I'm sure you guys have seen this article before: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I just want to bitch about what a load of bullshit it is.
He calls 50% a reasonable savings rate that will let you retire after 16 years, so I'll go with this figure. Let's do some reality checks:
If you make federal min. wage, this means living on $580 a month (!!!). Yeah, good luck, unless you live in a tent under the local overpass. But okay, that's minimum wage, right? Of course it's not enough.
Well, let's say you make the median income. This is 43k per household in US as of 2013, before tax. For the same year, the income tax is 15% if you are head of household. So after tax you get 37k. Now you must save a "reasonable" 50% of this, which means you must survive 1500 a month. On this 1500 a month, a whole household must survive. Let's say you were "smart" and didn't have kids, didn't have live-in girlfriend and will never marry. 1500 a month, for a single person, doesn't sound too bad, huh?
Well, I live on about that much currently. About half goes to paying rent (and I'm sharing my house, otherwise I'd be spending 2/3s on rent). Most of the rest goes to food. I don't have a car and have to beg friends to give me a ride to the mall. I have to scrape and scrunch to take a once-a-year vacation to a neighboring state. I commute on a shitty cheap bike that's literally falling apart because that's all I can afford. I can't visit my parents more often than yearly because of how expensive plane tickets are.
I don't mean to whine, all things considered my life, while being nothing to brag about, isn't terrible. But by this guy's logic, the "median household" would live at this income level for life. A young 20s dude can handle 1500/mo, but a 60 year old guy? What if I get cancer and have to pay for chemo?
And keep in mind that this is for the median. 50% of the households, not even individuals, make less than this, so for them it's even worse. Save 50% of your income and retire early? Lol, literally only possible if you're way at the top percentiles.
And where's this asshole getting these ridiculous ideas, anyhow? He says, "oh it's super easy, I did it myself without even trying lol". Well, here's the details: http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
>comp. eng. degree
>got a job straight out of college
>that job paid 41k (in 1997!)
>no student loan because rich parents paid for college
>zero interest car loan because rich sister (16k for a 3 year old car, kek dem 90s)
>buys tons of expensive shit
>STILL manages to save 5k in one year despite that
>after 1 year, got a 35% raise to 58k (!!!)
>still paying $350/mo in rent
>after 3 years salary is now 77k
>riding the dotcom bubble for all its worth
>after 4 years (at 26 yo) manages to find a woman who is both wife material and has a 44k job
>both him and girlfriend continue to get raises
>le easy retirement lel
Well, fuck, buddy. Not only do you have one of the highest earning majors, not only did you happen to start your career during one of the biggest booms of this century, not only did you manage to easily find a wife-material girlfriend (forget retirement, just this at 26 is very good luck in this day and age lol), not only was your wife also raking it in, not only did you start out with a great salary and it just kept skyrocketing, not only did you find great roommates who weren't making your life miserable, not only did you have to pay ridiculously low rent, not only did you have a wealthy family that supported you through all the big expenses… Fuck, I'm gonna stop here because it gets depressing.
So basically, if you are very lucky and in the right place at the right time, you can retire early. Whoop dee fucking do, thanks internet blog man!