The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.
A few days ago, my boss suddenly realized that one of our coworkers was retiring. He looked around at everyone and quickly said, “Retiring? I didn’t realize he was that old!” For an intelligent man that does well in his director level position, my boss made it very clear that he has absolutely no clue what retirement really is or how to get there.
Retirement is Not About Age
Frankly, I couldn’t believe that my boss made that statement, but even more to my surprise many of the people around us nodded their heads in agreement, and this guy (that was retiring) was easily 60 years old! Heck, what if I walked into the office at age 30 and announced that I was retiring? Most people would probably think it was a joke. But retirement has absolutely nothing to do with age!
Many people believe that once you turn 65, it’s time to retire. You can collect your full Social Security payment and you have a few aches and pains, so it must be time to retire. Hold on, not so fast. What about that mortgage payment on your $275,000 house? And how about that leased car in the driveway – your Social Security check won’t be able to cover that. Just because you’re 65 years old does not mean that you can automatically retire. As with most these days, you might have to work a couple more years to make ends meet before you get the luxury of quitting your job.
In other words, retirement is not at all about age. It’s about your finances.
Retirement is About the Dollars!
Earlier in this article, I said something about retiring at age 30. Do you believe that that’s possible? You might not know anyone that has done it, but what if I had created a popular app for the iPhone that had millions of downloads? I might have $7 million in the bank from this successful venture (I don’t by the way….yet), so why wouldn’t I be able to retire? I mean, I could withdraw $200,000 a year from my lump sum and it would still easily increase in value! Yup, I could easily retire for the rest of my life on $200,000 per year.
Since I am not an app writer and cannot think up addictive games in my spare time, I am trying a more conventional route: real estate. I am currently paying off my own house so that I can quickly purchase other properties with cash (for a discount of course – that is the beauty of cash) and rent them out for a tidy yearly profit, all while continuing to work my full-time job to fund the next house. Because I live very inexpensively, I can save up enough money to buy one house each year. Here is my schedule of planned purchases:
- 2016: Purchase rental property #1. Earn $850 per month
- 2017: Purchase rental property #2. Earn $1,700 per month
- 2018: Purchase rental property #3. Earn $2,550 per month
- 2019: Purchase rental property #4. Earn $3,400 per month
- 2020: Purchase rental property #5. Earn $4,250 per month
At this point, I would be earning $51,000 per year on top of my full-time job income. I will be 35 years old. It wouldn’t take much more of this to retire would it? In just a couple more years, I would have over $1,000,000 worth of homes and could generate an income of over $80,000 per year. Not too shabby huh? And I didn’t even have to be 65 years old to do it.
How about you all? Do you know of anyone that retired young? How did they do it?
Share your experiences by commenting below!
***Photo courtesy of https://www.flickr.com/photos/paulodonnell/5052028917/
