Quit Your Job – Rethinking Retirement
I plan to retire at 30.
What?! How are you gonna do that?
- Step 1 – Figure out how much you need to retire.
- Step 2 – Save that amount.
Well, how much money do you need?
Here’s one take:
Alright, so at least $20 Million. No problem. Couple more years of saving and I’ll be there.
Snap back to reality: I should put “retire” in quotes because I’m looking at it differently than the traditional definition.
The traditional definition of retirement is baffling to me. Spend the next few decades sitting in meetings, reading emails, and doing a bunch of other stupid bullshit that my managers think is sooo important. Then, eventually, I can spend the rest of my days watching Jeopardy or living in Florida.
This does not appeal to me for two reasons:
- More than half of your life is spent living on someone else’s terms
- After you’ve sacrificed all of that time and effort, your only reward is getting to be a potato while your retirement savings slowly melts away
Life should be, and can be, much more fulfilling.
Instead of hustling through the grind until I can eventually sit in a Panera Bread all day reading the newspaper, I want to do something different: create a life in which I’m not controlled by money and I do meaningful, fulfilling things with my time.
Imagine waking up and not saying “I have to go to work”. Instead, you wake up and say “I get to…” learn something new, do something with purpose, make a difference, enjoy life, etc.
I actually plan to keep working when I retire. I still call it “retirement” because I will be living on my own terms, rather than being stuck in the rat race and saying things like “Great powerpoint, Steve.”
How to Get Started
A good place to start is with this thought exercise: if some gratuitous rich person offered to pay all of your expenses and buy you anything you wanted for the rest of your life, what would you do with your time?
If the answer is jet skiing in the Bahamas every day and living off tequila… Have fun, my friend 😎
If other things start coming to mind (volunteer work, lower-paying but more meaningful work, work that you simply enjoy, etc.) then you’re in the right spot. Here’s how you can figure out how to get there:
- Track your expenses and come up with a yearly average – we’ll call this your Budget
- Determine how much you can make doing what you really love – we’ll call this your Happy Income
Subtract your Happy Income from your Budget. You will need to create some supplemental income to cover the difference.
Creating Supplemental Income
There are 3 options for creating supplemental income.
Option 1 – A “side hustle”
Your supplemental income could come from freelance, gig work, or a side hustle. Here are some examples:
- Monetizing a hobby, such as photography, interior design, anything you enjoy doing and can get paid for.
- Freelance work. There’s now plenty of options with Fiverr, Lyft, DoorDash, etc.
If you can do what you love while driving 1 day a week for Lyft, that’s not a bad deal! Though the focus here is to really enable yourself to live a life that’s fulfilling for you. Perhaps, driving for DoorDash will still feel like grinding, so there are better options.
Option 2 – Passive Income Streams
This can come from owning real estate that provides cash flow, or from owning a self-sustaining business. These are probably the most lucrative options, and they are highly recommended, but it can be difficult to get started in these endeavors, which leads to our final (and my favorite) option…
Option 3 – Investment Income
You can create an investment portfolio and supplement your income with dividends and capital gains.
Now, there’s all sorts of books and other materials about this, but I like to keep it simple: just invest in a moderately-allocated portfolio and follow the 4% withdrawal rate. The 4% withdrawal rate says that if you withdraw 4% of your portfolio’s value annually, it will continue to grow (keeping up with inflation) and provide you with income almost indefinitely.
Here’s what this might look like:
- Say you’ve tracked your expenses and spend an average of $55,000 per year (your Budget).
- Your “dream job” will only earn you a $35,000 salary (your Happy Income).
- So we need to replace the other $20,000 per year with supplemental income.
With the 4% withdrawal rule, you would need investments of $500,000 to provide you with a sustained supplemental income of $25,000.
That’s still a lot of money, but it’s much less than the millions you’ve probably always thought you needed for retirement, and it will take much less time to save this amount. Even if you’re starting from $0, investing $700/week at 8% would total $516,000 after only 10 years. That’s much shorter than the average working life of about 40 years, and that’s all time that you get back to do something meaningful to you. At the same time, you can continue to live a more comfortable lifestyle despite the income hit you took.
You are more than just your job, and it may be easier than you think to achieve Financial Liberty and start creating the life you want.
What do you really want to do with your time? Are you already doing it now, or is your current job in the way? Let me know in the comments below!
Still think this is unachievable or are you wondering how to get there faster? Here are some other blogs that may help: