Ask HN: Can you still achieve FIRE if you start planning at 40?

[amazonavocado]

As a hypothetical, imagine that you are 40, and you are strapped for cash. No retirement funds or other accounts other than a checking account, and you are collecting unemployment. Your first priority may be to get a full-time job for a more stable source of income. At that age, it still doable to retire early with financial independence in 10-15 years? And do you think there is an event horizon where FIRE is no longer achievable?

[Oneiros512]

One think I like to keep in mind with this sort of situation is that building retirement savings and an emergency fund can have immediate benefits of the added security blanket they provide, aside from the long-term goal of retirement.

Even if someone got a late start or has a high amount of debt and retirement isn't looking so possible, building a safety net and improving your financial situation is never a bad idea.

I just got laid off myself, and while I'm many years away from any kind of potential retirement, my savings over the last several years put my mind at ease because I know I can easily go a year if I have to without any additional employment, even though hopefully I'll have a new job much sooner than that.

[sloaken]

Great advise!

Sorry to hear you are laid off. I have been there twice. Short advice: 1) make a schedule so you do not spend ALL day troweling for a job (it gets depressing), 2) schedule in time to exercise 3) if you can find co-workers who were let go, and you like, try to meet with them weekly. It provides a stability and a sounding board for ideas.

[subhobroto]

> I just got laid off myself

Congratulations. Depending on how you look at it, it might feel the worst thing that ever happened to you but looking back, this would be the best thing (or pretty much up there) ever!

Feel free to reach out to me if you're in the U.S.

[asimjalis]

> I just got laid off myself

Been there. It’s a good opportunity to think about what you want to do. If you’re interested in a tech job contact me privately.

[maximente]

FIRE is about reducing spending.

if you're breaking even on unemployment - say $500/wk post-tax (???), then you just have to be disciplined enough to not inflate your lifestyle wildly when you land FTE.

if you make $1000 post-tax a week with a job and no spending increases, you immediately have a savings rate of 50%, which translates into working about 17 years. so you'd retire at 57.

here's the calculator i use: https://networthify.com/calculator/earlyretirement?income=50...

[subhobroto]

> FIRE is about reducing spending.

NO.

Sure, people can achieve FIRE by being frugal, but hoarding money won't get you anywhere.

It's how you use it that's important.

For example, you can also achieve FIRE by setting up cashflow sources so that you are net positive cashflow.

FIRE is about learning that your life depends on net positive cashflow and figuring out ways to achieve that.

[burntoutfire]

That's one of the approaches. But you can also live off the savings if you don't like risk.

[pmiller2]

10-15 years is doable with a savings rate of 67%. At that rate, you're accumulating 2 years' worth of spending for every year that passes by. In 12.5 years, you'll have accumulated 25 years' worth of expenses.

If you invest well over that time, you can either retire earlier or do it with a somewhat lower savings rate.

[s1t5]

Even if we assume that saving that much is possible, the math only works if you're up for living a lifestyle costing 33% of your current earnings for the rest of your life.

[pmiller2]

Yes, that's the idea.

[pfranz]

This is something I wish was talked about more in personal finance. Salary and spending don't have to be coupled.

[pmiller2]

It is, but usually only to the extent of "spend less than you make" and "save X% of your income," where X is significantly less than 50%. Only until you get to the FIRE community do you see people start talking about 50-60+% savings rates.

[pfranz]

I see it all around, like "housing should be around 30% if income" or a budgeting system like 50/30/20 (needs/wants/savings&debt).

I just think the concept of decoupling them isn't something people quite appreciate until you get really into personal finance. When going from college into a career your salary can double quite a few times and if you can keep you living expenses restrained it's a lot easier than a decade later trying to pull back and pay down debt.

[burntoutfire]

That's one of the main ideas behind the more extreme variants of FIRE - live like you lived when you were 25, keep getting raises, save 80-90% of your post-tax income. Also, learn to cook, fix things around your house, fix your car, grow some food etc and you'll be freed from from jobworld in 5-10 years max.

[cercatrova]

Correct; there is no free lunch, spend time or spend money.

[waterside81]

For the unitiated like me https://en.m.wikipedia.org/wiki/FIRE_movement

[keiferski]

Is there really a significant difference between retiring at 55 vs. 65? Is this difference large enough to warrant shaping your entire life, job choice, spending habits, and place where you live around it?

Personally I would say that you should instead focus on 1) cutting down spending and 2) finding a part-time job that gives you free time to live your ideal life. Both of these are actionable items, doable within six months. An abstract FIRE plan of 10-15 years is not.

Many people interested in FIRE would be better off analyzing why they want to retire and what they could do then, that they can’t do now. Much of the time, ‘retirement’ is just sort of a magic undefined goal that goes unexamined.

[burntoutfire]

> Is there really a significant difference between retiring at 55 vs. 65?

Ten years of life is a VAST lifespan. Plus, you might not even make it till 65.

