Retiring Rich

Most people associate retirement with money and want to retire rich. And I can’t blame them. Before I embarked on my journey to early retirement, I used to think that in order for someone to retire, they must have certain amount of money or else their retirement will stink. Back then, the rat race through life was all about retiring rich, all about this coveted life that’s supposed to come one day in the future. Questions about retiring rich and how to achieve that goal seemed perfectly valid, but it only lasted until I realized the importance of asking the right questions. “How Much Money Do I Need to Retire” is a fundamentally wrong question because as most wrong questions it implies that possession of something (in this case “money”) is necessary in order to retire. But that’s something I have already covered in my How Much Money Do I Need to Retire Early article. So why am I coming back to the same topic you ask? Because I believe it is important to realize that retiring rich should not be the goal, otherwise it will lead to the rat race. Hunt for the riches can cost you a lot of time, the commodity you only have the limited supply of. If you waste your time trying to get rich, trying to achieve a goal that you believe will bring benefits in the future, by the time you are a baby boomer you will be so short on the time left, that even if you have accumulated riches, you will have little time to enjoy them to the fullest. And that doesn’t even take into account worsened health you will have developed by the time you have reached that age.

Retiring rich should not be the goal, retiring soon, preferably now should be. If you make retiring rich your goal, you will set yourself on a long path using the best years of your life working like a slave. Whereas if you make retiring now your goal, you will look towards the ways to establishing a cashflow that will set you free from shackles of corporate slavery and send you on your way to enjoy life.

Forbes Magazine has a list of Rich People. According to their definition, a rich person is someone with annual income of at least $1 Million. This is Forbes’ definition of “Rich” – their understanding of “Rich” has everything to do with the amount of money. My definition of “Rich” would be vastly different as what Forbes considers rich people are simply people with a lot of money to me. Just because they have heaps of money, it doesn’t necessarily mean they live rich and fulfilling lives. But that’s not the point at this time.

Given Forbes’ definition of rich, if you wanted to retire rich, you would be aiming at gathering at least one million dollars before you retire. If you happen to score a good paying job, let’s say one that pays $60,000 a year, you might be able to put away $2,500 each month towards your goal of retiring rich. If everything goes without obstacles and you remain diligent and never fail at putting away $2,500 a month, it will take you 33 years and 4 months to reach your goal and retire rich.

Now – if you take into account that you won’t score a job that pays $60,000 a year right off the college, you may not be able to start with such savings until let’s say – the age of 27. This means that my the time you have saved enough to retire rich, you will have been 60 year old. Great – you’re an old vegetable. How does it feel to retire rich?

Why would you want to make retiring rich your goal? It could condemn you to lifetime of servitude as corporate slave, wasting the best years of your life in a cubicle or wherever your workplace may be so you can have the retirement you desire when you are 60? Let me remind you of the fact that to live it up as though you have retired rich, you do not need much money in your bank account. As matter of fact, you don’t need any money in your bank account and still be able to embark on a journey of a lifetime. What do I base such bold statement on? I base it on a fact that I personally know a guy who retired in his 30’s just like that – myself.

Not only did I not have any money when I retired, I was actually $30,000 plus interest in debt. Yet I’ve wasted no time and set out on my merry way to early retirement and never looked back. How could I do that? Cashflow and belief that I can do it. That is all you need to retire young. Or simply retire at any age. If I could do it, anyone can. Get rid of the notion that you need money in order to retire and quit focusing on the size of your bank account. Because if you keep asking yourself how much money you need to retire, you will be putting your retirement off into the future. And what you put off once, will be put off again. There will always be obstacles, challenges and changes in your life. At one point it will be more money that you need to retire, then completion of the project you are working on, then fill in the blank. If you see it in the future, it will always be in the future. Future is the destination, but that’s not where happiness lies. Happiness is the journey.

