Warren Buffett – The Original Early Retiree?

Just read a pretty fascinating summary on Warren Buffet’s early years, and almost spit out my coffee midway through.

Apparently at 25 years old he wanted to retire! And actually turned down a dream opportunity in order to do so!!

“The thing is, when I got out of college, I had $9,800, but by the end of 1955, I was up to $127,000. I thought, I’ll go back to Omaha, take some college classes, and read a lot—I was going to retire! I figured we could live on $12,000 a year, and off my $127,000 asset base, I could easily make that. I told my wife, “Compound interest guarantees I’m going to get rich.””

I feel like I had heard that before, but for some reason the “I was going to retire!” part escaped me. As well as the fact he was pretty confident screwing the 4% rule and trying to live off 10% of his assets, haha… But hey, he’s WARREN BUFFETT!

So what changed his fate?

“By pure accident, seven people, including a few of my relatives, said to me, “You used to sell stocks, and we want you to tell us what to do with our money.”  I replied, “I’m not going to do that again, but I’ll form a partnership like Ben and Jerry had, and if you want to join me, you can.”

He set a few ground rules (mainly, no bitching about the ups and downs of the market) and before he knew it people out of the blue were sending him money to invest as well. This “partnership” formed what is now Berkshire Hathaway with $620 billion in assets with an annual average growth of 19.7%.

If you want a share in the company right now? $245,000. For ONE share. (“Class A” anyways, there’s now a “Class B” you can nab for $160.00 a pop – here’s the difference between the two).

The main thing he credits to the success? He was doing something he liked :) And 60 years later he’s still doing it!!

Now one wouldn’t naturally consider him “early retired”, what with him obviously still working and running a massive empire, but it was the freedom he gained through being financially independent that led him down this course in life. He doesn’t need all these extra billions of dollars he now has (he literally still coupons!!), but he chooses to spend his time on stuff that excites him.

And that’s the the part I admire the most. It’s not his businesses wizardry or his sharp mind, but the fact he got his personal finances in order which then set himself up to do whatever he wants in life. And at the age of 25 at that!

I highly encourage you to read this short piece on him – it’s really cool, especially as it’s in 1st person: Warren Buffett’s $50 Billion Decision

Here were two other notes I found interesting from it:

  1. When he found a mentor to look up to (Benjamin Graham – famous investor and author of The Intelligent Investor), he did whatever it took to stay in his shadows for maximum learning!
  2. He was perfectly content renting a house vs buying one. Stating to his wife, “I’d be glad to buy a house, but that’s like a carpenter selling his toolkit.” I didn’t want to use up my capital.” Not the exact reason I dislike home ownership myself, but still – I’ll take it :)

Lots of hidden gems in the article, and crazy to think how drastic one decision can make in your life. Not unlike Monday’s post on making the wrong call on boyfriends.

I’m thinking I may need to change my own mind on early retirement too… Screw blogging in my free time, anyone want to invest in the new J. Money Fund? Millions back guarantee, but no bitching if I lose it all!

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56 Comments

  1. Wall Street Physician April 19, 2017 at 5:23 AM

    What a cool story. Oh, the investment world would be so different if Warren Buffett were retired for the last 60+ years instead of being the greatest investor of all-time. The thing is, he is so frugal relative to his wealth; he hasn’t been working for the money for many, many years. In that sense, he is an early retiree, doing what he loves to do (a hobby almost). A hobby that he is very good at, and is very lucrative for him :)

    1. J. Money April 19, 2017 at 10:21 AM

      Haha yup… the ultimate hobby!

  2. Ramona April 19, 2017 at 6:11 AM

    He he, whatever works for you, is the way to go. I never invested in my life, but we’re doing very well with our small businesses. And, working 2-3 hours/day, means we’re almost retired and able to care for our 3 year old.

    1. J. Money April 19, 2017 at 10:23 AM

      Wooow that’s pretty interesting that you’ve never invested before and are so close to retiring?? I have so many questions!! Haha… Have you written a post on this yet on your site? If not, want to write one for us? :)

  3. Band of Savers April 19, 2017 at 7:21 AM

    Just to put things into perspective I found an inflation calculator to see what $127,000 in 1955 would be worth today. Apparently that’s the equivalent of roughly $1,134,000 as of 2015. I can’t even imagine having amassed $1.1 million by the time I was 25. And if I had I would plan on retiring as well. But power to him for finding something else to do that brought him joy and turned him into a living legend.

