I am one of the people who never wants to retire even though I could have over a decade ago when I sold my first bigger company. At that time I tried retiring and found it terrible; I have tons of hobbies, a family and such but there are drivers in work (and more so in starting companies and growing them) that I cannot replicate. Or at least have not found a way to.
For me the most important is to keep starting new things and learning new very hard things (for me) and trying to apply them in business(es). The rest, at least to me, is rather obvious; stay healthy and don't overwork or work with toxic people. I made all those mistakes.
Another one is: learn to manage. If if you are a coder, your eyesight will weaken, you might get all kinds of physical issues even though fit; as a manager, even on a small scale, you can last much longer with those problems.
Build networks; you do not want to do job interviews at 60 if needed. Your network has to be solid enough to ask for a job and get one without any vetting. That is an advantage of getting older: this is very possible if you keep up this network.
But, rolling back to your post: why can you not retire? Thought about moving somewhere were this is not a problem? Because if you don't enjoy your work, it makes it vastly harder to keep it up.
But, rolling back to your post: why can you not retire?
For background: I came from a poor family with a history of substance abuse problems. I lifted myself out of my family situation by attending and graduating college, but in order to do so I had to take on a combination of student loan and credit card debt, most of which I am still paying off despite having a decent tech industry income. No one ever taught me to save, so I had to learn budgeting and finance management on my own while I was in college. I didn't start really saving until a couple of years ago when things sort of stabilized.
Currently I am able to save about 5% of my income for retirement with a match from my employer. However, every "retirement calculator" that I use basically says I will fall well short of replacing most of my income in retirement, even if I assume Social Security will fill in a portion (which is uncertain to me). I also don't currently own my own home and that also feels like a very far off prospect if not an impossibility.
Thought about moving somewhere were this is not a problem?
I have considered moving to a cheaper area, but unfortunately that means no longer being near some family connections so it's not a simple decision. My current job also adjusts salaries based on regional cost of living, so I'd have to factor that into the equation.
I am one of the people who never wants to retire
Honestly, this is also a factor for me. I am very fortunate that I like the work that I do and work is, for better or worse, where I get most of my social interactions. I have some hobbies but none of them make me feel as engaged as when I am solving a technical challenge or working on a high-level business problem.
My spouse and I also joke that we might kill each other if we're both just puttering around the house without anything "productive" to do.
Firstly, congratulations for escaping your background, getting through college, and making your way into tech.
Secondly, while I admire the drive never to want to retire because you'd be bored, I think it's a huge power-up to be able to have what Nassim Taleb calls f-you money (enough money to be able to tell your boss, "F-you, I'm leaving" if they make one too many unreasonable requests. For me, having something approximating that (initially just six months' worth of expenses in cash) has allowed me to make better decisions, take some risks which resulted in good payoffs, and just generally have more fun. I'd highly recommend aiming for this rather than just accepting that you'll be working forever.
So with that said I'm wondering if you can go into more detail on your financial situation. If you work in tech in my country, I'd suggest it's possible for most people in tech to earn 100k+ if they're not utterly incompetent. (I realise I might be in a bubble here, but where I am and what I'm seeing this is reasonable.) If you're on that salary, a savings rate of 50+% is completely achievable. To have a savings rate of 5-10% while working in tech suggests to me that something's off. Are you able to share a bit more info on that? Is it the repayments on your debt?
No one ever taught me to save, so I had to learn budgeting and finance management on my own while I was in college.
Just in case nobody has pointed this out to you yet, if you're in the US, how you use the tax system can make an enormous difference in your personal wealth and your generational wealth. Learning how to invest in tax-advantaged ways (backdoor 401k, tax loss harvesting, real estate transfers, trusts, donation funds, etc) is extremely complicated, but it is possible to deep dive enough to understand how it applies to you.
The US incentivizes a lot of risk taking and keeps an elite class by requiring obscure knowledge about tax laws. Most of it is "buy, borrow, die" with a lot of nuance to do it optimally.
US Dollars are losing value faster than ever, so saving in a bank is not a valid strategy. Optimally, all dollars should be invested in assets immediately, ideally assets you can easily borrow against at a low rate as you need dollars.
The whole system is crazy.
For really rich people, "life insurance" is the money they borrow against while they're alive, "living trusts" are how they pass money along to their heirs when they're dead, and "investments" are things they will never sell.
Learning how to invest in tax-advantaged ways (backdoor 401k, tax loss harvesting, real estate transfers, trusts, donation funds, etc) is extremely complicated
I strongly disagree with this advice; middle class people trying to imitate rich people with trusts and financial advisors and so on are just letting leeches siphon off their money with fees.
