{ "media_type": "text", "post_content": "Why don't more partners (esp. tier 2/MBB) just retire at ~40-45? What keeps a person going at that point? I get working a job that's meaningful and and for a cause close to heart, but why work an objectively demanding job when you have multiple millions saved and a fairly high level of prestige in your field?\n", "post_id": "61711abeac8f71002a26528f", "reply_count": 144, "vote_count": 43, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }
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Why don't more partners (esp. tier 2/MBB) just retire at ~40-45? What keeps a person going at that point? I get working a job that's meaningful and and for a cause close to heart, but why work an objectively demanding job when you have multiple millions saved and a fairly high level of prestige in your field?

likehelpful
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I had a Partner tell me once that he needed to make at least $800K to support his family’s lifestyle (house in Manhattan, kids in private school, full-time nanny, etc). As someone making 70K at the time, it blew my mind. But that kind of lifestyle inflation (and growing needs) is pretty common. Just guessing, but I would say the average person makes Partner around 36-37 and may have $1-1.5M NW at that point. With lifestyle inflation, I think many Partners probably spend $300-400K a year. So many probably have a retirement number of $10M+ in mind. Most Partners I know are also fairly risk averse, so would not walk away until they are 100% sure their egg can sustain them. Very few will have reached that $10M number by 45, let alone by 40.

likesmarthelpfulfunny

It’s clear so many here have just not done the math.

Retiring at 45 vs 65 means you not only lose 20 years of income, you have to budget for 20 additional years of living expenses. Housing. Food. Health insurance. Even if you live modestly, those things are expensive. Once you don’t have an income, you can’t borrow to fund these things. You need cash. A lot of cash. Retiring at 45 vs 65 means paying for your own health insurance rather than relying on Medicare; that’s an extra half a million bucks after tax you need to save right there just to cover you from 45 to 65.

People live a long time. If you retire at 45 you potentially have a LOT of years of expenses to pay for. You need a big chunk of change in the bank to cover.

likesmart

I’ll also throw in that 20-50 years of inflation means whatever you think things cost now, they will be many multiples in the future. If you have investments earning 10%, that is only 7% in real dollars and if you draw any of that, taxes take another 30%.

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Lifestyle inflation and desire to give to the next generation

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Ah ok. So you’re going to save $5M US in a market where things cost a whole lot less than they do in the US.

Yeah, I mean I could retire on my savings to an emerging market too. But I live in the US and I want to keep living here. That changes the game.

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Let's say you do retire. What do you actually do with your time?

The reality is that some people find working to be far more personally rewarding than not working. They don't want to turn into just another nobody with cash.

likefunnysmart

VP1: it does come with a nice package. I'm aiming to retire at 45 when I'm an empty nester. I think it's a good age and stage of life where I'll still be very fit to continue my adventures.

likeuplifting

Retirement is out of the question for many of us. Even gardening leave between companies is a frustration. I now work a lot less (at 40) than before but I couldn’t envision not working. Retirement is vastly overrated. There’s only so many rounds of golf you can play before you go nuts.

Also keep in mind at 40-45 many of us have young kids. We need to maintain some structure that’s aligned to the kids. I’m having my first in a few weeks. I think it’s really important that he sees that daddy has stuff to do.

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One of the partners in my firm has cancer. He had a surgery recently. He is in his early 40s. He used to work insane hours.

My point is that you can’t assume to live healthy until 70s. You have to enjoy life when you are young and healthy.

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Most consulting partners are type A personalities. They wouldn’t mind working for free just for the influence and prestige. Money is immaterial beyond a point, especially with the asset inflation of the last few decades.

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This is exactly how my spouse is. I enjoy what I do but would never do it for free (nor for this many hours). Ironically I make more than them currently since I’m now in tech (they’re in strategy) but I plan to FIRE at 45 or so and they plan to always work. Either way it’s a win-win.

