Retiring early means that your post-retirement life could very well be 50 years long. It's always embarrassing to admit that you're a part of a cult, but I'm a huge fan of MMM and his spiritual godfather Jacob () and I'm currently on track to retire in 4 years in my early forties.įew points to remember as you browse the site:ġ. It's this element of growth that distinguishes financial savings from 'savings' in the pork and beans sense. Ideally, the growth in future production resulting from your capital offsets the share of production you take out in retirement. That capital goes towards growing the economy. Saving money in financial instruments isn't a 'savings' game. That isn't to say that savings isn't an abstraction for something. How well you eat depends heavily on what the future looks like. 'Saving' in the financial sense is prospective. How well you eat depends on how much you saved, but not on what else is going on. 'Saving' in the sense of storing away pork and beans is retrospective. I think that distinction illustrates a deep difference between the two scenarios. Not just that it's a leaky abstraction, but that it's the wrong abstraction. I don't think saving in a bank is just an abstraction for putting away non-perishable food. I'm using the difference in edge case behavior to illustrate why I think the analogy is flawed. Effectively, everyone is already doing an early retirement, compared to people 50 years ago. Otherwise, if everyone started following the advice in that blog to try retiring early, what would happen is that average returns would go down across the board, and that '4% safe withdrawal rate' would become 2% or even 1%, making the whole math work out quite differently.Īrguably, that is already happening even without additional early retirees, simply because the increased average life expectancy (and thus the time people spend in retirement). This is vitally important because it means it's impossible for a significant percentage of people to retire early unless the remaining workforce becomes correspondingly more productive.

$mmm shockingly simple math behind early retirement$

Saving/investing money only allows people (via an arbitrarily complex system of indirections) to become indebted to you so they'll pay you some of the money they earn. As soon as you start saving and investing your money, it starts earning money all by itself.

Mmm shockingly simple math behind early retirement