Looking at the crisis of social security and "performance" of my modest 401k funds I sometimes feel that my own successful startup (with a modest exit) may be my only way to escape extreme poverty at older age. I doubt that anyone will hire a 65 year old programmer and I just don't see how SS+401k will be enough to deal with living/medical expenses. In that sense I'm desperate: starting a successful project is matter of survival.
If your startup projects have failed you, you don't think your 401k plus social security are enough, you are within two decades or so of retirement and you are still "just a coder" I know exactly what you should do:
1. Pick a company you don't hate
2. Get hired
3. learn their codebase inside and out
4. DON'T QUIT
Pretty soon you will be the only person around who knows about system "X" and they will be glad to keep you around past 65. My office is filled with COBOL programmers that took this path. Hell, we even recently hired a guy in his 60's, because that's just how old COBOL programmers are.
Alternatively you could get your MBA and go the CTO/VP of engineering route. This seems better to me, (as a backup plan to startup failure).
This is completely true. I'd say additionally that the smart COBOL programmers in their 60's "retire" and then return the following week as consultants making 50% more. That has been my experience working with them.
I've a similar mindset, though where I'll deviate is I'm 28.
For me I think the reality is that I expect computer literacy to continue to increase, while some slick abstractions will be developed in the next 25 years. Granted, software developers will still be in demand, yet there'll be more labor available in the market, and much of it will be more accessible which will drive down salaries a bit as the labor supply starts to catch up with demand. I also lack a formal degree, though real-world experience and self-teaching myself most of a CS and Mathematics undergrad curriculum has prevented that from becoming a problem.
Also, I'm watching my 60+ year-old parents go through it. They sold their house to free up cash. I had to bail them out (for 18 months) when I was 22-23 for a non-trivial amounts of money, since no one else could've helped them out. My uncle and aunt are in the same boat. My sister is ridden with debt. Parents of neighborhood kids are going through similar motions (selling the house to free up cash).
My plan?
* Save at least 35% of my net pay every year. Already done, shooting for 40% now. Goal is 50% (at current income level/standard of living). Credit is a tool that I do use to my advantage at times, but it's rare. Most everything is cash, including major purchases (i.e. car).
* Develop something to provide a 2nd income stream of at least $850/mo that only can go into savings. That's real money over the long haul.
* Minimize purchases of durable goods. I expect 15 years out of the car (only buy a car that makes you smile every time you get in it). My furniture will outlive me. I get 5-ish years out of clothing (and don't own much). Electronics either need to last 10+ years or have high resale value.
* Plan to change careers in 17-20 years, especially if there's tangible demand in a new field. Mostly since I expect to be bored. Barring that, time to get a "real" engineering degree.
> slick abstractions will be developed in the next 25 years.
Don't bet on it. There are tons of failed examples of attempts to enable plug and play programming (connecting pre-made components together), and it never scales. The devil is in the details.
Don't get me wrong. I agree with this. By and large it's still a pipe dream, but some dreams do come true. With that in mind, I won't bank on the fact that something won't materialize that lowers the barriers a bit.
Granted, more complex problems will always require more complex solutions. I don't see anything like this changing where I work (quantitative finance), but it'd be more of a concern for those working at J-Random Cardboard Box Company.
One could argue that this has already happened to some extent (where the domain model is commonly known and well explored: blogs, ecommerce) via packaged solutions and web frameworks.
Reading your points 1-3 (4, I agree with, I think) reminds me of Keynes' "In the long run, we're all dead".
I'm not against planning for the future, but at-least for me, living as frugally as you say you are would simply be too boring/depressing/mundane/etc. given my current (or short term) salary. Perhaps I will feel the pinch of this later in my life, but I definitely want to "live in the moment" as much as I possibly can - and for me, that involves spending some money (I have no doubts that others can do so without money too).
I wouldn't consider things to be all that frugal over here. I do live in a very nice - but modestly-sized - apartment. I have a sports car that I genuinely love (and would still have the one I bought in 2004 if someone didn't run a red light and T-bone me), and saved a ton by buying it 2 years old, getting it cheaper than most people pay for boring, 4-cylinder midsize sedans.
