Review: You Can Retire While You’re Still Young Enough to Enjoy It: Straightforward Strategies to Get You There in Your 20s, 30s, 40s, or 50s

Great title. Who doesn’t want to retire while they’re “still young enough to enjoy it”? Abromovitz knows of what he speaks—he and his wife transitioned into semi-retirement in their early forties. As of the book’s writing, they were living near the beach in Florida and working occasional part-time jobs for fun and money. Sounds great! Unfortunately, Abromovitz doesn’t seem able to translate their success into useful advice for his readers.

He does not go into great detail about his and his wife’s finances, but it’s clear that they made significant amounts of money in two ways:

1. Through a 401(k) which was invested primarily in his company’s stock, which then skyrocketed. (Interestingly, I found a later interview in which he advised against investing too much in company stock.)

2. The sale of their primary residence. The profit from this sale was not taxed, and they used part of the profit to buy a much less expensive home in Florida.

Abromovitz hastens to assure his readers that they can achieve early retirement without striking it big in the stock market or real estate. Most of the chapters explain sources of post-retirement income such as 401(k)s and IRAs, Social Security, pension plans, and part-time work. He advocates taking advantage of 401(k)s and IRAs. He suggests investing in stocks. He talks about how working part-time may allow you to retire earlier. There’s nothing extreme or out-of-the-ordinary here—which is exactly why I doubt it would help anyone seriously gunning for early retirement.

There are two big flaws in his advice:

1. While he does admit that living below one’s means is necessary, he constantly tries to reassure the reader that sacrifices are not necessary or that the level of sacrifice need only be minimal. He points to luxuries like a backyard swimming pool and paying $6 a day for a cat’s paws to be massaged during a kennel stay as things one might have to “give up” to achieve early retirement. Another example of “cutting corners”: “You might need to give up that second car. Instead of trading cars every three years, you should hold onto them a lot longer. Perhaps, when your current vehicle goes to auto heaven, you’ll be purchasing a reliable used car.”

Abromovitz may be trying to reach his readers where they are (little savings, spending indiscriminately), but he does them no favors by making the goal of early retirement sound easier than it is. My impression is that he does not quite understand the sort of budgets most people are working with. The Abramovitzes “can’t bear” to rent out their second home in Pittsburgh and seem to eat out several times a week, two luxuries that are fine if one can afford it but are probably not possible for most people who retire early.

2. He recommends saving 20% of one’s paycheck. Sound realistic? Mainstream news articles tend to suggest saving 10-15% of one’s income for a post-65 retirement. These threads on Early Retirement Forums show some figures from people currently saving for early retirement.

I did some pretty extensive calculations using the 20% figure.

*beginning of extensive calculations*
Let’s say you’re 25 today, make a salary of $50,000 a year, and want to retire at age 55 (it’s clear that the author considers “early retirement” to be before age 59 ½). You figure if you retired today you could live on $30,000 a year (a figure the author mentions), so you want an equivalent amount of buying power when you reach 55.

With 4% inflation, you’ll need about $97,000 of income in 2038 to match today’s $30,000. The good news is, at least in our scenario, your income is growing at a similar rate, so that $97,000 is the same percentage (60%) of your income in 2038 as $30,000 is of your income today. Your income in 2038 will be about $161,000 a year. For simplicity’s sake (and this is a huge mathematical leap which would affect compound interest and your total end portfolio hugely, but let’s go with it), we’ll say that your average income during those 30 years is $105,000, which would make your savings of 20% $15,200 a year.

Let’s say we put that $15,200 a year, starting now, into investments that return about 7%. At age 55, you’d have about $1.5 million. Sounds pretty good. So let’s put it into FIRECalc, a retirement calculator that tells you how realistic your retirement plans are by giving you a “success rate”—the number of scenarios in which your money would outlive you based on the past 100 years of returns. We’ll assume a retirement period of 35 years, for a total life expectancy of 90 years.

*end of extensive calculations*

The success rate with saving 20% of a $50,000 income would be 38%. In order to increase the success rate to over 75%, one would have to make well over $100,000 a year at age 25. In others words, early retirement on 20% savings is possible if one is starting very young (within a couple of years of college graduation) and makes over $100,000 starting out.

This isn’t to say that early retirement isn’t possible. Far from it. But Abramovitz’s strategy is only feasible for a small percent of the population. Most people, in order to retire early, will have to drastically reduce their living expenses, drastically increase their savings rate, or both. Other factors like very high market returns or big profits from real estate will make early retirement easier but can’t be counted on.

You Can Retire While You’re Young Enough to Enjoy It may help people retire comfortably, but it’s unlikely to help them retire early. Look elsewhere for early retirement advice.