Would you retire on $100/day?

[zumbafanforever]

Hypothetical:

1. Starting from 18 years old, you are paid $100/day into your bank account, 7 days/week, tax-free for the rest of your life (increasing to match inflation).
2. You are not allowed to earn or receive any additional money, except for passive investments such as HISA, term deposits or ETFs (e.g. can't invest it into a business or property or highly speculative assets).

Would you retire on this allocation?

Why? Why not?

What are the advantages/disadvantages?

Would you change your mind if this started at 16 years old instead (an extra $73k, which will enormously compound over the coming decades)?

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For me, I would strongly, strongly consider it, because:

a) $182,500 (5 x $36,500) is much more than I made between 18-23 (as a uni student), so I would get a nice 5-year head start

b) following on from point a), the power of compounding can work heavily in your favour if you play your cards right early on (i.e. building an ETF portfolio)

c) I was fortunate to not move out of home until my late 20's, so I could keep expenses relatively low to maximise point b)

d) the freedom of not having to work is (obviously) very, very appealing. This would allow me to never have to sacrifice family time, pursue hobbies, partake in activities which are fulfilling and maximise my health

e) the current aged pension is about $27.5k/year (I believe) so you will comfortably exceed that in your 'retirement' years

 

[bfdd6988]

@zumbafanforever Maybe. Living off $100 AUD a day in Vietnam is very doable

 

[codymarshall]

@bfdd6988 What on earth are you spending $100 per day on in Vietnam?

 

[bfdd6988]

@codymarshall Exactly. It's ultra affordable. $100 a day in Austtalia and you're practically on the bread line. $100 a day in Vietnam and you're living a good life

 

[ellenaus]

@zumbafanforever

Would you retire on this allocation?

No.

Why? Why not?

Retiring is actually a trade off between employment and retirement lifestyle. I reckon as an 18yr your employment lifestyle will afford you so much more than a $100/day lifestyle that I'd be worthwhile.

What are the advantages/disadvantages?

You're stuck with this. Talk about lost opportunity costs.

Would you change your mind if this started at 16 years old instead (an extra $73k, which will enormously compound over the coming decades)?

Quite possibly, but to go against the spirit of this question I'd then be looking to minimize all costs and invest til I could 'afford to live again'. And whilst that sounds miserable, it's something I guess..

 

[zumbafanforever]

@ellenaus You don’t think working and sleeping for most of your life also comes with certain (non-financial) lost opportunity costs?

 

[jayclay]

@zumbafanforever What I’ve discovered, being a contractor that works part time, is that unless you have friends in the same position it can be very lonely and boring

 

[brohoho]

@zumbafanforever Op - put down the bong and ask yourself how much is rent or a mortgage per week.

 

[zumbafanforever]

@brohoho Happy to educate you on the feasibility of this - even in a nice suburb - let me know if you’re interested

 

[prodigalson8523]

@zumbafanforever Live on 36500 a year? Are you mad?

 

[zumbafanforever]

@prodigalson8523 Nah son, are you?

• if you live off $11,500/year from ages 18-23 (very doable if you live with parents) you will save $25k/year or $125k total
• as per the rules I outlined, you are allowed to park this money in a HISA or ETFs, so presumably this will snowball into an even larger amount.

How many 23 year olds get such a big head start with $150k+?

Also, I never stipulated you couldn’t have a partner who earns an income.

And the biggest factor… you are free from the rat race! You’ll find a way to make it work.

 

[1amdmode]

@zumbafanforever You've convinced me.
I think you should do it.

 

[kayla0612]

@zumbafanforever I've earnt over 60k since I was 17. You realise there is a massive group of people who work and don't go to Uni? I don't know anyone who would get out of bed for $100 a day.

 

[zumbafanforever]

@kayla0612 Fair enough. You would earn the $100 even without getting out of bed, just to be clear…

 

[wantstofollowgod]

@zumbafanforever

Would you retire on this allocation?

If the spirit of this is “if you got $700 per week in todays money could you perpetually maintain a lifestyle for the rest of your life” then yes it could be done but would come with some major drawbacks.

If you consider living in a cheap area (say a small coastal town) and wanted to spend your days chilling on a beach

Rent: $200/week https://www.realestate.com.au/property-house-qld-balgal+beach-437023180

Food: $200/week (would need to be delivered since you don’t own a car)

Energy, clothes and other essentials: $100/week

Left over: $200/ week

Sounds good in theory, in reality what happens if you have a medical issue, dental work, landlord decides to keep raising rent outside inflation or decides to evict you, family member dies and you need to attend their funeral etc? $200/week won’t get you where you need to be forever and won’t cover you when financial shocks hit.

IMO “live with your parents” is indirectly substituting their income as your own.

 

[amarie07]

@wantstofollowgod One person isn't eating 200 a week.

200 a week though is 800 a month which is solid savings.

You be surprised lots of people can't save that.

So its just about what do you value more your frww time or

 

[littlestar777]

@zumbafanforever Unless you live in a very low cost area I don't think you're going to get much compounding. Especially since you'll need to have an emergency fund since some expenses are lumpy.

Also how is a spouse handled?

 

[zumbafanforever]

@littlestar777 Spouse can do as they like

 

[aeoril]

@zumbafanforever Can I give my spouse this option or do I need to be the one that takes it?

 

[elizahwhostands]

@zumbafanforever It entirely depends on when you were born. If you are born 1975 ish or later, then no not worth it. If you were born in 1960, then yes as you’d be on 80k a year tax free.