Granted, my income increased substantially over the years. My foundation expenses haven't increased, I've just cut down discretionary spending and buy things that last (i.e. avoiding buying cheap junk because it "saves money now" when it costs more over time because it has to be replaced). I actually spend less than I did 5 years ago.
There's ways to be cheap that are still smart and don't make you feel like your cheating yourself for the sake of frugality. Video games are just as fun when they're 2-years old and can be had off of eBay for $10 as they were when they were brand new and $60. I wait for consoles to be price cut. I can upgrade iPhones every year because I can get 90-95% of the upgrade cost covered by selling the old one on eBay. I spent a lot on an LED-backlit TV years ago, but it looks so fantastic (after 4 years) I don't see myself replacing it until it dies, rather than upgrading every 3 years like my friends have since the late 90s.
If I really wanted to, I could limit my expenses to 35% of my net pay. But then that would be short-changing myself. 35% used to be the average savings rate in China.
Completely agree on your frugal approach and about the last point, one thing that anyone in our field needs to develop is the ability to eventually gain expertise in a new area if interesting opportunities arise.
A 65 year old programmer seems strange today because very few 65 year olds are even computer literate. I have to think that will change as time goes by (although I don't know far off 65 is for you).
That said, I'm pretty sure there are some CS professors that are 65; if they can hold that gig we should be able to crank out software (I hope)!
I'll let you know what it's like in a year {just turned 64 this month). I wrote my first programs in September 1963.
I don't have a great deal of money, but I do have enough coming in that most months I end with more than I started, and don't have to worry about starvation, foreclosure or eviction, and spend a fair amount on books and gadgets.
It's not a very exciting life, but I enjoy it most days, and it's been years since I had to listen to anybody telling me what to do.
blog blog blog! I would love to hear more from an elder "statesman" like yourself. What it's like for older folks in the field, getting hired, getting clients, etc.
Sure there is, it's called 'job security'. It involves being the only person who understands how to run 40-year-old software.
Unfortunately (fortunately?) I don't think that in 37 years, I'll be seeing a lot of systems that were installed in the 00's - the mentality these days is more about interconnection and interoperability than it was in the 70's.
That said, I'm a systems administrator, not a programmer. There'll still be servers in 30 years, they'll just probably glow blue and float around the data centre unbounded by gravity, or something equally crazy.
If you're the only person understanding a system, it's a great risk for the company. They will eventually replace the old system and then you're worthless to them.
If you are one of the few people that understands the old system, you can easily be one of the people that set's up the new system, at which point your one of the few people that knows the new system. The secret is to get on board to projects trying to replace your system, and not become so over paid that they really want to replace you.
Work for the government or government contractor. Closest thing to a guaranteed job you'll find. Ability to get a clearance will make that 100% security.
Let's assume for the sake of argument that Americans earning the minimum wage are living in "extreme poverty" (which is not true in my opinion, but let's be conservative).
The median household income in US is around U$50k.
So the median household is already living above poverty. You alone can earn more than $50k as a junior programmer. You probably have above average programming skills, and will eventually earn 100k if you get a job in a big company and stick to it.
You don't even need to live too frugally. You only need to pretend your income is $50k -- you'll still live at least well as the median household -- and sock the rest away in very conservative investments.
Yeah, I don't do 401k. Nor am I depending on social security. I plan to start my own business(es) and get wealthy that way. I don't care if it's "risky" to start a business. That's what I choose to do. Also, the more cash/liquid savings you have, the more once-of-a-lifetime invest opportunities you can seize. I've gleaned this info from existing millionaires such as Mark Cuban, the book "The Millionaire Next Door," and others.
So... you aren't saving for retirement at all? If so, relying on the success of a future business as your retirement fund isn't smart. If you're still saving elsewhere, that could be a sound plan as long as you don't sink it all into a business that fails.
If that's your plan, then you are depending on Social Security or whatever social programs are available when you retire.
I am saving, but keeping it liquid. I save about 50% of my net income--which, as a mid-level software developer, is good money. Therefore, I can invest in myself now (or soon)--for example, starting a business. I'm not sure how much of my savings I'll need to start a business. But I'm a pretty conservative spender, so I'm not worried.
