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A 4% withdrawal rate is intended for a 30yr retirement when accounting for inflation, so you'd need to keep your expenses well below that, probably closer to 2%. But more importantly in my opinion this relies on the assumption of a mostly stable market, which over the course of a ~70yr retirement is riskier a bet to take compared to a ~30yr retirement.
Also what would you do on such a tight budget for ~70yr that you wouldn't get bored of?
I don't think most people could live on 65% of their current income. Many people are poor and can't handle a surprise $500 expense.
I could live happily on the median income of my area (NYC) - $113,400. Even if I got a more expensive apartment, I could make that work.
I do wonder about people's budgets sometimes. One of my friends has crushing medical, student, and credit card debt so they're always struggling. But another friend was like "I can't leave my job at [evil megacorp]! I need the money!" But when pressed slightly, their "needs" included broadway plays, fine dining, and every hot new game on steam (that they don't even play). Most people are probably between those two extremes.
I, personally, also prioritize living life.
What's the point of life if im going to eat rice and beans and never enjoy it. I'd simply resign.
My 'needs' include what makes me want to continue living, regardless of what it looks like from your perspective
i tried and its boring as fuck so i want to work again instead
We couldn't. More than 65% of what we make goes just to cover the bills, so it wouldn't be a possibility. Even if we didn't eat or have a car.
Would be underwater and back at work within a couple of months.
If you mean some version of 65% of our current lifestyle like magically the house shrinks and costs 65% of what it currently does, then maybe? We don't eat out much, don't vacation much, don't go out much already though.
If you mean health costs all covered, and no more retirement contributions and 65% of GROSS earnings, that would actually give me almost the exact same net pay, and wouldn't be a different lifestyle. Those things cost 32% of my earnings and taxes 15%.
So I'm not sure exactly how to think about this but in short - I am more willing to work to have a reasonably good life, than to not work and not have a good life, but have a lot of free time. I do know how to have fun for cheap, have been poor before, but I like life now better than then.
The only catch is that you would have to keep your expenses at 65% of what you spend right now.
Permanently? or like, adjusted for inflation? do I get rent control?
Because 65% of what I make now will be worth a lot less in 10 years.
You never know what the future holds. Much better to work now while you are in a good position to do so, than to be forced to work later on, when you have been out of the workforce for years.
No, I live relatively lean already. 65% would mean cutting down to rice-and-beans type diet, no Internet, no investment into hobbies, no travel.
Also, there's inflation. At 30 years old I could expect to live another 40+ years. And 65% of today's dollars is going to get less and less valuable as the years go on.
65% of what I spend right now? do we assume my mortgage is paid off and I get 65% of that money, too?
I'm currently spending less than I would like to so that I can save for retirement. do I just get 65% of all that money that I would otherwise be spending, in this scenario?
if yes to the above questions, easily. if not, no
Given the rate of inflation, and shrinkflation, I don’t think it’s economically feasible for many people to survive on 65% of their income. At least, I couldn’t. Especially not with two young boys who need clothing, a metric ton of food (and growing!), plus sports, etc. nope. I’m stuck n indentured servitude for the rest of my life.
Lol, that's called being homeless
No, because I'm close to 30, literally had a more favorable version of this option (enough money, relocate to a low cost-of-living country and doesn't even have to be frugal) presented to me, and I chose not to. And I already live frugal enough that 65% would be really rough... I'm okay with a lite version though: only take fun and engaging part-time/flexi jobs, and dedicate my full time to a rewarding but not necessarily well-paid (or paid at all) career, while cutting down a bit on spending
I just felt that with all the education & things I have going for me I'd rather do something productive that contributes to society. If I literally couldn't find a job that's not a metaphorical meat grinder then it's another story, but I'm not at that stage yet
Living frugally isn't the problem, at least not directly.
The boredom is what would get most people.
Most people need to engage themselves in something satisfying and challenging.
The founder of Myspace retired in early thirty's after selling his company for $80 million. He travels the world and does photography. People who say they will be bored if they retire aren't being creative enough to think of doing something else.
If I could retire now I would. But living in the US is expensive and gets more expensive every year. From real estate taxes or rent, from insurance, from cost of food, from basic utilities like electric, heat, gas... Neverind if you want a hobby, or a vacation, or Any leisure activities.....
Every time I leave my house it costs me $100 no matter what I am doing.
There's no way I would have enough money to retire comfortably.
65% of what I spend right now. So basically 35% below paycheck to paycheck? Seems like a bad idea to me.
If I was able to retire early at any age, I'd probably do some odd jobs or perhaps I'd volunteer for stuff. I need something to do.
No. I'm already living frugally. Cutting my spending by further 45% would make my life unsustainable.
I’d find a comfy job that’s easy to do even if it doesn’t pay the best.
Depends on if I could afford to own a scrapyard/pick and pull first. As a welder and machinist, thats basically a playground for me. If I ain't working, ill still be making. Otherwise, yes. I don't spend much now as it is, but growing my own weed would probably drop me below 65% by itself.
I'd continue to work. I want to do more in my retirement than just stay at home.
I'd work a bit more. Seeing my parents struggle with money made me never want to do that. So I'll do what I can early on to reduce the chances of that ever happening.
65% of what I spend rn would be unlivable
No.
My mortgage and childcare are like 80% of my outgoings. Once the mortgage is gone and kids in school maybe
When I was approaching 30 I was looking forward to kids, and that wouldn’t be sufficient to raise them.
In a couple years though ….. once they are through college so I’m done with those payments and child support, living on 65% of my income would be easy.
It depends on what you mean by current spending. I'm putting almost a third of my pre-tax income into savings already. If you mean I can live off of 65% of my default post-tax salary, sure. That probably wouldn't change too much from my current expenses, and I would love the free time. If you mean 65% of what's left over after my normal contributions, then that would be pretty tough. I consider my current lifestyle to be relatively frugal, so that would be very hard.
I'm actually trying to achieve the FIRE lifestyle, so the goal is getting to the point where average post-tax returns on investments is at least annual expenses. But I can't do it by thirty.
I was pretty close to this option, but in the end we moved to a much nicer house. So now our expenses are a lot more. I don't regret it, it's a much better place to raise kids.
I did took a sabbatical for about a year, and will probably do that again in 5 years or so. It doesn't have to be a binary option, you can do sabbaticals (mini retirements) and still work.
