A Simple Retirement Plan for You!

by Krantcents · 33 comments

Post image for A Simple Retirement Plan for You!

Retirement can happen at any time!  A typical definition of retirement is the act of leaving one’s job and ceasing work.  In my parent’s generation, you kicked back and did not do much. It was a way of withdrawing or retreating from the work world.  It may happen at a certain age or when you accumulate sufficient assets, money, investments or savings.

It is no secret that people are living longer!  So what?  Do you really want to retire when you are sixty-five (65) years old?  I didn’t!  I was in my early thirties and realized I wanted to make my own choices in life.  I didn’t start out trying to retire early and quit my job.  I never saw that role model nor was it something that looked attractive to me.  I grew up with entrepreneurial parents who constantly worked and never had time for me.  I went to work with them to just see them more.  I wanted to succeed in the corporate world!

Thanks to workaholic parents who worked 24/7, a corporate job seemed like almost semi-retirement compared to them.  I worked just 50-60 hours a week and still had a life outside of work.  I would get to work by 7 AM and leave between 5-6 PM.  I was important to have a family life and balance work and the rest of my life.  Why become an entrepreneur?  I started by just investing in income property and it fit me like a glove.  I liked it because it was all about the numbers.  The value of income property is based on the income it generates.

Steps to Freedom

Income property is not for everyone!  What can you do to retire early or at all?  First, start with your priorities.  You are twenty-two (22) years old and just graduated college or finished an apprenticeship.  Next, you need a job!  In this economy, it is not easy, but this is not new to recent graduates.  Good or bad economy, you should prepare for the day you will graduate.  You should have accumulated summer jobs, paid or unpaid internships and professional connections.  If you didn’t do that, finding work will be harder.  Even if you did, it is not a slam dunk!  If you have trouble finding work, think about unpaid internships that you can add to your resume.

You network and find your first job.  Great, your salary is probably $40-50,000.  For the next eight (8) years you need to max out your 401K and Roth IRA.  What would have to do to make that happen?  You may need one or more roommates or live with your parents.  Living like a student is not foreign to you and it is a small sacrifice to get to where you want to be in eight (8) years.  Remember your salary should increase every year and the sacrifice will decrease each year.  Without a match or any growth, you should have $132,000 in your 401K and $40,000 in your Roth IRA.

If you do not add any money to the 401K, you will have over a million dollars in thirty-five (35) years with a 7% return.  You can use your Roth savings as a down payment for a home or business.  You can start your business on the side during those first eight (8) years online or the traditional way.  You may finance it yourself or get financing.  It is up to you!  Maybe you start out thinking that you are not interested in starting a business.  There is a number of well paying professions such engineering, information technology or many of the trades which provide a comfortable living.  You may feel differently at a later date and you can use your experience to start a company or get a contractor’s license.

You need to plan for this future change.  How will you fund this change?  Will you finance this through savings?  It will be your choice after only eight (8) years!  Imagine never working for someone else at an early age.  More importantly, doing something you enjoy and building a business for yourself.  It is your choice because you made the effort to provide the opportunity.  Choice means you take it or not.  If you are happy in your career, you would just keep contributing to your retirement savings and keep working.  Just investing in the stock market or individuals is also a choice.  The result may be the same.

Retirement or financial freedom is different for everyone.  You do not have to quit your job and stop work.  There are many people who do things they enjoy working for someone else.  There are CEOs and other executives of public companies who earn multimillion dollar compensation packages.  It just doesn’t make sense for these executives to quit their jobs.  There are many people who enjoy their job and they would not be good candidate s either.  It is all a matter of choice!  A little planning provides choices.

Don’t Forget Your Career

I have always been an advocate of choices.  Much has been written about starting your own business.  Finding a career that works for you is no easy task!  I have always said that you need the skills and knowledge that will allow you to be your best.  If you like what you do, you will be good at it.  The money usually follows.  If it doesn’t, you can always change employers.  Do you want more responsibility?  Are you a leader?  You can find a role in a company that pays well and achieve success.  Remember, you can always start your own business.

Planning early with savings and for a career pays off big with choices!  Can you imagine having a lucrative career that you can easily walk away from, but choose to stay because you love it?  It is the kind of choice, we would all like!  If you are unhappy with your job or career, consider changing employers or your career.  Starting a business is a bigger commitment and should not be taken lightly.  Everyone thinks about all the great things about being in business, but you can win big or lose too.  The bottom line is to have a choice!

Final Thoughts

When you retire should always be a choice!  If you plan early and do what you need to do with savings, you can have choices.  Whether you decide to retire early, start a business or continue working, it should always be a choice.  Too many people reach middle age and realize they are unhappy in their career, but are stuck because they were unprepared.  A little planning and savings provide choices.  What are you going to do?  Retirement can happen at any time!

Photo by:  grantlairdjr


Yakezie Carnival at The Frugal Toad
Finance Carn. for Young Adults at Femme Frugality
Carnival of MoneyPros at Drop That Debt
Carnival of Retirement at Making Sense of Cents
Y and T’s Weekend Ramblings at Young and Thrifty.ca
Carn. of Financial Camaraderie at My University Money

Retirement can happen at any time!

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My Financial Independence Journey February 14, 2013 at 2:49 am

These would be a bit different than my steps.

I would nix the extreme sacrifice. Early retirement or financial independence is a long game and you have to be able to stay in it for a while. I live on the cheap, but living with roommates and parents is out. I can’t handle those mentally.

I would also nix all retirement savings and keep my money in taxable accounts. If the plan is to exit in 10 years, having your money locked away until age 59 and 1/2 doesn’t make sense to me.

