Ex-Google TechLead calculates the number you need to financial independence retire early (FIRE).
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[UPDATE 8/30/23]: I had unlisted this video since the calculations (while valid) seem a bit high, but I think it's still worth understanding the analysis for your own planning. Based on comments, a more optimistic calculation applies a shorter timeframe of 30 years (because social security/medicare kicks in, although the reserves are forecast to deplete by 2034), a lower effective tax rate of 5% (this can be achieved by capital gains tax harvesting), a lower inflation of 3.5% (the original 5% forecast may be high), and a higher interest return of 6% (compared to 5% as in the video). This results in ~$1.3m needed. Seems reasonable, YMMV. Maybe best to just enjoy life as you go and not wait until retirement.
- Some people mentioned owning a house instead of renting. This does not change the equation, since you'd then lose out on the investment earnings (and there are property taxes and loan interest). A buy/rent calculator would show the're quite similar in costs. Efficient markets.
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@newchaoz Says:
You will never stop working. The government will make sure of that.
@victorcampeanu Says:
TAXES ARE JEWISH THEFT
@birdsong879 Says:
I AM F**KED!
@indexplus Says:
You stock and RE assets go up with inflation. You don't put money at 5% fixed income return with 5% inflation
@ThorsMjollnir0341 Says:
Compelling information but seems to be missing social security payments (which may not exist much longer) and what about for most of us who expect maybe 20 years from retirement, rather than 40?
@rick5773 Says:
@TechLead dude your commercials are getting too much, too long… will stop following if it stays like this… just saying
@petermartin9494 Says:
Renting at $4000 a month for 40 years is almost $2 million. Own your own property when you retire.
@JannyLuits Says:
We all know that prices of almost everything aren’t coming down. Simply put, they're rising less. Costs are rising due to rising inflation. As we are evidently at the verge of hyperinflation, with the less haves bearing the brunt of the burden. I'm more concerned that the rising inflation may lead my entire $990k retirement funds to lose value. Where else could we put our cash?
@Nethanel773 Says:
Thank you for putting this up.
@user-qs1jt3hc8f Says:
5% expected inflation rate over the next 40 years is insane
@raulguerreroflores1460 Says:
As a rich man
@naacrinternational6970 Says:
Dude you are bonkers, off your rocker, saying $5000 is pretty "basic living"
If you don't own property free and clear by the time you retire, you have screwed up.
If you still have a car payment by the time you retire, you're a child.
If you can't live on $1500 a month, all-in, food, bills, etc., you might be living a fair bit beyond "basic".
@tomboat3535 Says:
A 5% return on investments and 5% inflation is a zero real return. This is a conservative assumption.
@tomboat3535 Says:
What about social security benefits?
@pavlinpetkov8984 Says:
Early retirement is only possible if you win the lottery. There is nooo job out there that can make you that much money... I have a friend from childhood that was not smarter than me. He became e software developer. Now he is making much more money than me and I am a med school graduate... Making money is luck not a skill... He got lucky with the profession, with the employer, with the country and with the time. 25 years ago, there was no facebook nor google...
@rof8200 Says:
Own a house and save on rent. That should make a difference.
@sterlthepearl1000 Says:
It's not inflation, it's corporate greed.
@UnemployableFakeGuru Says:
Spot on... we could be such good friends.
@TravelsWithSophia Says:
The true inflation rate is 27.95 percent. Cost of fuel has risen 100 percent in the last 3 years. FJB.
@user-hk6rc9dw9m Says:
Irrational = chemistry; rational = astrology
@user-hk6rc9dw9m Says:
look up prices of books so you know how much info you are eating from start to finish
@user-hk6rc9dw9m Says:
have you ever had to learn to read again? First you need the alphabet. all 26 of them.
@user-hk6rc9dw9m Says:
you are not alive until you are 18 yrs old as evidenced by orphans locating their DNA parents,
@omineirotech Says:
Even with these numbers, you continue defending the ideia to rent a house instead to buy one...
@davidclot8364 Says:
I will retire in a country with a low cost of living as a digital nomad.
@thumpernats Says:
To bad if one single thing in your life goes wrong. Homelessness for you..
@lonnysstuff8773 Says:
Those math models were overly optimistic, because they didn’t account for any downside risk.
Additionally, those models also don’t account for how investing strategically and/or incorporating multiple income streams could help reduce the overall time.
@CJ-re7bx Says:
Lol, i know techlead is mostly hyperbole, but he took pretty much every variable to an extreme.
When you are living off of investments, you can find ways to minimize your taxes in ways you cant with income taxes.
You can also minimize expenses when your life doesnt revolve around a job. Live in a less expensive area, have one car or no car because dont need to commute, etc.
A two year sample size of extreme years of inflation is not going to be representative of your whole 40 year retirement.
Social security exists.
@chriswalter92 Says:
I've come to realize that the key to amassing wealth lies in making sound investments. I purchased my first home at the age of 21 for $87,000 and sold it for $197,000. My second home, acquired for $170,000, was later sold for $320,000, and my third property, purchased at $300,000, fetched $589,000, with buyers covering all closing costs and expenses. Not reaching a million before retirement feels like an unfulfilled goal.-
@andre-le-bone-aparte Says:
Hot Take: Senior Software Engineers won't be making 300K, 10 years from now.... the value of those jobs will decrease.