    1. J. Money April 19, 2017 at 10:25 AM

      Interesting… does that mean he was spending $100,000’ish a year in expenses then based on inflation? I thought about looking it up for the post but got lazy :)

      1. Band of Savers April 19, 2017 at 2:21 PM

        Yeah, I ran his $12k per year through the calculator and it comes out that he would have been planning to live on $107,000 per year in today’s dollars. Crazy.

  4. My Sons Father April 19, 2017 at 7:35 AM

    That is crazy, an early retiree before it was cool. What a trend setter. I have no doubt had the technology been available, he’d have been a PF blogger as well.

  5. Mr. Tako April 19, 2017 at 7:43 AM

    That’s a good story, although now he says he’ll “never retire”….

    Basically when you’re having fun all-day like most of us ‘early retirees’, why would you ever want to quit?

    1. J. Money April 19, 2017 at 10:26 AM

      Yup! We should be so lucky to have fun all the time – no matter what it is or how much it makes :)

  6. Matt April 19, 2017 at 7:44 AM

    I lose all credibility if he’s the original early retiree, haha! I claim Ben Franklin was the Original Early Retiree on my website. But Buffett’s story is great and inspirational. It’s amazing how good work becomes when you don’t NEED to do it.

    1. J. Money April 19, 2017 at 10:27 AM

      That is hilarious :) Benny Franklin is for sure one of the OGs of money and frugality…

      Check out my tagline up above below my logo to see what he once said about my blog ;)

      1. Matt April 19, 2017 at 3:02 PM

        He was a prescient man

  7. Apathy Ends April 19, 2017 at 7:46 AM

    I had never heard this before, it’s a good thing he didn’t not only for his friends and family but for the millions he has helped (and continues to help) with his massive donations to The Gates Foundation.

    1. J. Money April 19, 2017 at 10:28 AM

      YES!! He’s started a whole other wave in philanthropy too – doubling his legacy for us all to try and emulate!

  8. Lars-Christian April 19, 2017 at 7:49 AM

    Thanks for sharing the piece, J$. I hadn’t come across it before, and will be sure to add it to my reading list right now. Buffett is definintely a source of inspiration for those of us looking to combine an entrepreneurial spirit with financial security.

  9. Paul April 19, 2017 at 8:31 AM

    Yeah, selling products seems like the way to go. I’m getting really sick of selling my time for money. Been thinking a lot on this…

    1. J. Money April 19, 2017 at 10:29 AM

      Def. don’t go into blogging then, haha…

  10. Dividend Growth Investor April 19, 2017 at 8:48 AM

    I am glad you found the article interesting. ;-)

    The concept of early retirement means doing what you love, and doing it on your own terms. If you love what you are doing, you never really have to work a day in your life. This is how Buffett managed to “work” 70 hours per week for 70 years, and earn the returns and reputation that have made him so well known to everyone!

    DGI

  11. Fervent Finance April 19, 2017 at 9:04 AM

    I read that the other day as well and thought it was great to hear about his early years, right from the man himself!

  12. Mike B. April 19, 2017 at 9:16 AM

    Yea do it J! The investors would be lining up around the block, and you’ll be err…. rich! Thanks for another tasty morsel of wisdom from the guru, WB.

    1. J. Money April 19, 2017 at 10:31 AM

      I’ll start it as soon as I receive your check :)

  13. Miss Mazuma April 19, 2017 at 9:33 AM

    Thank goodness he didn’t retire early or we wouldn’t have him as the investing guru that he is! Obviously, no one invests like Mr Buffett, but his wisdom in regards to the market and investing as a whole is what has driven many of us to success. I only have a few individual stocks (BRKb being one of them) but his advice to his family after his passing is the FI standard – index funds. Warren Buffett may not be my grandpa but I consider him mine just the same. :) I hope he sticks around long enough for the annual meeting next year!!

