{ "media_type": "text", "post_content": "Can FIRE pros help me balance limiting expenses today vs extending retirement plans, specifically in high comp trajectory careers. Assumptions (model B4 career):\nYear1 comp - 75k\nYr5 - 150k\nYr10 - 300k\nYr15 - 500-600k\nWhy would I sacrifice n limit my expenses in Yr1 - 5 when I have high comp expectations? Saving an extra 10k in Yr1 is a sacrifice (high marginal utility if u spend that 10k), even if it’s worth 40k by Yr15, that’s only an addl 1 month of work at Yr15 vs full yr of sacrifice in Yr1", "post_id": "609ed45981dc830021ee4521", "reply_count": 16, "vote_count": 2, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

Can FIRE pros help me balance limiting expenses today vs extending retirement plans, specifically in high comp trajectory careers. Assumptions (model B4 career): Year1 comp - 75k Yr5 - 150k Yr10 - 300k Yr15 - 500-600k Why would I sacrifice n limit my expenses in Yr1 - 5 when I have high comp expectations? Saving an extra 10k in Yr1 is a sacrifice (high marginal utility if u spend that 10k), even if it’s worth 40k by Yr15, that’s only an addl 1 month of work at Yr15 vs full yr of sacrifice in Yr1

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I am not a FIRE Pro.. but the way I look at it is... FIRE is a mentality/lifestyle. If you don't set that foundation early, will you be able to suddenly pick it up and keep your expenses low enough as your income picks up or will your expenses increase as your income picks up?

likesmart

@ OP Decreasing marginal returns. I’m with you.

Salary growth of that trajectory is not guaranteed. You are assuming a lot of things go right for that type of compensation in those amounts of years.

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I agree w this, wonder if we could risk-adjust it and still understand the balance. I think the biggest adjustment needed is for the last leg - essentially lower % chance to make partner, and instead of partner a lot of people flatten out at the 250-350 level.

Not a fire pro either, but once my check hits there’s already a preset amount I invest. I don’t think it’s about having money left over in your account at the end of the month, but putting a hard cap before you even have the chance to spend it. Time in the market > timing the market.

likesmart

I’m not advocating to time the market, I’m advocating to avoid the sacrifice of a high savings rate early career if you know contributions later career can/will be larger. Compounding won’t outpace capital contributions in the example above where u save an extra 10k in Yr1 vs any extra contribution you can do in Yr15 by either working an extra month before retiring or just tightening expenses up there from the higher base.

Your earnings won’t actually follow that. You’ll have down income years, down market years, unexpected costs or big purchases to save fore before Y15, etc. $10k savings in Y1 = $25k in Y15. Over each year, you’ll have double your Y15 income easy. That’s what enables FIRE, rather than living a $100k lifestyle when you’re making $300k. You don’t have to sacrifice everything, but you can invest early to give yourself more options later.

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There is a difference between minimal and marginal. Saving $10k at 22 may be all you can do. At Y15 you could be saving $100k. They aren’t comparable. It’s about finding the comfortable lifestyle, growing expenses a bit while income grows a lot, and investing the difference. There isn’t a trade off.

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I agree with consultant 2 - tuck it away before you think about spending. One thing you are not considering is lifestyle inflation. It is really hard to avoid the increased cost of living that comes with kids. Not so bad when they are little (you really don’t need to buy all that shit..) but damn my teenagers are expensive as hell. College is coming up. I’ve saved for all of that and stuff but its turned out to be more bloat that I had planned 15 years ago.

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When I was 22, I didn’t mind living with parents or in a closet with roommates. And investing and compounding my savings for 5 years has more than doubled them. Continuing this lifestyle will guarantee my RE as early as possible. Plus after year 5, I could not deal with the wlb and left for a lower paying job in a startup. Consulting is very bottom heavy, not many make it past year 3 and your assumed salary trajectory.

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If you invest that 10k in crypto it might be 100k next day...watch out for Shibas

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"can I forgo compounding and count my eggs before they hatch?" Sure, what could go wrong? Life is what happens after you make plans...

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