@bluecrocks Says:
In what realm of reality do you want to pay 5000k a month for rent. Save for a house already if your making that much to just spend on rent.
@deama15 Says:
This would be a lot cheaper in the UK if you built up a portfolio on the investment ISA, you wouldn't pay any taxes apart from the standard 15% one for foreign investment.
Since healthcare is part of the actual tax, you wouldn't have to pay that either, so the $500 to healthcare wouldn't apply to you.
Car payment wouldn't apply either since the public transport here is actually viable in the UK (unless you wanted to live somewhere remote).
The food seems a bit high also, I generally spend $400 on food per month in the UK, and that's after taxes.
With that in mind, you'd probably be able to retire with half a million $$$ in the UK, you could even get a 40 year+ mortgage deal just before retiring and that should make you only pay like $1000 per month of mortgage for about a property that costed $365,000 (decent price), this way you'd get more freedom on doing what you wanted with your house/property if you wanted to e.g. become a farmer or beekeeper or something.
@rarepower Says:
This is because people are playing like it is a finite game
@maximkhan109 Says:
Not always agree with your thoughts on topics but this one is definitely a reality check. Hard check...
@xxxoo2131 Says:
compounding inflation will eat you up
@Diego0wnz Says:
Just find a remote afk job taking up 1 hour per week
@Philip8888888 Says:
six figures! cracked me up. nice one!
@philmaturanodrums Says:
It is absolutely ridiculous to think of paying this amount of money just to live! Move from the usa !! The end
@Mav0585 Says:
$5M-$10M
@LifeisajokeER Says:
i wanna retire at 20, im 19 rn and I'm done with all this rat race I wanna retire asap
@DeadCat-42 Says:
Boomers were the last generation to retire. It's why Florida is doomed. There is NO other economy in the villages but servicing the retirees. That's why they built the houses and infrastructure to only last 25 years.
@jaythay4716 Says:
5% inflation rate sounds reasonable and could even go higher considering its been manipulated.
@zughbor Says:
why shoulding you retire in 3'd work country let's say Morocco for example, maybe you'll have fun with beautiful woman's out there? and you will be happy with any amount you have, and by the way tax's are not bad, there is a way to hide your net worth, not like USA and Europe counters!
@ArchesBro Says:
Lol, pinned comment. The biggest issue with this is assumed 5% inflation and assuming low investment returns pre-retirement. Of course during retirement you would hold more conservative assets so your yield would be lower
@joaott1974 Says:
It all depends where you live. I would retire if i had 500.000 € on my account, and im 46. But i dont live in USA. I live in Portugal.
@WHOTHAFUCK Says:
Help me out, guys. I just got 33 a few days ago and currently don't really know where i should go in life. I hustled through my 20's, studying (Art & Media-Informatics teacher program) while also always working different internships, part- and fulltime jobs - it was very adventurous as i got to see different environments and work various things. Being a student still, money was never that great, but i saved A LOT by living modestly. I even started a small "business" doing summer courses for mediadesign. 3 years ago this nomadic work-student-lifestyle ended, when i got hired as a teacher by a really good school. My 4th year there is starting now and im terrified. In retrospective, all of this seems good, but ever since last year, i started getting extremely depressed from overworking and being lonely. finishing my masters degree while working full time (with rather large commutes) took a toll on my mental health. Im at a point where im a total wreck on some days, being so low in energy that even getting up is hard. Also a big sadness and anxiety (about being/staying lonely, getting older and wasting most of the time just for work) has overcome me, to the point im literally crying sometimes. Also i struggle with my body image since i started balding. I know that deep down in my core, i'm an active person who enjoys life and has many interessts - while also admitting that im not the most "conscientious" person, as i love simply having peace and quiet and just being LAZY every other day. But im not myself anymore. I worked so hard and now im burnt out, even though im just like 4-5 years into my "main goal job" - teacher (which here in europe is a rather well-payed job, btw. unlike in the US). I really wanna change my life to a more peaceful and lazy lifestyle - which doesnt mean that i dont want to work at all, i just want reduced hours, less days a week for work. I need sleep, i need communication, i need time to enjoy my home, reading, tinkering, gardening, gaming, cooking. I also need time for THERAPY, "healing" and sorting out my confidence issues. Starting this new school year FULL TIME really feels like a prison. Money is really the only motivating factor right now, since im saving up to 100k € to this moment and will continue saving throughout the year.
If anyone can relate, please tell me. I need someone to tell me its alright to not work full time and "grind" all the time. I want to know if there are others out there who work part-time and manage their life just as well with less money.
@joeswanson733 Says:
holy cow 3 to 5.8 million dollar net worth needed...
@sizzla123 Says:
Thank you for this Techlead.
There's a Sucker Born Every Minute.~P. T. Barnum
@antoinettewilliams716 Says:
Retirement is a lie get it in yall head🙄 adults still believe in Santa 😞
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