Let me recapitulate again why the idea of working yourself to exhaustion so you can save enough money to retire rich is a silly one and why working to save money for the future is a fundamental loss:

  • Being employed provides you with security of a steady paycheck, but at the same time it is the type of income that’s taxed more than anything else and offers little control over how big a chunk of your hard earned money is taken off as tax
  • Going to work requires dedication of your time to job tasks and time is the most precious commodity you have
  • Employment doesn’t come with significant fluctuation of money earned. In order to earn more, you’d have to either work more (take overtimes or second job) or work harder
  • Employment has little or no residual value. You get paid for work performed and/or time spent at the workplace. In order to get paid again, you need to do work and/or spend time at the workplace again

Does the idea of spending your whole life being a corporate slave with the goal that one day you may retire rich still sound appealing to you? Being an employee is to be the most underprivileged member of society. You will be taxed near 50% of your income and you will only have the after-tax left overs to pay your rent with. But the worst thing is that you will spend the days of your life while you are able bodied doing anything but what you want to do. Days you have only so many of before your time is up. If you are going to invest it towards securing your retirement, don’t do it with the goal of retiring rich. Invest it into getting some cashflow happening for yourself so you can retire now, whatever your age and start spending your precious time doing things that matter to you, things that excite you, things that fulfil you. This way, when your time comes and Grim Reaper knocks at your door to end your journey on Earth, you will feel rich. Not Forbes rich, but content with the way you have led your life. You’ll leave this world happy and fulfilled.

What You Need to Retire Young

Now that you feel inspired and the idea of an early retirement starts making sense to you, you most certainly want to move to the next level, to the level of action. You want to know what it is you need to retire young so let’s take a look at it:

#1 Need to Retire Young – Positive Thinking

If you want to retire young, the first and the most important step to take is to start believing in yourself. You have to switch your thinking to “I can do it”. The “I can’t afford retiring young” thinking you were demonstrating as you were reading through previous chapters of my Early Retirement section must be put to rest. Keep in mind that whether you think you can, or whether you think you can’t – either way you’re right (words of Henry Ford). Positive thinking is the key.

#2 Need to Retire Young – Get Rid of Self-Doubt

Second most important thing you need to retire young is to quit doubting yourself. How many times has it occurred to you as you were reading about my Early Retirement that it worked out for me, but you don’t think it will work for you? You are doubting your own ability to turn your life around and you are lazy to take action to make it happen. Door to your freedom will forever remain locked if you continue doubting yourself and remain lazy to take action. When I was on the cross roads of turning my life around, I had an option to go for it and pace my way to an exciting and fulfilling life, or let my self-doubt prevail and go back to work and continue working hard until I retire. Do you want your life to go forward or backwards?

Do you recall the pickup line from the Fight Club? “The first rule of Fight Club is you do not talk about Fight Club. The second rule of Fight Club is you DO NOT talk about Fight Club.” It is the same with retiring young – the first rule of retiring young is that you can do it. The second rule of retiring young is that you CAN do it. Getting rid of self doubt is just a different way of saying that you need to think positively. They are two different things yet they are the same and whether you succeed or fail in your quest vastly depends on whether you see yourself as successful or as a failure. Think like a winner if you want to win and keep in mind that you can’t win unless you risk the loss.

#3 Need to Retire Young – Cashflow

Thirdly, to successfully retire young and sustain your retirement, you need cashflow. I see cashflow as the key to sustenance of your early retirement. You don’t have to be rich, you don’t need lots of money coming in on daily basis, but you need enough to meet the needs of your comfort level. Fact of a matter is, a person of fair standards can comfortably live with as little as $600 a month in many of world’s safe countries. You wouldn’t even score a half decent room for rent in exchange for this type of money in the USA or Canada, but it’ll get you by with medical insurance, all the food you need, rent, transport, entertainment and more in countries like Ecuador, The Philippines or Cambodia. Monthly cashflow of $1,000 is recommended as it will allow for better standard of living and it’s always nice to have some extra. Cashflow is an essential ingredient in the pot called early retirement.

I personally do not believe such things as “plan” are what you need to retire young. Life will continue being exciting and enjoyable when you don’t know where the adventure takes you tomorrow. Follow you bliss – let your heart guide you. Don’t sit over the map or on the internet to pick your “perfect” destination. Be adventurous and open minded. Afterall – happiness is a journey, not a destination. Plan is a destination, it is a possibility of the future. Quit worrying about the future and start living for the here and the now. Now is the best time of your life. Yesterday is long gone and tomorrow – nobody know what tomorrow brings. If you have the cashflow secured and are enthusiastic about the change, then in my mind, you have all it takes to retire young. That which seems as the end of the caterpillar is the beginning of the butterfly.