Of all of the traditional financial planning assumptions, retirement has to be one of the most baffling for me. Millions – if not a billion or more – of people around the world are preparing to work themselves to the bone over the course of their lives in order to “retire” near the end of their life.
This is one of those topics that is so engraved in our culture that questioning it is extremely difficult for most people to even grasp. But as I’ve written about before, I’m a contrarian – and this is an area where contrarians should be shining.
The rest of this article is going to explain and guide you through something you probably won’t read anywhere else online: You don’t have to wait for retirement until you’re older. You can start much, much sooner.
For example, I’m only 21 — and I’ve already begun my working retirement. Sound interesting? Then read on.
What is a Retirement, Anyway?
Retirement is where you stop focusing on what you want to focus on. For most, this means the lack of work, lots of golf, plenty of family time, some traveling, and sitting on the front porch – you get the idea.
Financially speaking, retirement is typically the period of time when you no longer have to actively work in order to maintain your lifestyle – so you stop trying to work to maintain what you have. It’s where finances hit an automatic stage where you can sit back and enjoy other things in life. Retirement is when you begin to enjoy the fruits of your labors.
For most, this period of time is only possible after decades of working, saving, investing, and building a nest egg. For others, like me, this period of time is simply after we’ve achieved some of our wealth management goals. In other words, some of us didn’t go along with the whole “wait half a century to retire” thing.
Before we talk about how to retire younger, let’s first move in and talk about why an old-age retirement isn’t optimal.
Why an Old-Age Retirement Doesn’t Make Sense
This is baffling because it just fundamentally doesn’t make sense. It smacks of waste, irrationality, and bad planning. Here are a few reasons why it doesn’t make sense:
- They might die before retirement.
- They’ll be old even if they make it.
- They don’t have to do it that way.
At risk of sounding morbid, look at it this way: every time someone dies before retirement, they wasted hundreds of thousands – if not millions – of dollars. Plus they wasted decades of their life focusing on the chance that they’d actually make it to 65 or later.
Even worse, if they do happen to somehow survive 65 years on this dangerous planet, they’ll only make it to retirement in a physical and mental condition that allows them only another few decades to function – at best.
Even worse, they didn’t have to do it that way.
I’m not against everyone retiring later in life – but I am against the idea that it’s the only way of doing things, and that it’s a smart calculated decision for someone who is a lot younger than 65. Imagine being able to have the freedom and money of retirement – in your 20s. Sound comparatively better? Then read on to learn what the alternatives are to an old-age retirement. Some might even afford a fairly young retirement.
Once again, I’m not saying that you’re a failure or necessarily wrong if you opt for a retirement later in life – for some people, that’s the best they can do. Regardless, it’s their life, and their choice. I’m just here to say that there are other ways of doing it that make more sense for most people.
The Alternatives to a Late-Life Retirement
Like I’ve said before, a late-life retirement isn’t the only way to take it easy and enjoy your productive labor. There are options – dozens. I’ve listed just a few of my favorite below.
- Mini-Retirements. This is something that’s becoming popular due to Tim Ferris and the Four-Hour Workweek – one of the best books on money I’ve ever read. You effectually save enough money and get an income going that allows you to take a year or two off to retire, and then go back to work after the mini-retirement. Just get a special bank account set up that automatically takes a certain amount of money every month, and use that for future retirements. Piece of cake.
- Part-Time Retirements. A part-time retirement is when you just gradually stop working as much. You go from a 9-to-5 to a 9-to-3 and then a 9-12 – you get the idea. I’m not a huge fan of this because it’s unpractical in most industries, and it means you basically are always going to have a job.
- Upper-Class Lifestyle. To be honest, some peoples’ working lives are as easy as some people’s retirements. For example, if you work 9-5 and make 250k a year, your lifestyle is closer to a retirement lifestyle than someone making minimum wage. Though this isn’t technically retirement, it does give you the ability to have a fun and liberating lifestyle. Close enough.
- Never Quit Working. Find something profitable that you enjoy as a hobby and would do for fun. Now you’re no longer “working” – and are just being productive while enjoying yourself. Congrats. Plus, you’re making money. Bingo. This is what I’m doing. As a web publisher, I’d build websites if they made money or not – the fact that it provides me with a great full-time income is just icing on the proverbial cake.
- Get-Rich-Quick. Yes, I just wrote “get-rich-quick” – please don’t leave the website. A vast majority of people claim this isn’t possible. Unfortunately, that’s really absurd. People become millionaires in their 20s all the time – they’re just exceptionally self-starters, are willing to take risks, and are typically business owners. I’ll write more about “get rich quick” later on.
How to Plan Your Retirement
So which one of the above options should you pick? Just ask yourself the following question: What do you want out of your life?
When you’re on your death bed, what do you want to remember? Go out and do that. That’s what your retirement plan should be based on: what you really want out of life, in the end. You don’t necessarily need a financial planner to do this – this is do-it-yourself material.
And that’s true whether you never stop working, take mini-retirements, work part-time, do what you love, or take the traditional end-of-life retirement. Just figure out what you want, and do it – that’s success.
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Financial Strategies, Wealth Management 101