Tax exempt investments are easy to find, they just pay less than taxable investments. If you're not in the top tax bracket, you're playing yourself.
Inheritance taxes only apply to the extremely rich anymore. Avoiding probate with a trust or something does not mean avoiding taxes.
Most of it is "buy, borrow, die" with a lot of nuance to do it optimally
Oh, yeah, it's easy, step 1 is buy something, wait till it goes up. If it doesn't go up, don't buy it.
The federal estate tax exemption is still high, but state estate taxes are much lower, like a million to a million and a half. Anyone who has a decent 401k + house will have that on the east/west coasts. I had to help my folks make a trust so we don’t get double estate taxation last summer.
Also keep in mind that you might be able to live a perfectly satisfying life without replacing even half your current income. Track your spending, not your income, since right now you are probably paying a lot of income tax that you won't be paying when you stop working. If you can replace the amount of spending you want to support, then it doesn't really matter what percentage of your current income that becomes.
But, rolling back to your post: why can you not retire?
Currently a SWE at $BIG_TECH_COMPANY making very good money. 100% of my income goes to paying off debt which, like the OP of this post, was acquired by attending school with no support from addict parents.
I have ~80k in debt. At 12.5%, 8.5%, and ~6% APR. I think I will at some point be able to retire if the next 20 years are the same as the past 20 years. Although: the stock market is at record high values and property prices are at record highs. I don't know how to explain why this is the case though. Nothing is preventing our 401ks from buying into stocks at today's price and the rug getting pulled and getting completely screwed.
Sofi has some really solid educational loan refinancing options if you’ve got good finance fundamentals (income, credit), might consider refinancing as much of the high rate debt that you can to enable faster payoff (which leads to more free cash flow for investment, leading to financial independence faster).
Exactly. I can take out a personal loan and use that but those aren't a good interest rate and it would possibly effect my credit. By just paying off my loan in advance of their schedule my credit is being effected very positively.
you definitely gotta refinance. I went from a 7.3 to a 3.0 and now I'm actually making progress on the payments instead of just paying a bunch of interest every month. the favorable(ish) terms with the government are not worth the extra money
That's interesting. They'd have to drag me back kicking and screaming into the office. I got used to having time for anything, and can't imagine myself voluntarily giving that up.
Comments
I am one of the people who never wants to retire even though I could have over a decade ago when I sold my first bigger company. At that time I tried retiring and found it terrible; I have tons of hobbies, a family and such but there are drivers in work (and more so in starting companies and growing them) that I cannot replicate. Or at least have not found a way to.
For me the most important is to keep starting new things and learning new very hard things (for me) and trying to apply them in business(es). The rest, at least to me, is rather obvious; stay healthy and don't overwork or work with toxic people. I made all those mistakes.
Another one is: learn to manage. If if you are a coder, your eyesight will weaken, you might get all kinds of physical issues even though fit; as a manager, even on a small scale, you can last much longer with those problems.
Build networks; you do not want to do job interviews at 60 if needed. Your network has to be solid enough to ask for a job and get one without any vetting. That is an advantage of getting older: this is very possible if you keep up this network.
But, rolling back to your post: why can you not retire? Thought about moving somewhere were this is not a problem? Because if you don't enjoy your work, it makes it vastly harder to keep it up.
For background: I came from a poor family with a history of substance abuse problems. I lifted myself out of my family situation by attending and graduating college, but in order to do so I had to take on a combination of student loan and credit card debt, most of which I am still paying off despite having a decent tech industry income. No one ever taught me to save, so I had to learn budgeting and finance management on my own while I was in college. I didn't start really saving until a couple of years ago when things sort of stabilized.
Currently I am able to save about 5% of my income for retirement with a match from my employer. However, every "retirement calculator" that I use basically says I will fall well short of replacing most of my income in retirement, even if I assume Social Security will fill in a portion (which is uncertain to me). I also don't currently own my own home and that also feels like a very far off prospect if not an impossibility.
I have considered moving to a cheaper area, but unfortunately that means no longer being near some family connections so it's not a simple decision. My current job also adjusts salaries based on regional cost of living, so I'd have to factor that into the equation.
Honestly, this is also a factor for me. I am very fortunate that I like the work that I do and work is, for better or worse, where I get most of my social interactions. I have some hobbies but none of them make me feel as engaged as when I am solving a technical challenge or working on a high-level business problem.
My spouse and I also joke that we might kill each other if we're both just puttering around the house without anything "productive" to do.
Firstly, congratulations for escaping your background, getting through college, and making your way into tech.