    1. J. Money April 19, 2017 at 10:34 AM

      Yup!! Loved reading that about index funds – especially since I moved all my $$$ into them three years ago haha… Thanks Grandpa Buffett!

  14. Joe April 19, 2017 at 10:05 AM

    Interesting. I haven’t read that about Warren Buffett.
    He is a great investor and he’s going to do some good with his money. Great down to earth guy.

  15. Ms. Montana April 19, 2017 at 10:16 AM

    I think this is the most exciting part to me since we left the 9-5 18 months ago. We get to just do stuff we love. Some of it, some people might see as work. But the line between our “work” and our “life” and our “hobbies” is really really blurry. We are just doing what we love. I think when you have the freedom to do that like Buffet did, we can make our best contribution to the world.

    1. J. Money April 19, 2017 at 10:34 AM

      “We are just doing what we love. ”

      Nothing better than that :)

  16. Liz April 19, 2017 at 11:02 AM

    I never heard this before and it makes me like him even more! When I retired last year, going to his annual meeting was on my list of to do’s so I bought 10 shares (of B) and we’re off to Omaha in a couple of weeks. I’ll have two extra credentials if you want to join us :)

    1. J. Money April 19, 2017 at 12:13 PM

      AHH!!!!! I WANT TO GO WITH YOU SO BAD!!!

  17. caren April 19, 2017 at 11:55 AM

    I love this on so many levels. I’m someone who is very skeptical about ditching your day job to follow a passion (I’ve tried it and it doesn’t work well). What you’ve underscored about warren is the right way to engage in passions: Do work that excites you, but don’t assume it’s going to support you.

    That’s the key!

    Thanks for sharing this. Great message.

    1. J. Money April 23, 2017 at 2:25 PM

      Amen to that!

  18. Mrs. Picky Pincher April 19, 2017 at 12:32 PM

    Buffett is definitely an interesting guy! And I believe that if you enjoy investing, you’ll probably be a little better at it. ;)

  19. The Tepid Tamale April 19, 2017 at 12:39 PM

    I would agree he is one of the first ‘early retirees’. For me the definition is freedom. He had the freedom, did something he loved, and so why would be stop working now? It was his creation on his terms, he may slow down, but why stop?

    Wow, thinking like this is fascinating. I am late to the ‘Early Retirement Game’. And with less time left, and a large family, my best effort will get me out of the rat race only a handful of years earlier. So, now that my finances are more on auto-pilot than they have been, I need to focus on something that I would not ‘retire’ from, and I need to do that!

    Thanks for the inspiration!

  20. Professor April 19, 2017 at 1:11 PM

    What that quote . . . idle hands . . . ? Human beings are radically irrational . . . even way back when we were living in caves . . . and some would say (me included) that the more complex the world becomes, the more irrational we become. Our choices make absolutely no clear and lasting sense BECAUSE our reasoning changes rapidly (and often in very contradictory ways). I think this is one of the things that makes saving so hard to do nowadays. It just doesn’t fit with contemporary human behavior . . . For me, the challenge (the older I get) is maintaining attention on retirement planning and saving, not the actual coming up with the money to save . . .

    Sorry to get a bit academic and soap-boxy . . . Great post J. Money!

    1. J. Money April 23, 2017 at 2:30 PM

      I like the insight! And I would agree – especially the more technology integrates into our lives. Everything seems much more complex than even a decade ago.

  21. Michelle Schroeder-Gardner April 19, 2017 at 2:07 PM

    This is so cool! Early retirement has been around for this long and yet people still don’t think it’s possible…. haha!

  22. maria@moneyprinciple April 19, 2017 at 3:22 PM

    J, I’ve told you before – I’m always ready to invest in the J Money fund. As to bitching, not in my nature :). (Btw, I watched Iron Fist and the did refer to J Money and the ‘redesigned’ dollar. I played it several time just to make sure.)

    1. J. Money April 23, 2017 at 2:31 PM

      Now I just need to figure out how to make everyone $$$ so I don’t turn into Madoff :)

  23. COD April 19, 2017 at 4:31 PM

    Irony alert: when I clicked through to Investopedia to understand the difference between the class A and B shares, I got a pop up asking me to subscribe to their 10 week course on short selling.

    I think Ill pass.

