Yeah I’m having trouble making sense of this, 401(k) was late 70s and that # didn’t go up for 15 years?
10 Year Treasuries were something like 12% to 15% in the late 70s. For many years thereafter they stayed north of 5%. For a long time investing in bonds was actually a pretty good deal (if you had any money left over after paying similarly high interest rates on your mortgage, ldo).
Can you imagine the 4% rule in the 70s?
I think a lot of the FIRE crowd is in for a rude awakening. With bond yields at nothing an extended bear market is going to crush their portfolios.
Agree, if it’s the type who is retiring at 35 with $750k 100% in stocks. The closer you get to “fat FIRE” (sometimes defined as $200k annual expenses) the more likely you are able to withstand an extended bear market. Things you can do to prepare for such a situation:
- Keep 2-3 years in cash
- Have a higher bond allocation approaching retirement and in early retirement
- Reduce expenses in bad years
Things that the early retirees living at the edge can do:
- go back to work (“barista FIRE”)
- side hustles
You can then nit pick that they’re not really retired, but they won’t care. But, yeah, they will have to make some changes to survive.
I think the simplest version might be that valuations of stocks are changing. Like, suppose people keep a fairly constant cash/emergency fund cushion and put the rest in stocks. You’d get something like the above chart, at least from 1980 on.
Based on my experience working at two large companies, I think a better FIRE strategy is to accumulate a nest egg AND 20 years at some company, then just become borderline useless and putter around the office all day but be too expensive for the company to fire and just make one contribution a week or something so every time they want to fire you someone will hesitate because then they’ll need to find someone else to do that thing.
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The inefficiency of large organizations is astounding. Every place I’ve worked has simultaneously been immensely profitable and had a seemingly endless stable of completely useless mid 6-figures and up old white guys.
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It’s almost like there’s a massive inequality problem and companies have way too much fucking money
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While this is definitely true, it happens even with private equity ownership, which ostensibly limits the principal/agent problem. Of course, PE firms absolutely hammer low wage employees, but the drastically overpaid middle managers magically seem to endure.
Hey, stop doxxing me! 
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Zombie VPs, I call them. Often, their one report is an administrative assitant. Then, one day, presumably when their last options vest, they quietly disappear.
Click through if you want to watch some boomers talk about how they retired in the 90s with $500k
In 1991 they could have put all their money in US treasuries yielding 7% for 10 years or 8% for 30 years.
They have a website here:
Apparently they were able to retire on $500k because they were spending roughly $20k per year. And the website says they currently spend $30k a year. This probably means that I’m super materialistic, but retiring at 40 years old or so and only being able to spend $20k-$30k a year sounds miserable to me.
Spending $30k/year is living fairly high on the hog by overlander (driving around the world) standards.
It’s only in freaking LA that it costs me a base of $80k or something (before taxes) just to exist.
How much is the ferry from Alaska to Russia?
Not sure that exists. But the most expensive shipping fee for car and my plans is Chile to New Zealand for $3800. Big rigs get up over $10k.
You can ship to Iceland and back from Denmark for $1500 Euros. That’s cheaper than renting a car if you stay for a few months.
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Do you just drive around with USA#1 tags?
Yep. You need special car visas in most countries, which add a minimum hour and a half to the border crossing - at least in Central and South America. Fee is somewhere from $20-$100. Some countries require insurance, which is super cheap.
Some countries supposedly want an International Driver’s license, or even a Latin-American Driver’s license. I was never asked for either. You can get both at AAA for $20 if you’re a member.
In a lot of Africa and some other places you can get a blanket Carnet de Passage - which serves as a universal auto visa. You have to put a bunch of money in escrow, how much depending on the country. Supposedly Egypt wants 4x the value of your car. But I also read someone saying it’s only double.
Interestingly you can drive a left-hand steering wheel anywhere. But some countries like Costa Rica don’t allow right-hand drives - a super pain for Brits trying to do the Pan-Am Highway. They usually just skip Costa Rica and Panama. Australia demands your car be immaculate and no modifications like wheels that stick out past the fender wells.
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About 2.7 million Americans age 55 or older are contemplating retirement years earlier than they’d imagined because of the pandemic, government data show. They’re more likely to be White, a group that typically has a larger amount of accumulated wealth, and many cite robust retirement accounts and Covid-19 fatigue for their early exit, according to interviews with wealth managers and federal surveys.