Secondly, while I admire the drive never to want to retire because you'd be bored, I think it's a huge power-up to be able to have what Nassim Taleb calls f-you money (enough money to be able to tell your boss, "F-you, I'm leaving" if they make one too many unreasonable requests. For me, having something approximating that (initially just six months' worth of expenses in cash) has allowed me to make better decisions, take some risks which resulted in good payoffs, and just generally have more fun. I'd highly recommend aiming for this rather than just accepting that you'll be working forever.
So with that said I'm wondering if you can go into more detail on your financial situation. If you work in tech in my country, I'd suggest it's possible for most people in tech to earn 100k+ if they're not utterly incompetent. (I realise I might be in a bubble here, but where I am and what I'm seeing this is reasonable.) If you're on that salary, a savings rate of 50+% is completely achievable. To have a savings rate of 5-10% while working in tech suggests to me that something's off. Are you able to share a bit more info on that? Is it the repayments on your debt?
Just in case nobody has pointed this out to you yet, if you're in the US, how you use the tax system can make an enormous difference in your personal wealth and your generational wealth. Learning how to invest in tax-advantaged ways (backdoor 401k, tax loss harvesting, real estate transfers, trusts, donation funds, etc) is extremely complicated, but it is possible to deep dive enough to understand how it applies to you.
The US incentivizes a lot of risk taking and keeps an elite class by requiring obscure knowledge about tax laws. Most of it is "buy, borrow, die" with a lot of nuance to do it optimally.
US Dollars are losing value faster than ever, so saving in a bank is not a valid strategy. Optimally, all dollars should be invested in assets immediately, ideally assets you can easily borrow against at a low rate as you need dollars.
The whole system is crazy.
For really rich people, "life insurance" is the money they borrow against while they're alive, "living trusts" are how they pass money along to their heirs when they're dead, and "investments" are things they will never sell.
I strongly disagree with this advice; middle class people trying to imitate rich people with trusts and financial advisors and so on are just letting leeches siphon off their money with fees.
Tax exempt investments are easy to find, they just pay less than taxable investments. If you're not in the top tax bracket, you're playing yourself.
Inheritance taxes only apply to the extremely rich anymore. Avoiding probate with a trust or something does not mean avoiding taxes.
Oh, yeah, it's easy, step 1 is buy something, wait till it goes up. If it doesn't go up, don't buy it.
The federal estate tax exemption is still high, but state estate taxes are much lower, like a million to a million and a half. Anyone who has a decent 401k + house will have that on the east/west coasts. I had to help my folks make a trust so we don’t get double estate taxation last summer.
Also keep in mind that you might be able to live a perfectly satisfying life without replacing even half your current income. Track your spending, not your income, since right now you are probably paying a lot of income tax that you won't be paying when you stop working. If you can replace the amount of spending you want to support, then it doesn't really matter what percentage of your current income that becomes.
What do you consider to be a “decent tech industry income”?
Are you making at LEAST $150,000USD?
Currently a SWE at $BIG_TECH_COMPANY making very good money. 100% of my income goes to paying off debt which, like the OP of this post, was acquired by attending school with no support from addict parents.
I have ~80k in debt. At 12.5%, 8.5%, and ~6% APR. I think I will at some point be able to retire if the next 20 years are the same as the past 20 years. Although: the stock market is at record high values and property prices are at record highs. I don't know how to explain why this is the case though. Nothing is preventing our 401ks from buying into stocks at today's price and the rug getting pulled and getting completely screwed.
Sofi has some really solid educational loan refinancing options if you’ve got good finance fundamentals (income, credit), might consider refinancing as much of the high rate debt that you can to enable faster payoff (which leads to more free cash flow for investment, leading to financial independence faster).
12.5% is crazy. Refinance! Take a lower % loan to pay off all your current debt.
The problem is who would lend you money for a lower % with zero collateral, which you could bankrupt yourself out of?
Education loans persist through a bankruptcy, which is why they exist in the first place.
But i do agree that 12.5% is really high - not credit card debt high, but pretty close!
Exactly. I can take out a personal loan and use that but those aren't a good interest rate and it would possibly effect my credit. By just paying off my loan in advance of their schedule my credit is being effected very positively.
100% of a SWE salary at a big employer should melt that $80k in no time flat.
2 years left at my current plan with 401k contributions, taxes, holding stocks, etc.
you definitely gotta refinance. I went from a 7.3 to a 3.0 and now I'm actually making progress on the payments instead of just paying a bunch of interest every month. the favorable(ish) terms with the government are not worth the extra money
That's interesting. They'd have to drag me back kicking and screaming into the office. I got used to having time for anything, and can't imagine myself voluntarily giving that up.