Krantcents February 14, 2013 at 6:59 am

There are lots of ways to achieve independence. When I did it, it was before tax deferred accounts.

Tony@WeOnlyDoThisOnce February 14, 2013 at 4:37 am

Here’s to hoping you are right, because I will be “retiring” soon. To be clear: leaving a job and living off of extra income from doing several things. Not the classic definition of retirement….let’s call it my definition! Great post.

Krantcents February 14, 2013 at 7:01 am

Thanks, I believe in multiple sources of income. My articles is just one way to reach financial independence.

John S @ Frugal Rules February 14, 2013 at 7:25 am

Good post! I think a lot of it comes down to having choices and planning appropriately so you have the freedom to make those choice. Multiple income streams will be incredibly helpful towards that end. I don’t know that we’ll ever truly retire, but look for ways to continue to stay active and pursuing further entrepreneurship.

Krantcents February 14, 2013 at 8:50 am

There are two parts to retirement, first the assets or savings and second is what you will do in retirement. Without the first, the second does not matter.

John@MoneyPrinciple February 14, 2013 at 1:16 pm

Not sure I agree with early maxing of pension provisions. After all, you may not live to enjoy them. You should spend your time before family building social capital such as travelling and education. You can build a large pension pot later in life when there is spare cash because your career is beginning to pay a lot, maybe your kids are (semi) independent and the mortgage is paid.

Just a thought.

Krantcents February 14, 2013 at 2:09 pm

In investing, time is important. You don’t have to give up travel or any other social pursuit,but you need to make choices. I can be the best dressed teacher or wear khakis and a polo shirt. I can go to the movies every week or catch 2-3 live theater shows a year. I can go out for lunch every day or bag my lunch and have some funds for dating. They are all choices and still put away a large part of my earnings.

Kim@Eyesonthedollar February 14, 2013 at 4:28 pm

Here’s to hoping investment property fits me like a glove as well. Our commercial rental will be paid off in two years and the residential rental maybe a few years after, depending on some decisions we have to make soon. If we can add a couple more properties, we should be able to cover our living expenses within about 10 years, therefore having the ability to “retire” if we choose. I love options!

Krantcents February 14, 2013 at 5:10 pm

It is always about choices! The choices we have because of good decisions and the choices we make that make life better.

Pauline February 14, 2013 at 6:48 pm

I did all that except maxing out the pension accounts. Didn’t even take the match from my last company. I make more in real estate and the money is all mine. Who knows what pensions will be like in 40 years or if I will be there in 40 years.

Krantcents February 15, 2013 at 6:56 am

I wish I had deferred savings when I started out never mind an employer match. I just hate to leave money on the table! Real estate is great, but it is cyclical. As we saw recently, there can be bubbles at the wrong time. This is also true with the stock market.

Kathleen, Frugal Portland February 15, 2013 at 11:47 am

I’d love to buy a duplex and rent out half of it, and live in the other half. That’s my real estate goal for the short term.

Krantcents February 15, 2013 at 12:15 pm

It is an excellent goal. A duplex will just reduce your expenses of owning a home in the short run, but you are building up an asset for the long term.

Suzanne @ Financial Advisor Coach February 15, 2013 at 2:25 pm

Starting early to plan financial success is essential to having a good life. If we can just help young people understand that they don’t need the most current toys and gadgets and that savings means freedom of choice, we’d be better off as a society.

Krantcents February 15, 2013 at 3:57 pm

I agree! In fact the sooner you start the better off you are in the long run. Time is the most important part of financial planning.

Maverick February 16, 2013 at 8:38 am

I’d love to see a comparison of being a landlord vs REIT investing with advantages and disadvantages from your point of view. Thanks in advance!

Krantcents February 16, 2013 at 10:17 am

Thanks for the idea, I will publish it very soon.

Tushar @ Everything Finance February 16, 2013 at 4:35 pm

If you start putting money away for your retirement when you are young, it can only pay off in the long run. After all, you’ll have time on your side! You’re right that it would be nice to have the choice as to when to retire; I can’t imagine it being fun to be a slave to your work.

Krantcents February 16, 2013 at 8:07 pm

Whether you retire early or not, you still should pick a career you enjoy. After all why torture yourself?

Sarah Park February 17, 2013 at 4:59 am

Retirement is something to be planned and prepared carefully. These tips are surely helpful. Thanks a lot!

Krantcents February 17, 2013 at 7:36 am

Thanks, planning retirement is important and few do it! Retirement planning is too important to not do it.

Squirrelers February 18, 2013 at 6:13 pm

Planning ahead is of course critical, and this also includes making decisions that will facilitate good health. If we aren’t healthy, it will be tough to either work if needed or enjoy retirement.

Krantcents February 18, 2013 at 6:57 pm

I am reminded as I get older how fragile good health can be. It helps to be in good shape, active and live a healthy lifestyle. At least, I can control those things and the rest is genetic.

Darwin's Money February 18, 2013 at 8:21 pm

Great points; the earlier you start, that timing has a much greater impact on your retirement dollars than the actual returns you earn (and yes, it’s a good idea to assume more conservative returns than what we’ve seen historically).

Krantcents February 19, 2013 at 6:55 am

Time compensates for mistakes, volatility and cycles too even if you start out small.

Sean March 15, 2013 at 7:48 am

You can’t start early enough to plan your retirement. Thanks for the great tips… We know we can’t count on social security

Krantcents March 15, 2013 at 8:11 am

Although I am much older (66 y.o.) I think of Social Security as a bonus. I think you always should take care of yourself financially. That way you cannot be disappointed if something changes.

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