but a lot of it is keep-up-with-the-Jones stuff where e.g. people are paying crazy amounts for housing zoned for the “right” school when paying less and spending more time with their kids will have a much bigger lifetime impact. Someone in that position probably isn't retiring too early in any case but if they have their spending well planned out they're probably going to say that was an acceptable tradeoff for having kids, while the guy living above even considerable means is having a midlife crisis reconsidering hemorrhaging that kind of cash.

[loeg]

Totally agree.

[AFNobody]

http://awealthofcommonsense.com/2014/02/worlds-worst-market-...

Even with bad market timing, you still have pretty good odds if you are genuinely dedicated to the task. Keep in mind, to succeed in ~20 years in almost all market conditions you would need to save 50-60% of your before-tax income.

[sokoloff]

MMM has done a blog post covering the issue of how long it takes to save for early [or not] retirement at a spread of savings rates.

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...

Under his assumptions, to retire in 20 years takes a savings rate of around 44%.

[AFNobody]

His math is a little optimistic when we are talking about "almost all market conditions" and once you start factoring in things that might go wrong, like a couple years of unemployment stretched over a 20 year career.

MMM ignores a ton of statistically common problems (like 4 bouts of unemployment over 20 years).

[sokoloff]

All models are wrong, but some models are useful.

[AFNobody]

If it is obvious predictable stuff, like being unemployed that almost everyone experiences eventually it isn't useful.

[sokoloff]

"[A] couple years of unemployment stretched over a 20 year career" seems to be an extreme outlier for the tech field.

I worked through the 2000 and 2008 crashes and I can't think of anyone I worked with in tech who was involuntarily unemployed for more than a few weeks at a time and certainly not for 10% of the total time. (Voluntarily for personal reasons like they decided to stay home with a kid, sure.)

Yes, years or 10%+ of unemployment would derail retirement savings. A few weeks here and there doesn't.

[firebones]

The luck isn't in the timing--as others point out, even bad timing leads to impressive gains over long time periods if there's a steady stream of periodic investments. The "luck" comes from winning a genetic lottery that allows you to live to 96 with no major bankrupting health crises or other situational losses, and to be well off enough early in that timeframe to have excess to invest.