    1. J. Money April 23, 2017 at 2:32 PM

      Oh jeez, haha…

  24. FullTimeFinance April 19, 2017 at 7:45 PM

    Very cool perspective. I have mixed feelings about Buffet and his business, but I strongly respect the image he promotes to others. The concept of living within your means and not chasing every new bright shining object is important and powerful.

  25. @Guyon_FIRE April 19, 2017 at 8:29 PM

    Great post. The 10% rule was definitely more doable back then given the interest rate and dividend yield environment. Would highly recommend anyone interested in picking individual stocks read The Intelegent Investor. Graham is the man and we studied him not stop in school.

    1. J. Money April 23, 2017 at 2:33 PM

      I remember stories of interest being so high! Both for saving AND debt, unfortunately… (though something tells me we were better at staying away from it then vs now, eh?)

  26. Dividend Diplomats April 19, 2017 at 8:52 PM

    J –

    Nice share. Warren simply took the jump and said – worst case, it doesn’t work and I’ll still be fine. Best case – we have the time of our lives doing what we love. And yep – he’s doing just that. Also funny that he grew his assets pretty quickly and knew that it didn’t matter, that no matter what – he would know what to do to be financially “OK”. Nice quick synopsis.

    -Lanny

  27. Primal Prosperity April 20, 2017 at 10:00 AM

    That’s soooo interesting that Warren Buffett said ‘retire’. It just goes to show you though, that most people don’t really “retire” early, they just leave the rat race. :)

    I think that is when people get successful… i.e. when they have the freedom to pursue their passions.

  28. Kate App April 20, 2017 at 10:27 AM

    Thanks for sharing this – it comes in the best possible time for me!
    Warren Buffett is inspiring in so many ways. If you think of it, everything he does makes perfect sense – living in a low-cost city, living in the same house for almost all his life, choosing what he likes doing instead of the ‘secure income’ and so on, and so on.
    It’s as if he never aimed at becoming the world’s badass investor, he just followed his bliss.

    1. J. Money April 23, 2017 at 2:34 PM

      Glad you liked it :)

  29. Done by Forty April 20, 2017 at 12:55 PM

    I never knew that about Buffett. The more I learn about the guy, the more I like him. And he likes Sees Candy: a sure sign of good taste. Turrrrtles.

    Living on $12k, too. Dude’s a boss.

  30. Troy @ Market History April 20, 2017 at 5:33 PM

    Warren is a money machine. I don’t really admire his life. He has no hobbies or interests outside of investing! The guy is boring as hell. He’s not a fan of travel, eats the same thing every day, and generally doesn’t seem to live an exciting life (minus the $60 billion of course).

    1. J. Money April 23, 2017 at 2:35 PM

      HAH! Haven’t thought of it that way, but I guess if he’s happy then it doesn’t really matter what anyone else thinks? Happiness = happiness no matter how you get there?

  31. COD April 21, 2017 at 10:28 AM

    Buffet and Bill Gates are good friends, and are known to play chess frequently. And here is a video of Buffet at a charity event playing ukulele with Jon Bovi Jovi.

    Yeah – his life seems dull and totally devoid of fun.

    https://www.youtube.com/watch?v=nCm5-2UN2Ms

    1. J. Money April 23, 2017 at 2:36 PM

      Haha…

      For a second there I thought you meant that Buffet and Bill Gates were good friends of YOURS! I was about to start hanging out with you a lot more ;)

  32. K.P April 30, 2017 at 5:33 PM

    Warren Buffet has the most inspirational journey for all entrepreneurs to learn from. It’s really all binary with him. He used all the basic financial foundations to grow and he’s still doing so at scale. I wish he was blogging when he started so we could follow him instead of after the fact.

    1. J. Money May 1, 2017 at 11:06 AM

      That would be amazing if he blogged :)

  33. Dividend Daze May 2, 2017 at 11:11 AM

    Love reading anything by Buffet. It is ultimately all informational/ educational, entertaining, and very easy to relate to. Anytime you are able to read for enjoyment as well as education at the same time will help you in the long run.

  34. ZJ Thorne June 20, 2017 at 6:39 PM

    I had never heard that about Buffett. I wonder what the financial markets would be like had he made the decision he originally intended.