In today’s work culture, and forever, this standard definition of retirement has been the norm. Go to school, get a job, create a solid financial plan, have a family somewhere in the middle or after or before, and eventually retire.
If you are one of the lucky ones, you will not die 30 days after you finally ring the retirement bell. This…is your dream life. I learned a few years ago that this definition is half true. And as a result, I may not be retiring at 44; I plan on being work optional.
What is Retirement
The definition (formal definition) of retirement is when a person has stopped working and no longer participates in the labor force. It is a stage of life that typically follows a period of employment characterized by reduced work-related activities and increased leisure activities.
For most people, retirement is measured as a specific age or, in some cases, by the years of service that an individual becomes eligible for retirement benefits, such as a pension or social security. This age can vary, and due to the fantastic fiscal management of our government leaders (sarcasm), the age is consistently getting higher and higher.
Corporate America’s retirement package can be voluntary or forced, depending on the circumstances. Voluntary retirement occurs when an individual has reached a certain age or has sufficient financial resources to support themselves, then chooses to retire from work.
Forced retirement occurs when an individual can no longer work due to health reasons or changes in the labor market. In a volatile market, companies will use retirement packages to trim headcount and avoid a “layoff.”
Financial advisors provide advice about money management. They help clients develop a comprehensive financial plan considering their unique goals, financial situation, and risk tolerance.
Financial advisors can help clients with a range of financial issues, including:
- Investment planning: Advisors help clients choose investments aligned with their goals and risk tolerance. They can advise on investment strategies such as portfolio diversification, rebalancing, and tax-efficient investing.
- Retirement planning: Advisors help clients plan for their retirement years by determining how much they will need to save and what type of retirement account is best for them. They can also guide Social Security benefits and retirement income strategies.
- Estate planning: Advisors help clients plan to distribute their assets after they die. This can include creating a will, setting up trusts, and naming beneficiaries.
- Tax planning: Advisors help clients minimize tax liability and maximize tax-advantaged investment opportunities.
- Debt management: Advisors can help clients get out of debt and manage their credit more effectively.
Financial advisors monitor clients’ financial progress, recommend changes to their financial plans as needed, and provide ongoing support and guidance. They are trained to provide a customized plan that aligns with the client’s goals and financial situation.
The traditional path for Americans to work and retire typically involves working full-time for 40 to 50 years and then retiring at 65 or older.
This involves saving and investing in retirement accounts such as a 401(k) or individual retirement account (IRA) during their working years, working with an investment adviser, and maybe even participating in employer-sponsored pension plans, which provide a guaranteed source of income in retirement.
In the traditional path, people work until they reach their 60s or 70s and then retire, at which point they start living off their savings, investment income, and Social Security benefits. They may also downsize their homes, sell investments, or take on part-time work to supplement their retirement income.
Many people choose to retire earlier, work part-time, or continue working full-time well into their 70s and beyond. There are better options than this traditional path. Some people may also experience unexpected changes to their financial situation, such as job loss or a medical emergency, that can affect their retirement plans.
In these cases, it is essential to seek the help of a financial adviser to determine the best course of action.
So many people are involved in a high-stress career. This career is characterized by high mental, emotional, and sometimes physical demands, leading to stress and burnout. High-stress careers are common in medicine, law enforcement, finance, and senior-level management.
People take high-stress careers for various reasons, including:
- High salaries: Big money is a trade-off for considerable stress
- Prestige and status: In some cases, a certain level of prestige and social status or recognition attracts people to these positions
- Personal challenge: This is a personal challenge people want to take on. They may feel a sense of fulfillment and satisfaction from their ability to handle the demands of their job.
- Career advancement: High-stress careers can often lead to rapid career advancement, appealing to ambitious people who want to climb the corporate ladder.
- Passion for the field: Some people may be passionate about their work and will endure the stress to achieve career goals.
However, the stress of some careers can hurt one’s physical and mental health. It’s essential to find ways to manage stress and seek support from friends, family, and mental health professionals if necessary.
If we enter the daily grind of a traditional life path, we create a set pattern for ourselves. (Or, we already have.) Each day, for our whole life, begins with the same alarm clock and ends at the same time at the same place.
This is, for the most part, a safe place to be and the traditional goal of our education system. But setbacks can happen. Physical health issues for you or your immediate family can occur. Cracks in the economy happen and cause companies to lay off employees.
This is the importance of having your plan in addition to traditional financial planning.
- Do you have enough money to weather a financial storm?
- How financially secure are you?
- How well do you know your entire financial picture?
- What will happen if you make one or two financial mistakes?
- Do you have a bulletproof plan?
Financial independence means having enough wealth to support one’s living expenses without relying on traditional sources of income. Savvy people want more control over their time and financial future.
This can be achieved by saving and investing in cash-flowing assets. The wealth needed to attain financial independence varies depending on individual circumstances, such as lifestyle and expenses.
For our entire life, we are brainwashed into thinking retirement happens at a certain age. It happens when your PASSIVE income matches or EXCEEDS your EXPENSES.
Suze Orman and Dave Ramsey will have you believe that frugality and reducing your annual spending with zero debt is the practical approach and an excellent long-term plan for the American Dream.
The crack in this simple living plan is that we will never have a zero-cost basis. Taxes, Insurance, and Food prices are always going to increase. We will consistently need to increase income; our ability to earn will decrease as age increases.
By learning the right things and making some strategic decisions, we can confidently attack future unknowns because our income is working for us.
My non-penny-pinching way to achieve a work-optional life through real estate. Rental Income is how I began my journey into Passive Income, the path to the good life, and being work-optional.
In 2009, I saw the equity in my house disappear like so many others. My neighbors all began selling their houses to investors for a fraction of the price. I’m sure folks had reasons, but one question kept repeating: How can I buy houses in a recession with cash?
I never wanted to be the guy selling in a down market. This is not a person who is selling on his terms.
I read all of the best books on the subject. Then, I went to a weekend seminar. Here I received some excellent information about rentals in the vast area of Houston and an entire investment strategy. It was there that I created a money mission statement.
As a supply chain and logistics salesperson, I receive commissions for business brought to the organization. The problem was the volatility of the various business cycles. And, it is easy to spend this money on things you are waiting for, especially with a growing family.
I was able to exchange commission (residual income) for rental income (passive income).
This was eye-opening; every month, I had an extra check. I was always looking for deals for work and houses for rentals. Eventually, it got overwhelming, and I sold them all off-turning rental income into capital gains income which is where the real money is.
I took some practical advice as my family was also scaling up. Investing in syndications is the most passive form of investing I can do. My dollars earn around 17-20% per year without my searching for deals, answering calls, filing evictions, or going to title companies.
As a busy professional and full-time dad, I needed a more passive vehicle to enable a work-optional life. Syndications have been ideal for our lifestyle of busy professionals and five kids.
I’ve stepped out of the landlord and house-flipping side hustles and enjoy being an investor. The same returns as rentals, the same tax benefits as rentals; however, 97% less time commitment!