The blog from MMM that I've read was First Retire... Then Get Rich, the title speaks for itself, in this blog he talks about retiring at an early age and being able to get rich by maintaining a positive savings rate, even in retirement. MMM had gave the readers two good examples on how to be able to retire early.
The first example was of Jack who follows the popular "4% withdrawal rate" guideline and once he reaches $500,000 he quits his job. Jack then spends $20,000 per year whether he needs it or not.
The second example was of Jill, who also estimated she needs at least $20,000 per year in retirement so she also saves until she reaches the $500,000 mark. MMM then goes on and talks about how she can save more money than Jack because she has found opportunities in her dreams of being a kayak instructor. Jill has also used another MMM article so she can swap out her car and save even more money and by biking more, so she saves around $2000 per year. Since she has been a kayak instructor, she only does it for four days a year so it doesn't feel like a real job and gets $5000 per year on that.
MMM mentioned that Jack and Jill had came to find each other and fell in love so they can cut some spending even more by renting out one of their old houses and eventually have a income of $50,000 per year total while only spending $30,000 so they have $20,000 that can be re-invested in each. MMM had calculated that in the next 30 years they would have an additional $1.329 million dollars. By this plan, MMM says you would have several millions saved by the age of 65.
Although, I find this a little hard to believe, the chances of Jack and Jill meeting each other, I find that being able to save money like that and saving together with someone can give you the chance to retire early. I also know that this method of retiring early for some people isn't a choice because some people might not be able to save up to $500,000 in their lifetime if they're living paycheck to paycheck, but overall this sounds like a good method for the general middle class to be able to reach.
I cant imagine retiring so early and living on a minimal income I would have to become one of those cheap-sakes that dont flush the toilet till after a week of use to save $2 a month.
ReplyDeleteI like his idea of being able to retire early but i do not think i would be able to maintain the same spending per year. i agree that this is a good goal that many middle class people can meet but personally i do not think i would be able to budget that considering i like to shop.
ReplyDeleteWow! That was a really interesting way to describe his thinking. I was really intrigued by the number that he said they would make over the next 30 years. That just baffles me.
ReplyDeleteYeah, I definitely agree with you that it's hard to believe that a situation like this would just fall into place, but MMM gives great evidence that living life in this manner would considerably cut out expenses. Also, I found it really interesting that an excess of over a million dollars could be accumulated in 30 years, which truly sounds like great financial planning.
ReplyDeleteRetiring early sounds really great but at the same time for myself, it just doesn't sound realistic. I'd rather work a couple more years and save money, retiring at a later age
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