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Early Retirement Extreme.


Early Retirement Extreme.

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This article was first posted January 1, 2010.

[Retire Early]

Invest with DFA Funds, 12-Step Program

Despite what you hear from many Cassandras, early retirement isn't dead. But you will likely have to be a bit more frugal to get there.

An example is Jacob Lund Fisker's blog Early Retirement Extreme where he describes the disciplined, extremely frugal approach that allowed him to reach financial independence by age 30.

Jacob is from Denmark and has a PhD in Theoretical Physics from the University of Basel, Switzerland. He worked at the Lawrence Livermore National Laboratory in California prior to retiring. Like many early retirees, Jacob saved a large portion of his salary -- more than 75% of his annual earnings. He followed the "4% rule" (i.e., 25 times annual expenses) in calculating what's required for financial independence. As he explains, "The math works out. If you save, 83% and spend 17%, you have need 25*0.17/0.83 ~ 5 years of savings, where 25 is the 25 years above. Add 8% interest from your assets, and you “only” need to save around 75%."

Of course, if you're not earning an investment banker's salary, saving 75% of your income doesn't leave you with much to live on. Jacob doesn’t own a car or a a home (he lives in a used RV that he purchased for less than $15,000 -- a 1991 Georgie Boy Encounter.) He cooks everything from scratch, cuts his own hair, and practically never buys anything new (or anything at all for that matter.) He also trys to limit his hobbies to activities he can do for free (like crewing on a racing yacht.)

Investment Philosophy

While most retirees invest in a diversified portfolio of low-cost index funds, Jacob holds a portfolio of less than 20 dividend-paying stocks. He chooses mostly US companies and does a bit of trading. While it works for him, it's an approach few financial planners would advise.


At 30 years old, Jacob can buy a high-deductible health insurance policy tied to a Health Savings Account (HSA) for a low monthly premium. The only other insurance he carries is liability insurance. His personal property is cheap and easy to replace so he doesn't bother carrying insurance on that.

The Four-hour Work Week

Despite his financial independence, Jacob works an average of 4 hours per week as a copy editor for scientific journals. It pays well enough so that his able to meet his monthly living expenses on that income and not touch his savings. If you can live on four hours a week of work, why work five?

Another retiree with the INTJ personality type

Ten years ago Retire Early did a survey of the Myers-Briggs personality type of early retirees which revealed that INTJ's were represented in Retire Early community with 20 times the frequency of the general population. Jacob Lund Fisker reports that he's an INTJ as well.

Jacob's Early Retirement Extreme blog is informative and thought-provoking. It's well worth a visit.

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Copyright © 2010 John P. Greaney, All rights reserved.

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