The Role of Luck in Early Retirement
We’re celebrating Thanksgiving here in America in a few days, and that means two things: eating massive quantities of turkey and reflecting on all the beautifully awesome parts of life! Last year I mentioned how thankful I was for cool affordable tech gadgets, the ease of growing wealth, and lastly, economic and political stability.
I’m still a big fan of all of those! But in this post, I want to express my gratitude for all the good luck experienced throughout my life.
First up, I’m glad I was born in the United States of America. It’s one of the richest countries in the world as measured by per capita gross domestic product, consistently ranking in the top 10 or 15 countries of the world. In the good ole US of A, we speak English which is the lingua franca of business and culture worldwide. Speaking English as a first language boosts one’s career prospects and allows conversation with around a quarter of the world’s population. That also translates to a huge marketplace if you’re in the idea biz (such as writing a blog).
Even the poorest Americans are almost guaranteed:
- clean drinking water (the embarrassment of Flint notwithstanding)
- some modicum of a safe environment (disregarding the worst pockets of gang warfare in some inner cities)
- twelve or more years of free public education (we can quibble over the quality in some places)
- and a basic social safety net (Social Security old age pension, survivors and disability benefits, Earned Income Tax Credit, Affordable Care Act/Medicaid at least through 2017 or 2018, TANF, Food Stamps/WIC, Unemployment Insurance, just to name a few)
This isn’t to say the US is without problems but I’ll posit that it’s still the land of opportunity for the vast majority of Americans.
My Lucky Start
In my case, I discerningly selected a good set of parents to be born to. When I was born, my parents lived in a house trailer in rural Appalachia but several years and one valuable college degree later, we upgraded our standard of living and joined the ranks of the comfortable middle class (loosely defined as a house, a car, and plenty of food).
Coming from a somewhat humble background exposed me to others working hard at blue collar jobs. It made me realize 40 hours per week in an air conditioned office wasn’t such a bad life after all. At varying times in my childhood I enjoyed the pleasure of hanging out at my grandfather’s auto shop, collecting eggs in the chicken house with my other grandfather (he even let me drive the shit truck after we scraped the manure pits!). Growing up with rural, working class roots has its advantages. Not many other kids can say they helped dig up and move an outhouse while growing up (those things are HEAVY).
The one downside was having to learn to speak “city” once we moved to Raleigh. You may know this “city” dialect as plain old, regular American English that doesn’t require subtitles in the way that Appalachian English does.
Being born a white male certainly helped me statistically since racism and sexism generally weren’t issues, and us white dudes tend to earn some of the highest salaries, playing second fiddle only to Asians. But there’s at least one confounding variable at work – family wealth. Those with family money do much better on average compared to those born in more austere circumstances. The cultural inheritance of social networks and connections plus access to better educational opportunities give the children of the wealthy a big step up (regardless of race, I might add).
I’ll offer as an example my own experience in deciding on a college to attend. Although I grew up a dozen miles away from Duke University, I had no clue it was a top ranked university and that I might want to consider dangling my near-perfect SAT scores in front of the admissions staff to see if any financial aid might be forthcoming. My lackluster high school GPA (yeah, I was a slacker, but a smart slacker) probably would have precluded any meaningful merit based scholarships, but I didn’t even think about attending an elite university instead of a “good enough” state university regardless of financial considerations. It just didn’t cross my mind to apply. Things still turned out okay (guess I got lucky).
Though I didn’t grow up rich, I did observe first hand how to manage money responsibly. We never had any houses foreclosed on nor cars repossessed. We never suffered eviction for non-payment of rent. No one blew all the grocery money on drugs or alcohol, nor did they fail to pay the utility bill due to an unlucky night at the poker table. When I started college I knew it would be paid for somehow (and I was fortunate to actually make money during college).
Education was important. Good grades meant good things.
My father was into computers back in the early 1980’s back when they were cumbersome and expensive. I grew up in a household awash in the monochromatic green glow of those early computers (this was WAY before internet, kiddos). This translated to familiarity and success using computers during high school, college, and in my career. It also led to a lifelong love of computer and video games!
