I Want to Retire When I’m 55
I was speaking to a relatively young man (I’d place him in his 30s or 40s) earlier this week who was a referral. I am always happy to be a sounding board to folks when they need help or guidance, and this happens to be one of those instances. He had just started investing and appeared to be doing well with his endeavor. Actually, what he was doing was day trading stocks. Nevertheless, he was seeking advice on planning for retirement. I applaud him for thinking ahead and thinking big. I asked him when he wanted to retire. He exclaimed, 55! Interestingly enough, he backed off on that goal and said it would be nice to retire then, with a quieter tone. Looking disappointed and unsure of whether it can be done, I said to him, “why not?”
Along my path as an advisor and planner, and reliving my own personal journey, I have come to learn the boundaries of what a “normal” retirement age is, should indeed, be shattered. At this point in my career, I encourage clients and people I counsel to imagine big. Why not?
Planning for a work optional lifestyle and/or financial independence starts with stating a goal. When do you want to accomplish this goal? What does it look like? How do you get there? Is it feasible? What adjustments need to be made to help accomplish your goals? What are your priorities? Are you already there? Perhaps you are.
I was stuck with the mindset that I would officially retire at age 65. Perhaps do some fishing afterwards, golf, travel and then die. DIE. The finality of it all and there was so little time to do the things I WANTED to do. And at age 65, I’m not so sure my health would allow me to endure all that fun!
Why not move that time frame forward a decade or two? I simply must plan for it; simple as that. Now I am not saying that I am retiring anytime soon. On the contrary, my practice brings me immense joy. It’s simply nice to know that I have a work optional lifestyle. That in turn keeps me motivated to coach clients about how to help them achieve it and more importantly, help preserve their financial independence.
When I look back on my journey and those of others, the wealth creation journey typically looks something like this: buy an asset (typically a home or other real estate) at an early age, also save/invest in an account designated for the purpose of retirement. This type of account may come in the guise of 401(K), 403(B), IRA, Roth etc. Complementing those two items could be syphoning money into a non-retirement investment account.
The key is to start early and do what you can. Lord knows I struggled like mad! And struggle I did. That’s for a later post.
If you are young and reading this, consider doing any of the above three items early. At the age of 25, I purchased my first home in 1997. I can’t remember what I put down. It was probably no more than $20,000. I remember this because my mom would match what I saved as an incentive. I saved $10K and she gifted me $10K. I did not flounder the gift. I also started saving in my employer’s 401K at age 27. I actually started saving in a 401K at 22, changed employers, and unwittingly cashed out that 401K. Big mistake, BIG! I didn’t know any better. Later in my journey, I started investing in an account outside of my 401K. The combination of these items has opened the door to today’s options.
Folks who can potentially reach financial independence have demonstrated some semblance of progress in the above activities mentioned. Of course, there are many more paths to accumulating wealth. I’m simply giving a shout out to the path I see most commonly traveled. With that being said, I recognize not all have the luxury of walking the path and starting early. That’s OK. It’s never too late to start.
When reflecting on the conversation with the gentleman who asked if it is possible to retire at age 55; yes, it is possible. And perhaps, retiring or at least having the work optional lifestyle is doable sooner. Be sure to pay yourself first with a retirement account that has tax advantages or one that will allow you to own growth investments. Next, lay out a plan that meets your expectations realistically. And above all else, start now if you already have not. Time is an ally.
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