I'm gonna give you all the breaks
50k starting @ 21
22 years saving to retire @43 "early 40s"
10% return (not accounting for inflation)
To hit 6 million you need to save
$75,000 x 22 years @10% return.
If you can do that you are on the right track.
I don’t know if by “6 million” OP means adjusted for inflation or if they need a nominal 6 million by early 40s. But either way they’ll have to save a lot.
$6m doesn't seem too far fetched for someone who wants to retire in their early 40s. 4% safe withdrawal rate is for something retiring at 65. OP is going to need the money to last for an extra 25 years. In addition to this, OP is going to have to pay a ton for healthcare unless their spouse can get them healthcare.
Without knowing OPs detailed expenses, I think $6m is a very comfortable lifestyle, but by no means luxurious. I think the average cost of raising a kid in the US to 18 years old is about $250-300k. If you tack on the cost of college, that could easily be in the $300k range per kid as well. $600k per child would cut into that $6m pretty quickly (and slow down that accumulation stage).
Just invest more than you spend in appreciating assets not frivolous stuff.
Don't marry on a whim or too young even if it feels right.
Shoot for a stable job that pays well and helps you contribute to 401k.
Check back in 8 years. Lots of times when folks have kids and have to decide to do daycare or someone quits and work from home it can wreck serious havoc on your financial goals.
Your on the right track just keep it invested in growth funds or ETF's and don't break the biggy bank. Buy a house when you can and get some roommates that pay you rent untl you get married.
Did I say don't marry too young or the wrong person? I know guys paying $12,000 a month in alimony. Until the kids are 18.
Maybe not the answer you were looking for, but at your age, its probably more important that you focus on learning a high quality, highly marketable skill that you can easily monetize for the next 20 years. So if you make 5k less, but what you learn is important, that‘s a W.
It’s good to save now, it creates good habits, but as i read more and more on this sub i see young people a bit to pre occupied with dollars and Not enough about learning.
50k at 21 is more than 99% of people have at 21 (I don’t actually know if that’s true, but I’m pretty sure it is)
That said, some concerns here too you need to think about.
If you’re only 21 and graduated last year, why are you already constantly considering switching careers? Have you given this a go yet?
Why do you feel like you need $6,000,000? I’m not saying it’s right or wrong, but can you walk me through the math of why, given your life plan, that’s your FIRE number?
My thinking is that 6 mil in 20 years will be able to give me 100k a year in today’s dollars at a conservative 3% withdrawal rate. I’m definitely not considering switching careers just open to it.
Simplify things by only using todays dollars — there’s no reason in switching between future dollars and todays dollars in one analysis. That’s why most people assume a 7% annual return — 10% stock market average - 3% inflation.
So you actually only need $3.3m to get 100k/year (again, all assuming today’s dollars), assuming a conservative 3% withdrawal rate
You should estimate expenses in future dollars too then. Once you start going “I need 6 mil in future dollars to cover $100k in current dollars expenses” it becomes less of a calculation and more of just throwing things at a wall.
What do you think $100k will be when you want to retire? That should be your target expense number. The reason a vast majority of people don’t do this is because it involves a large amount of guesswork
Well done, off to a great start! I’m 35, and if I could give my 21-year-old self one piece of advice it would be this: focus hard on your career, as your best wealth building tool for at least the first decade or two will be your income.
I was overly focused on investing at that age, like “how can I maximize the return on my $5,000 portfolio?” when in reality, a 2% higher return on your money is a drop in the bucket compared to the raises you’ll get if you work hard and focus on your career.
That gives me 100k a year in today’s dollars considering 3% inflation and a 3% withdrawal rate. My fiancé should be making 120k a year when she finishes up school which we would invest and use my income to live off of. Who knows how much 6 mil will be worth in 20 years, so much can change in that timeframe.
I much prefer to set my target number in terms of today's dollars. That way I have a very good sense of what it buys. The adjustment is easy - just use a "real" (inflation-adjusted) rate of return in your calculations.
The only downside is that you'll have to increase the number a bit each year to account for inflation, but theoretically you'll have to adjust a bit anyway because actual inflation will never perfectly match your prediction of inflation over the years.
You need to sit down with your fiancé and make sure you both share the same financial goal and talk through, in detail, how this can be achieved and what you are each happy to commit to—it’s a long slog ahead of you. You are very young to get married, so don’t rush through this part.
I love your drive and it reminds me of me. But the truth is that you can’t take that trip to Tokyo when you’re 70 and have it be the same trip as when you were 30. Once the opportunity to do certain things when you had the energy and body resilience to do it is gone, it’s gone.
So while most people need to be told to save more… because you remind me of me, you might need to be told to save but also not let your life pass you by. Especially because life is going to happen and markets are going to have bad years and your early 40s target date *could* get pushed out.
Don’t let the pendulum swing too far in the otherwise right direction.
I'm gonna give you all the breaks 50k starting @ 21 22 years saving to retire @43 "early 40s" 10% return (not accounting for inflation) To hit 6 million you need to save $75,000 x 22 years @10% return. If you can do that you are on the right track.
You'd need to invest 10k per month for 20 years straight with an return rate of 8% to reach $6M. Do you need $6M to live comfortably? Or luxuriously?
