How to retire on your own terms.
It’s really important you understand this. Something is gonna happen in your life, one day, you’re gonna stop working. And you have to decide, today, whether that’s on your terms or someone else’s.
Do you stop working because you have enough money too? Or that you get laid off and can’t get another job? Or, even worse, can’t work anymore due to ill health? And who looks after you then?
You might be retired for 20 - 30 years so it’s really important you have enough money to keep you going through that period.
Think about it, you spend 40 years working, earning a decent salary, living your life, and if you don’t put a decent chunk of that away for those 40 years you're gonna spend another 20, 30 maybe even 40 years living in poverty.
That’s bonkers, yet so many people are doing nothing about it. And I think a big reason is that they don’t see it as an urgency. When it really should be.
The sooner you start, the less painful it’s gonna be.
Well, let’s say that you want an income in retirement 70% of what you’re getting now, and you want to retire at 65. If you’re 25 years old you need to be investing at least 10% of your salary every month, and every time you get a pay rise, increase it.
You need to do this, religiously, for 40 years until retirement. This is because of the magic of compound interest. And the older you are the more difficult you’re making it for yourself and the more you have to put away. If you start at 45, you need to be putting 31% of your salary away, and not touching it, until you’re 65.
The other benefit of starting young is that you learn to live to your means, if you get used to putting money away at a young age when your only commitment is beer money on a friday night, and increase it slightly every year you don’t notice. If you’ve lived the "Big Baller" lifestyle for the first 20 years of your working life, it’s very difficult to start investing a third of your salary. But you need to, otherwise you’re gonna be a long time miserable when you get to your 60s, either that or hope your kids have got good jobs and hope they don’t mind you sponging off them.
Thanks for reading,