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.

Cheapskate Must-Read: How to Survive without a Salary

How to Survive without a Salary deserves to be much more well known than it is. Tim at Canadian Dream : Free at 45 reviewed it a few weeks ago and didn’t seem especially impressed. Other reviews are few and far between.

Most readers won't want to duplicate Long’s lifestyle exactly, but all of us can learn from him. The chapter on “Needs” is some of the most useful personal finance writing I’ve ever read. For anyone working towards early retirement or simply trying to live below their means, this book is invaluable. Some of us will be able to translate his ideas into a way to quit or downsize our own jobs as he did.

The Strengths

Charles Long quit his salaried job early in life and eventually moved to the Canadian countryside with his wife and two children. Their lifestyle is based on reducing costs and material needs as much as possible (“conserving”) and using “casual income” to meet their remaining need for cash. “Snowflaking” as popularized by I’ve Paid for This Twice Already is similar to the idea of casual income, but Long’s family uses their version of “snowflakes” to pay for essential needs rather than to reduce debt.

Long and his family make extreme frugality sound normal, even fun. They may not have indoor plumbing (really!), but they do have, as he describes it, “a standard array of offspring, pets, and bulky appliances that signal a rather ordinary middle-class household,” as well as a sizeable country house and an abundance of homemade wine. The beauty of this book is that it helps you realize how you, too, might be able to adjust your needs without giving up quality of life.

It’s easy to misinterpret this book as a back-to-the-land guide to country living, especially when the author keeps throwing in examples like how to get the best deal on roofing felt. However, it’s far more than that. If you pay attention, you’ll notice many examples of “conserving” in the city from both his family and from others. It’s also not a step-by-step guide to quitting your job—he mostly describes what he and his family did after he quit his job. But the techniques he describes would certainly help anyone still on their way to building up a nest egg.

Long’s can spin a good tale, and he’s lived an interesting life. He has an impressively broad and colorful circle of acquaintances and introduces us to characters ranging from perfectly conventional careerpeople to a nomadic salesman. I loved reading the details of how these vastly different people live frugally but well.

Amy Dacyczyn’s Tightwad Gazette books introduced me to the idea of “creative frugality.” Dacyczyn’s books will give you lots of examples creative frugality. Charles Long’s book will teach you how to be creatively frugal. The list of questions he gives us for examining a possible need, his thoughtful analysis of the true costs of owning things, and his extensive exploration of secondhand and barter economies teach us how a “conserver” thinks, which is more valuable than any number of examples. Specific thrifty techniques may or may not work depending on needs, wants, resources, and location, but a new way of thinking can be universal.

Long shows that the principles of creative frugality can be applied to any need, no matter how obscure or how complex. He also offers an exceptionally broad look at the alternative economy—thrift stores, auctions, dumps, and barter, to name just a few of the places he shops.

He encourages readers to make the most of their creativity, to believe that they can do things on their own, and to have the confidence to use some of their “unmarketable” skills as sources of casual income. It’s clear that Long loves his lifestyle, and he wants to help other people live the lives they love, too.

The Weaknesses

Long is Canadian, and his brief discussion of healthcare seems to assume that catastrophic coverage is both available and affordable. Anyone in the U.S. seriously working towards early retirement will want to examine the issue of healthcare from all angles and budget for health insurance carefully and generously.

He doesn’t spend much time on long-term big-ticket items that worry most of us, like how to support ourselves as we age or how to pay for kids’ college. Long’s “pension plan,” is “a young hardwood forest.” Most of us could use a little more specific guidance.

He also has an interesting blind spot when it comes to debt—his discussion of renting vs. buying assumes that one is able to buy a home without taking on a mortgage! He explains the difference between “good debt” and “bad debt” quite nicely, but doesn’t give any specific ideas on how to eliminate debt. I do think this book still has a lot to offer to those who are in debt, especially if you need to cut your expenses to the bone in order to make progress on paying it off.

Highly Recommended

The chapters “Needs,” and “Casual Income” and the section in “Getting Ready” about material fasts are essential reading. “The Secondhand Market,” “Auction Buying,” and “Alternatives to Buying,” are also packed with great information and interesting stories. If you’re turned off by politics, you may want to skim or skip the preface and the last two chapters, which at certain points deteriorate into screeds against the state of the economy.

How to Survive without a Salary was most recently updated in 2003. It’s now out of print and available from Amazon only at relatively high prices. I believe it’s well worth $15.00 or so, but check it out from your library or request it from interlibrary loan to see whether it resonates with you before buying. According to Worldcat, it’s available at about 300 libraries worldwide
(more on the wonders of Worldcat and other library hacks coming soon).