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They’re losers

likefunny

Have you ever met a partner with interesting hobbies? Developed pursuits outside of work? Once you give that stuff up for 10+ years, I doubt it comes back easily.

likehelpful

At BCG I knew partners who drove race cars on the side, ran triathalons, made wine, flew airplanes, taught courses at universities, served on charity boards… I got into the habit of motorcycle touring when I first became a BCG partner, every year I’d take 3 weeks off and fly somewhere and buy and motorcycle and just ride. Then I’d sell it at the end of the trip. Was single then, have kids now so I spend my time differently, but it was definitely a hobby I could only take up once I had a little money.

If you haven’t met a partner with interesting hobbies what that tells me is that you have never gotten to know the partners you have met.

likeupliftinghelpfulfunny

OP, genuinely curious how long have you been in consulting? What net worth do you think an average partner has a 40 or 45?

Partners make good money without a doubt but it’s not like it compares to founders of a successful startup that was acquired. Not even close.

likesmart

I think the simple answer is that most partners in their 40s have increased their standard of living to a point where they can’t afford to retire. It is also a choice to simply work more to live a more lavish lifestyle.

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Legacy, purpose, enjoyment, routine, status, etc.

likesmart

I am in that age bracket. Have about 4-5m NW. I would imagine that I am average (best guess range is 3-8m)

Can I just drop everything and move to another country and live off of that? Yes. Would I want to do that? Probably not…

I enjoy working. I enjoy the money. Put it this way, it’s going to be much easier for me to work an extra year for a few million than for my kids to earn that

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VP2 - my kids will definitely work. I had a paper route growing up, worked as a cashier and other random jobs. It was fun and I learned a ton.

What I am saying is that savings and wealth is a family game. It’s much easier for me to work a year and clear, say 2m, as opposed to them working forever to accumulate the same amount.

We are doing financial planning for the family now and I don’t think we will do lump sum when we keel over, probably milestone based. And likely give a bunch of it away too. Let’s see

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It's funny how it works, but the more money you earn, the more money you need...

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Hamsters like to run in their wheels

likefunny

I retired early but not in my mid 40’s because 1) I had kids and you never know what may come up with them, 2) I wanted to develop and support a couple of key co-workers to se them through to promotion to partner, 3) I was doing important and interesting things for which the firm needed me and I wanted to see through to completion, 4) I was able to donate significant $ to charity, 5) personal risk management and stability. Finally, not my case, but a I regularly observe that divorce sets everyone back from early retirement.

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As someone who got married and divorced and remarried in my 20s before entering consulting in my 30s, let me tell you — jobs don’t cause divorce. Being married to the wrong person does.

likesmart

You don’t have multiple millions saved by age 40 and to get there by 45 requires consistent strong bonus performance and also moderate lifestyle costs, which many 45 year old partners don’t manage. But indeed it’s mainly about not wanting to retire. Lots of MBB partners leave MBB in their 40s, they just take other roles.

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Most, I would argue.

There are layers in partnership. There is always a bigger carrot. You become head of a practice in a a region and then in a country and so on.

I think some would retire if they had a good set up. For instance, 20 hours a week job with some purpose. Most don’t have it.

likesmarthelpful

In my circle of acquaintances, lifestyle inflation is a big factor, as is the "prestige" of being a partner and being an influential person.

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Yup I agree with EY1. My uncle is a partner at UMM PE fund, for all that prestige is worth dude sends his family to our family vacations and no one has seen him in 10yrs.

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Mortgage

likefunny

It’s actually not that fun always when retiring. Some people who are old have their kids married off and just live alone with their spouses. Although at first it seems like you can travel and do all these great things, it eventually gets boring. That’s why some people will work forever, it’s almost an addiction to some.

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If you make it about helping others and take time to hear their stories and struggles, you won’t get bored. Please give it a try!

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I'm late 30s and plan on retiring at 45 when I'm an empty nester. Retirement is not overrated. I can't wait! Life's too short to work so hard for so long.

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