[keiferski]

That kind of just illustrates my point. In order to FIRE at 55, you're looking at a difficult time for a decade+, from 40-50/55. Who's to say you won't drop dead a month into your retirement at 55?

All the research and anecdotes I've come across illustrate how staying active and working (in whatever way possible) extend lifespan more than being retired and purposeless. So personally, I think FIRE only makes sense if you're retiring to pursue a greater goal that otherwise wouldn't be possible. And for most cases, this goal is still achievable without FIRE, if you get a little creative.

As I said above: better to figure out what your ideal life is and work at it now. IMO, FIRE is really only a rational option if you're young, have a high income, and are OK with living cheaply/into DIY. Even then, assuming that the markets/civilization in general will be predictable for the next 50-100+ years seems rather naive, especially with recent events (COVID).

[b_t_s]

Totally agree. There is risk of death but also risk of failure(recession, medical issues, etc...) and the risk/reward analysis goes downhill fast as you age. I was on track for FIRE. Then the great recession happened and that became semi-on track. Then I got married to someone who wasn't FIREing and had a kid. Game over. I'm now too old(late 30s). The guaranteed hardships required to achieve FIRE are totally not worth it for the potential extra years of retirement. For a few decades of retirement as a recent grad, yea. For a few extra years of retirement as a married with kids, nope. I can't subject my kid to that, and the payoff is too little, too late, too uncertain. We're focusing on living our best life now, and if I manage to achieve some degree of FIRE by virtue of high salary and not being wastefull then yay, bonus. If not, oh well. The transition from FIRE lifestyle to living our best life now lifestyle has been fantastic, joyful, and totally life altering.

[fiftyacorn]

I always wonder how americans can achieve FIRE with the healthcare system.

It seems doable until something goes wrong and you get a huge bill?

[1123581321]

Most Americans who want health insurance have it. Insurance pays the the bulk of a huge bill. The individual pays a small fraction of a huge bill through deductibles, co-payments and co-insurance (depends on the policy.) This fraction can be paid from the savings a FIRE retiree would have accumulated without significantly affecting their investment income.

The individual pays a larger fraction of smaller medical bills, but because the bills are small, this is also affordable to someone with savings. The majority of medical events are inexpensive.

[redis_mlc]

Everything you said is the opposite of reality in America in 2020.

[1123581321]

This Wikipedia article is a good summary, especially the breakdown of uninsured populations. https://en.m.wikipedia.org/wiki/Health_insurance_coverage_in...

There are a number of reports of out-of-pocket spending and insurance plan policy detail is generally available. Do you have a preferred source for that data? This conversation is about FIRE, but a summary of the prevelance of burdensome healthcare costs in respect to the broader US population was published here: https://www.commonwealthfund.org/publications/issue-briefs/2...

Again, these are just gentle introductions to the data. I would be happy to read what you’re looking at.

[rayhendricks]

There are a good amount of healthcare resources for retirees and government workers in [WA, USA].

Before he passed away last summer my grandfather was using $26000USD/mo of insurance benefits which the state paid for as he was a retired public employee[0]. Literally added up all the expenditures because I was visiting and bored. This was mainly GP/Antibiotics at a hospital/PT work. The only thing they don't cover is long term care, of which we are currently paying $7500USD/mo for my grandmother.

Yeah, it's a lot of money and they sold their [Grandparents] house last year for approximately $490,000USD after realtors comissions and fees thankfully before COVID. But I hope that puts things in to perspective for those outside the USA.

Basically you have to do a medicare trust for your house or pay $6000-$13000USD/mo for longterm care. Usually what happens is people spend down the parental assets then apply for medicare and they try and find them a nursing home or memory care bed.

[0] https://www.hca.wa.gov/employee-retiree-benefits/retirees/ho...

[_bxg1]

I never thought about that side of it; you do need health insurance. Anybody have an answer?

[535188B17C93743]

This is what I came up with: https://www.usatoday.com/story/money/2019/06/04/early-retire...

Looks like private insurance, previous employer benefits, your spouse's insurance (if they're still employed), and bare-bones plans are all options.

[quickthrower2]

An alternative to FIRE is to find a way to live off say 20h or less of work. The trick would be to find a way to get paid a good rate still for those 20. With 3 short days and a 4 day weekend, assuming you are doing a job you live I don’t see that as much different to being retired. And with digital nomadding (pandemic excepted) you could even travel. I’m not convinced that having nothing to do is great and I’m convinced you can find something you love that you can be paid for, albeit maybe less than if you are prepared to do a job you hate.

[SenHeng]

I've always thought that FIRE was comprised of two separate things that weren't necessarily related, but one required the other before it could be achieved.

0. fix your personal finance situation

1. attain financial independence

2. retire early (if at all)

0 is a pre-condition that most people in the world are stuck at. Some manage to get to step 1. Step 2 is optional because it has a hard time limit and has a fuzzy definition.

Does retiring at 64 count as early?

Does working a part time job count as retirement?

