I may have mentioned this before, but I want to retire by the time I’m 40 (ideally even earlier) and be able to actually spend time with my theoretical future
spawn children. When I tell someone, I usually hear a sarcastic “yeah, sure, when [insert startup here] IPOs and your shares are worth millions,” and then we move on.
Financial Independence/Retiring Early (FI/RE) is becoming more and more common. Great, especially considering that our robot overlords are already gunning for our jobs.
But think about it. There’s a reason Elon Musk fears artificial intelligence, but even before our robot overlords reach singularity (at which point, let’s face it, we’re probably doomed), the economy will change drastically.
Unless you’re a fancy-pants artisanal craftsman, who knows how long our jobs are going to be around? Technology is going to advance exponentially over the next few decades, and do you really want to have to compete with a machine in the future? We’re having enough trouble being recognized at work now just based on gender.
And sure, the end is nigh and all that. But even without James Cameron’s the War Against the Machines, who wants to have to work forever? I have so much respect for the endless hours of work my parents put in, but if and when I reproduce, I want to be around to experience every frustration of parenting. And before that, I want to travel more, volunteer more… the whole shebang.
So how do we break free from the paycheck dependence?
We have to become financially independent – and I don’t mean from our parents’ bank accounts. Financial Independence is the concept of being totally self reliant or sustainable, financially, without having to actively work or depend on a paycheck. And you don’t need to be a millionaire to do it. Instead, millennials are building up enough passive income to pay for their lifestyles, whether in the form of dividend payouts, investment income, rental income, book sales, ad revenue from viral youtube videos… or any combination of these.
Financial Independence is a form of ultimate freedom. And we don’t have to work towards it alone. There’s a whole online community supporting this pipe dream.
I’ve been gunning for FI/RE since my now-ex first introduced me to Mr. Money Mustache, back when we were in that #startupgrind, making next to nothing and dreaming about not having to work 60+ hour work weeks.
While I’m not as extreme as MMM, I’ve taken to the online FI/RE community, and adopted their ways. Striving to save 50% of my take-home, investing smart, and working to increase my income – all of these are setting me up for a cushy hammock lifestyle well before I hit 50.
Which brings me to that 40 number – it’s not just because it’s a nice clean round number (although it is oddly satisfying). It’s based on Networthify’s retirement calculator.
This is probably the single most powerful concept that kept me on this whole FI/RE thing. The more you save, the less you spend, and the less you need to live on at retirement to maintain your lifestyle. While of course there are unavoidable costs of living, the general idea is that after a certain point, the numbers matter less than the percentage. Regardless of what you’re making*, with a Y% savings rate, you can retire in X years. That’s powerful.
*Again, I want to stress that this only holds true above a certain income. Fixed expenses are a real thing. Let’s not pretend that income doesn’t matter, and it’s easy for anyone who just puts the effort in. Someone making $90,000 inevitably has an easier time saving 50% of their take-home than someone making $18,000. I know, I’ve been both.
This is just a quick intro, but Financial Independence and Early Retirement aren’t just silly daydreams to help sustain us in the rat race. They’re realistic, tangible goals. And people are already achieving them.
Now my only question is whether I’ll be retired before some Recruiter Bot starts taking over the market. Here’s to hoping!
My favorite free financial tool I use is M1 Finance. I've previously written about M1's free trades, automatic rebalancing, and easy-to-use interface, but it really does make investing accessible and easy. If you're not already investing in some way, or if you're looking for a tool that makes it easy to manage, I recommend trying it out.
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