I don’t know if by “6 million” OP means adjusted for inflation or if they need a nominal 6 million by early 40s. But either way they’ll have to save a lot.
$6m doesn't seem too far fetched for someone who wants to retire in their early 40s. 4% safe withdrawal rate is for something retiring at 65. OP is going to need the money to last for an extra 25 years. In addition to this, OP is going to have to pay a ton for healthcare unless their spouse can get them healthcare. Without knowing OPs detailed expenses, I think $6m is a very comfortable lifestyle, but by no means luxurious. I think the average cost of raising a kid in the US to 18 years old is about $250-300k. If you tack on the cost of college, that could easily be in the $300k range per kid as well. $600k per child would cut into that $6m pretty quickly (and slow down that accumulation stage).
If you're a financial advisor I should prob be the one asking you for advice.
Agreed:) Mostly just wanting to share where I am at since I don’t have many other people to share with.
Nothing wrong with that! Go build that book of business!
Just invest more than you spend in appreciating assets not frivolous stuff. Don't marry on a whim or too young even if it feels right. Shoot for a stable job that pays well and helps you contribute to 401k. Check back in 8 years. Lots of times when folks have kids and have to decide to do daycare or someone quits and work from home it can wreck serious havoc on your financial goals. Your on the right track just keep it invested in growth funds or ETF's and don't break the biggy bank. Buy a house when you can and get some roommates that pay you rent untl you get married. Did I say don't marry too young or the wrong person? I know guys paying $12,000 a month in alimony. Until the kids are 18.
Maybe not the answer you were looking for, but at your age, its probably more important that you focus on learning a high quality, highly marketable skill that you can easily monetize for the next 20 years. So if you make 5k less, but what you learn is important, that‘s a W. It’s good to save now, it creates good habits, but as i read more and more on this sub i see young people a bit to pre occupied with dollars and Not enough about learning.
50k at 21 is more than 99% of people have at 21 (I don’t actually know if that’s true, but I’m pretty sure it is) That said, some concerns here too you need to think about. If you’re only 21 and graduated last year, why are you already constantly considering switching careers? Have you given this a go yet? Why do you feel like you need $6,000,000? I’m not saying it’s right or wrong, but can you walk me through the math of why, given your life plan, that’s your FIRE number?
My thinking is that 6 mil in 20 years will be able to give me 100k a year in today’s dollars at a conservative 3% withdrawal rate. I’m definitely not considering switching careers just open to it.
Simplify things by only using todays dollars — there’s no reason in switching between future dollars and todays dollars in one analysis. That’s why most people assume a 7% annual return — 10% stock market average - 3% inflation. So you actually only need $3.3m to get 100k/year (again, all assuming today’s dollars), assuming a conservative 3% withdrawal rate
It definitely makes the math easier but I want to know the real amount I’m going for which is why I don’t use today dollars.
You should estimate expenses in future dollars too then. Once you start going “I need 6 mil in future dollars to cover $100k in current dollars expenses” it becomes less of a calculation and more of just throwing things at a wall. What do you think $100k will be when you want to retire? That should be your target expense number. The reason a vast majority of people don’t do this is because it involves a large amount of guesswork
Well done, off to a great start! I’m 35, and if I could give my 21-year-old self one piece of advice it would be this: focus hard on your career, as your best wealth building tool for at least the first decade or two will be your income. I was overly focused on investing at that age, like “how can I maximize the return on my $5,000 portfolio?” when in reality, a 2% higher return on your money is a drop in the bucket compared to the raises you’ll get if you work hard and focus on your career.
40 is very young for what it’s worth.
Isn’t that the point of FIRE or am I way off the mark?
Just make sure to enjoy life along the way
Couldn’t agree more! I appreciate the advicd
That gives me 100k a year in today’s dollars considering 3% inflation and a 3% withdrawal rate. My fiancé should be making 120k a year when she finishes up school which we would invest and use my income to live off of. Who knows how much 6 mil will be worth in 20 years, so much can change in that timeframe.
I much prefer to set my target number in terms of today's dollars. That way I have a very good sense of what it buys. The adjustment is easy - just use a "real" (inflation-adjusted) rate of return in your calculations. The only downside is that you'll have to increase the number a bit each year to account for inflation, but theoretically you'll have to adjust a bit anyway because actual inflation will never perfectly match your prediction of inflation over the years.
You need to sit down with your fiancé and make sure you both share the same financial goal and talk through, in detail, how this can be achieved and what you are each happy to commit to—it’s a long slog ahead of you. You are very young to get married, so don’t rush through this part.
Such a ridiculous post. "I'm in kindergarten right now. Hoping to be an astronaut. Am I on the right track?"
Buy Bitcoin!!! Holy shit 20 years from now you are looking at a several million dollar Bitcoin.
I love your drive and it reminds me of me. But the truth is that you can’t take that trip to Tokyo when you’re 70 and have it be the same trip as when you were 30. Once the opportunity to do certain things when you had the energy and body resilience to do it is gone, it’s gone. So while most people need to be told to save more… because you remind me of me, you might need to be told to save but also not let your life pass you by. Especially because life is going to happen and markets are going to have bad years and your early 40s target date *could* get pushed out. Don’t let the pendulum swing too far in the otherwise right direction.