I'm going to make it happen. Somehow.
I understand that everyone's financial situation and aspirations are different. YMMV.
This is the strategy I'll be taking, although I'm 20 and have little to save as is. If there's a bout of deflation or price/asset decline, keeping money in savings as opposed to 401(k) assets could earn a much better real return. The only reason people don't normally think of this is because this normally doesn't occur.
But there are significant tax savings when using a 401K or IRA, which combined with the long term makes it quite unlikely that savings will out perform.
Plus, you can probably put currency funds into a retirement account. I think that would function the same as holding cash, but I haven't completely thought through it.
Betting on deflation as the path to riches seems to be hardly a prudent strategy, let alone one to bet your retirement on. Yes I 'could' get a great return on investment if I buy that painting in the garage sale of my neighbor and it turns out to be a Monet, that doesn't make it a wise investment.
Nope. I'm 36 (turn 37 in a week) and I have similar thoughts. There is definitely a sense of desperation at work.
I do believe that, at this point in my life, the only realistic shot I have at living out my dreams for the future is to build a successful startup. So you are definitely not alone. :-)
Same here - I don't think a normal job would earn me enough to have a rent significantly above poverty level in 30 years. Especially not when accounting for inflation (1 million today won't be a million in 30 years).
Hypothetically supposing your logic is accurate, there should be an army of unemployed talented 65 year old programmers desperate to run your business(es) for you while you sit on the beach, right?
If your talented there is huge demand for 60+ year old programmers. The issue is expected salary increases with age, and if your skill's don't keep up it becomes harder to find a job.
PS: My father was a 63 year old programmer the day he died, and believe me he was well paid and in high demand.
Or, emigrate to another country where healthcare/living expenses are cheap (most of the countries in Asia) or where the government won't (likely) default on its healthcare/social security obligations (Germany, France, Canada, Australia, Northern European Countries), unlike the US.
I live in Germany, and healthcare is very expensive here. True, if you are on social welfare, the government will also pay for your healthcare. But that means you have to live on social welfare standard. Also, you can't really bet on social welfare being still as high in 30 years as it is now.
My impression is that most countries don't have as generous of immigration laws as the US does, and judging by the experience most of my immigrant friends have gone through, that's saying something. Have I been FUD-ed?
US laws are significantly harder than a lot of European nations, the easiest of which to get citizenship are Sweden (my plan), UK, officially France (although in practice perhaps not), and Belgium. In Sweden you don't even need a job, if you have a self employed business bringing in 2k+ per month, you can just move there for 5 years and get citizenship.
That highly depends on where you're emigrating from and what your standing in life is.
If you are looking to emigrate from a 'third world' (what a ridiculous term) country to a wealthier one it can be quite hard. If you already have family or friends somewhere that can make the process considerably easier.
I just had some wall plastering done on my fence (I'm in Australia). The guy that did it was from Huntington Beach and now holds dual citizenship. His wife is also a US citizen. I kind of asked him how he did it but he ambiguously said he stayed here for a while and got residency.
I think it's pretty much a given that Australia and New Zealand will accept you if you (a) speak the language (b) have a profession and (c) no criminal record. When I goto the local playground sometimes I wonder if I'm not in a suburb of London, such is the amount of English accents I hear.
Canada is really easy. Denmark is pretty good, so is Australia/New Zealand. Asian countries love high quality labor. Other than that, try investing or marrying into the country :)
As an ex-pat Canadian, I worry about long term prospects for Canada. Even though the Canadian government seems to be doing the right things, economically, can Canada really avoid a crash if things in the US really tank? The US is Canada's largest trading partner.
Ontario is highly dependent on trade with the US for it's income, but BC and Alberta have economies that are more resource-based, IIRC. Prior to becoming a huge trading partner with the US, Canada's economy was largely resource-based (though I couldn't tell you which resources these were).
This is why BC and Alberta were thriving when the Canadian dollar was worth more than the US dollar and the price of oil was sky-high, while Ontario was suffering. That said, I'm not sure of the larger implications to the Canadian economy as a whole if the US tanks. It may be simple to move to trade with China, though it may not.
Is it just me who is having similar thoughts?