So based on the above stipulations, I think FI is possible but RE depends on your POV.

[lcall]

About getting to 0 (as i noted elsewhere): One of the best things I can recommend is getting control of finances, instead of letting others and money control you, using Dave Ramsey's 7 baby steps: https://www.daveramsey.com/dave-ramsey-7-baby-steps

I can attest it makes life better!

(...with or without purchasing one of his books/dvds/etc; no affiliation but customer; we bought some of his materials for our children. Some of them told us they prefer a free BYU personal finance course, but I dont have that link as handy at the moment).

[rskar]

Per https://www.marketwatch.com/story/this-is-exactly-how-much-i..., retirees have a lifestyle of roughly $60k or so per year. At a more modest $50k, and assuming a portfolio of working assets from which to draw this $50k, that would be something like a portfolio of about $830k at 6%. Assuming a 6% yearly net gain on investments, then if you can somehow sock away about $33k per year, you might achieve FIRE status in 15 years.

So there you have it: The event horizon is based on how realistically you can soldier on and invest 66% of your target retirement income each year for 15 years. Not sure how realistic that is for most people, let alone this hypothetical 40-something in the doldrums.

I'm using 6% for sake of argument for no good reason, but it's the usual rate used in converting a pension into a lump-sum. It is possible to do much better - stock market has been about 8% to 11% on average. So maybe 6% works as a fudge-factor in this sort of planning versus life's many ups and downs.

Anyway, if one had 30 years towards this "$50k FIRE", then the yearly "at 6%" investing is $10k; at 20 years, $21k; 10 years, $56k.

[mi100hael]

Conventional wisdom is 4% withdrawal for year 1, and then inflationary adjustments after [0].

So for $50k, that's $1.25M principal. If you can wait and supplement with social security or part time work so you only need to withdraw about $35k, then it's $875k principal.

[0]: https://www.fool.com/retirement/what-is-a-safe-withdrawal-ra...

[pfranz]

Don't forget taxes! Both on contribution and withdraw. Those under 50 are capped at $19k /year for 401k and $7k /year for IRA. Keep in mind you can't start withdrawing until age 59 1/2.

So any money accrued above those limits will be taxed and any money you need to withdraw before that age will need to be separate and taxed.

[junar]

> Both on contribution and withdraw

To clarify, the same money generally isn't taxed twice. Contributions to pre-tax retirement accounts are not taxed, but distributions are. On the other hand, contributions to Roth accounts come from taxable compensation, but qualified distributions are tax-free. Finally, you buy taxable investments with after-tax principal, and only its earnings are taxed later.

> Keep in mind you can't start withdrawing until age 59 1/2

This doesn't apply to taxable investments, obviously, but even for retirement accounts, there are ways around that.

https://www.madfientist.com/how-to-access-retirement-funds-e...

[codegeek]

First define what is retirement to YOU. If you can live with 1000 USD per month vs say 10,000 per month, we are talking different strategies. In general though, why not.

[alltakendamned]

Pragmatically, you'll be in a better shape, and have a better chance of succeeding, if you start the journey than if you don't.

[blankface]

it's possible to retire at any age

keep your costs fixed and live within your means

theoretically if I saved the entire year worth of salary of a SWE, could live off of that for 3 years (3 years of 50k salary)

it really is easy if you come from a struggle background - everything I get from this point on is simply a +

[lcall]

One of the best things I can recommend is getting control of finances, instead of letting others and money control you, using Dave Ramsey's 7 baby steps: https://www.daveramsey.com/dave-ramsey-7-baby-steps

I can attest it makes life better!

(...with or without purchasing one of his books/dvds/etc; no affiliation but customer; we bought some of his materials for our children. Some of them told us they prefer a free BYU personal finance course, but I dont have that link as handy at the moment).

[smcphile]

There’s no “one size fits all” answer to the question. Some people certainly have started from zero at age 40 and have happily retired before the legal retirement age. Whether or not it’s possible for you depends. Life situations vary enormously.

Two suggestions:

Read Rolf Dobelli’s “The art of the good life” to get a realistic idea of how the world works, and how both character and the fates have a role in how your life plays out.

Set up a spreadsheet to model earnings and expenses from age 40 to age 90 and see what the model tells you. Play with the numbers to develop a strategy that works for you and your situation.

[burntoutfire]

Read this blog, it is pondering this topic quite thoroghly: http://earlyretirementextreme.com/

[sloaken]

Do you own your house? Depending on what you think you need verses what you want. If you are willing to live in a country where the typical standard of living is lower than what you are use to. You will probably not speak the language.

Are you willing to live in a mobile home? If you are flexible and self reliant then definitely yes. If you need luxury, meals delivered, swimming pool, etc then probably not, well not in 10 to 15 years, maybe 25 to 30. But it depends how much you make.

[orasis]

Read the book "Millionaire Fastlane" by M.J. DeMarco. You need to create massive value that is automatable and scalable to make millions in < 10 years.

[orasis]

Pearls before swine.