A new article about the ERE book

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guitarplayer
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Joined: Thu Feb 27, 2020 6:43 pm
Location: Scotland

A new article about the ERE book

Post by guitarplayer »

I have a habit of occasionally typing in "early retirement extreme" in google scholar and this time it spit out this article. I wonder if the author hangs out on the forum, and equally if @jacob will manage going through 38 pages of being referred to by his second name.

Fish
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Joined: Sun Jun 12, 2016 9:09 am

Re: A new article about the ERE book

Post by Fish »

It is neat to read a journal article that examines the ERE book from many angles, including a critique of the math. Something I find notable is how the possibility of extreme early retirement resulting from high savings rates is not considered novel: it is assumed to be common knowledge for the audience.
One of Lund’s major contributions comes in here: figuring out how many years’ worth of retirement can be finance with a current year of work, given a certain level of expenses. For example, if a person earns $100,000 dollar in a year and spends $50,000, s/he will need to work two years to finance one year away from work. In other words, at that rate of saving (50%), each year finances half a year of retirement. (emphasis mine)
For this example, we would disagree and argue that only 1 year of work is required to finance 1 year of retirement, because savings is equal to expenses. Is it an error? Or maybe the author is working from a conventional PF mindset where savings needs to replace pre-retirement income (which is reasonable under an assumption of expenses~=income). The way the article is written leads me to believe that the author considers SR > 0.5 to be impractical.

Related: viewtopic.php?t=8481

guitarplayer
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Joined: Thu Feb 27, 2020 6:43 pm
Location: Scotland

Re: A new article about the ERE book

Post by guitarplayer »

Fish wrote:
Tue Sep 13, 2022 1:26 am
For this example, we would disagree and argue that only 1 year of work is required to finance 1 year of retirement, because savings is equal to expenses. Is it an error?

[...]

Related: viewtopic.php?t=8481
I think the author assumes a complete replacement of income, together with the saving power i.e. a retirement with $100,000 per annum.

I get a sense that he almost looks at ERE as nested withing the general retirement planning. So get oneself ERE and stop working, and yet be able to contribute to a some general mainstream retirement pot to draw from in the 'proper' retirement.

Thanks for the link, I looked at it in the past!

xmj
Posts: 48
Joined: Tue Apr 14, 2020 6:26 am

Re: A new article about the ERE book

Post by xmj »

He seems to fail to accept the premise of high savings rates in general, and *especially* the point that with enough saved up, it becomes an endowment that'll last a lifetime or three.

In both Case A + Case B the author calculates (pages 21ff) he assumes higher outflows than inflows... but that is precisely the point of hitting financial independence (and even more so, WL7 and above) - you'd work until inflows *exceed* outflows.

But maybe he accepts it but his paycheck depends on people failing to replicate this insight, who knows.

prudentelo
Posts: 151
Joined: Sat Jan 22, 2022 8:55 am

Re: A new article about the ERE book

Post by prudentelo »

Professor of Finance at UCSF is probably $200k job with ~10 hour of real work requirement per week.

Once can get such job by writing book review of book someone else who does not work in your field of research professionally wrote and misunderstanding vital parts of it.

This brings wisdom of not working in question

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