I noticed my parents invested routinely while growing up. They contributed to 401k’s. My dad watched the Nightly Business Report on PBS. Though I didn’t fully grasp exactly what a stock or mutual fund was, I understood they were valuable and usually grew in value over time. And wealthy people liked to buy them. Sounds like something I might like to own, too.
In our household, frugality got the job done. Don’t waste stuff. Fix it instead of tossing and buying new. You can’t always have the nicest stuff, and “good enough” is usually okay. In a perverse way, modest living growing up benefited me as an adult. Since I never experienced an upper middle class or upper class lifestyle, I never had inflated expectations of what I “deserved” when I graduated college. “You can have it when you earn it” was the way things had always worked in my experience.
Contrast that with the expectations of some college graduates who expect to make a fat salary with cushy benefits right out of school just because they stumbled through four years of higher education and miraculously picked up a bachelor’s degree somehow.
All of these cultural inheritances proved to be a lucky acquisition on my part.
Another stroke of luck is being born able bodied. My arms, legs, heart, and brain all work (on most days). I’ve never experienced hospitalization or suffered from mental health issues (other than undiagnosed kid-induced temporary insanity). I was able to go to school while young, get a good job right out of school, save, and invest to achieve financial independence and early retirement.
We were even more lucky that all three of our children were born perfectly able-bodied so that our child-related expenses have remained modest so far.
Separating Luck From Effort
It’s easy to start on third base and think you hit a triple (to borrow a baseball analogy). Then when you score that home run, you take credit for your success without acknowledging how fortunate you were to start on third, or recognize the fact that you’re playing on a team that is also responsible for part of your success. Your effort is still required because you still have to make the run from third to home plate, possibly making a hard slide home.
For those that don’t start on base and have to, you know, actually pick up a bat and hit the ball, there’s some help available. Enter the social safety nets for food, housing, medical care, disability, and social security I mentioned earlier. Not everyone can start on third base, but at least most of us get bats and balls and a flat field to take a shot at getting on base. Some do well, others founder. Those that start on base tend to get a lot farther in the game.
Mrs. Root of Good didn’t have the sagacity and good fortune to be born in the US. In contrast, her family barely escaped from the genocidal dictatorship in one of the world’s least developed nations at the time, Cambodia. After spending the first six years of her life in refugee camps in Asia, she arrived in the US with not much more than the shirt on her back and the flip flops on her feet. Once settled in America, her family was able to take advantage of all the social goodies on offer to vastly improve their lot in life.
Instead of farming rice in Cambodia or hustling her way into a good “high paying” sweatshop job, here in the US she finished high school, then college, then graduate school and landed a reasonably high paying job that made us millionaires after ten years of working. We had to do the heavy lifting of saving and investing, but on a scale unimaginable for the daughter of your average Cambodian laborer and rice farmer.
Mrs. Root of Good’s greatest stroke of luck manifested itself in a one way plane ticket to a developed nation with plenty of opportunity coupled with proper immigration status to make her official in the system. There was a lot of luck involved in landing in Raleigh where the cost of living is relatively low, the economy is strong, and even the worst elementary, middle, and high schools are still pretty good.
Then came the hard part. Catching up with her classmates by learning English. Learning new social customs and traditions. Making friends in a foreign land. Knowing you didn’t have as much as many of your wealthier classmates, but succeeding in spite of that (because of that?).
Kristy, the blogger behind Millennial Revolution, shared a similar path when she immigrated from China to Canada as a kid. She started with very little, made the most of her new life and created a lot of wealth and success which led to early retirement.
Keeping my Luck Making Machine in Perspective
In a piece I wrote several years ago, I poked fun at our Luck Making Machine that got us to where we are today. The idea is that we have some magical device that catapulted us to the top of the socioeconomic ladder. In reality, our relative success of retiring in our 30’s came from a combination of lucky starts in life, smart choices along the way, and persistent effort throughout.
I’m very thankful for all the luck I’ve had in the past and hope to keep that Luck Making Machine running for several more decades.
How much of your success today came from luck, and how much came from skill, hard work, and effort? Does your starting point in life determine how you view luck and success?