A Facebook friend of mine recently posted his thoughts about how “most people believe they need to be rich to retire young.” He went on to say “They don’t. Many people have retired in their 40’s or 50’s without being rich; but neither were they poor. The net worth you are going to need will depend on the lifestyle you want to live. And the philosophy is quite simple: if you can live on less than most people, you can probably retire earlier than most people. If you want to retire young, spend less, save more, and invest wisely.”
My friend’s remarks should not be construed as a way to look for an easy way out towards early retirement. Some folks will never reach their goals, and usually because their goals are too lofty or unrealistic. Or, it could be they have set no goals at all. The philosophy of it all though is sound…get back to what is important in your life and remember that the best things in life are free: Love, laughter, and family togetherness. Stop wasting what you cannot afford. This is how you will save for your retirement.
My Fb friend views me as living the dream, but it was not easy to get where we are today. It took both a vision and a sincere determination to establish realistic goals. Sometimes setting the larger goals can be almost as difficult as achieving them. They need to be done realistically, with some careful thought and planning. Reaching one’s goals requires perseverance.
While I have practiced a lot of personal and professional goal-setting during my working life, this article is not intended to seduce you with the boring details of goal setting. Rather it is to provide guidance, inspiration, and a little self vision….all with the result of helping you get to your end game. At this point, if you have never done any formal goal setting, I will suggest doing some simple research on personal goal setting – learn how to set multiple smaller goals to accomplish the larger goal.
In a past blog article (Real Estate – Is it Too Late?), I wrote about how my wife and I fell into planning out where we would settle and how we would eventually settle in the Philippines. Looking back on it all, it seems like it was such a lengthy process. I place much emphasis on the word “process”. In a nutshell though, with some self-realization and, if we had begun the process sooner (like say 10 years sooner), we could have retired while we were still in our 40’s and we would not be among the oldest beachgoers on our beach. But we were living life – we were keeping up with the Smith’s and the Jones’. We were enjoying all that could be enjoyed, and like many others, we leveraged our lives (and our credit) to do it. During our highest-earning years, we found ourselves living on cash flow alone. It provided a comfortable lifestyle that was technically beyond our means, but it had to continue to grow, almost exponentially, to keep the lifestyle going. It eventually became so stressful and it became obvious that it would be financially dangerous to continue to live this way for any length of time. A lifestyle of living on credit and cash flow alone usually always leads to financial doom. If you have ever heard and listened to the financial guru Dave Ramsey, you know his feelings about borrowing money and credit. He says “you don’t build wealth with credit, you do it with cash.” And looking back in retrospect with how we used to burn through our money, it is just about the most accurate financial planning statement that holds true.
Because we personally grew into the vision of early retirement, we took some steps to eventually pay down and eliminate our debt, and we began saving. Rather than saving in the traditional sense, by putting money in the bank or into investments, we took the more painful route – we purchased the property and invested slowly in concrete and construction materials, building our retirement home one concrete block at a time (so to speak). Most places in Western society would not allow construction projects to continue endlessly, and there would be fairly strict time constraints on the completion of a residential structure…in most places. In our case though in the Philippines, it took just over 6 years, start to finish. We finally moved to the Philippines in July of 2013, took a month to finish up, and moved into our new home 6 weeks later. We are now reaping the reward of having NO mortgage or rental payments. It’s like paying ourselves back now for everything that we endured over the last 10 years.
The end game should be to strive for a comfortable retirement, not one filled with an abundance of luxury and fancy gadgets (unless you have an extremely large bank account). Where you choose to retire is also an important decision, a topic I discussed in greater detail in another previous article titled “Can You Retire in Paradise?” In the future, it is being said that it will become increasingly more difficult to enjoy a targeted and comfortable retirement, at least in the U.S. and many other western countries, without having to continue working as one approaches their 70’s. What kind of retirement is that? These days, for most people wanting to retire, it takes a vision…and a daily affirmation to get to where you want to be. Without all the above, it takes pure luck. Cut back on your spending now, get back to the basics of life – live within your means and start saving, If it is still too early for you to retire, you should still practice spending wisely now, plan, plan, and plan some more, take your time (don’t rush it), and you will discover that you can take the rest of your life off (from working), early….if you so choose.
Thanks to my friend Carl for the inspiration for this post.