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beoShaffer comments on Open thread, Oct. 20 - Oct. 26, 2014 - Less Wrong Discussion
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I have found this to be the case. I still find the advice useful, but find myself thinking about how I'm going to retire early before remembering there was another reason I was saving that money.
It takes roughly 2.5 million dollars invested prudently with a return of 7% per annum in order to live off savings. You would have to be earning a great deal and live extremely frugally in order to accomplish that. However, there are people that retire from daily work at 35 who have done it. However, given student debt and this kind of thing I think it is harder now than ever before. I have an issue with extreme altruism movement and the early retirement crowd because I think there is a loss of meaning in both.
Why, can you not live on less than $175k/year?
No, I would have to lay off most of my servants. I can't imagine living like that.
That estimate needs at least two more vital numbers: the expected volatility of your returns and the expected inflation.
At the current amount I live off, $2.5 million would last me for 200 years, and that's if it returned 0% post-inflation. I might have less expenses than "real adults", being a student, but unless you're assuming a family of 12, those numbers sound insane.
I could live on $20k/year easily, given I stay in the same place. A ROI of ~3%/year on an investment of $1,000,000 would sustain me for life, given that it remains constant at worst.
(Expenses: ~900USD in student loan payments, ~400USD food/utilities/internet/transit, = ~1300/month = ~15600/year. I'll also note that I am not drawing even half that in SSI at the moment, but if not for the student debt, SSI would be livable. This relies on not paying rent/mortgage/whatever you pay for housing. If housing is an issue, location obviously matters--$30k/year in Silicon Valley isn't worth much, but it might get you further in, say, St Louis. I specifically picked St Louis because it is both an excellent city for cheapskates and, at least some journalists there seem to think it's becoming a tech town. I do not live there.)
Of course, if I had $1,000,000 to invest, I'd probably just spend the first $100k to wipe out most of the loans, and invest the rest. The interest drops a little, but the reduction in expenses more than makes up for it (expected gains are ~8k/year). In reality, the most likely reason that I wouldn't win forever if someone handed me a million dollars is that I have no experience with financial shenanigans and probably would fail completely at making these payments/investments happen. That, and the no moving thing (but that's a whole other can of worms).