What is the first thing that pops into your mind when picturing the retirement phase of life? For me, I think of nursing homes, AARP, shuffleboard, maybe some fishing or a similar hobby. For decades, the traditional mold has been retiring at 65-70 and living out your remaining years from there. The more you think about it the less desirable it gets! There has been a growing consensus all over the web about rethinking retirement for the past decade-plus. I want to share some of the best tips I’ve found so you can get ahead of the game.
Why the old model has lost its efficacy
“What’s so bad about retiring at 65?”
This might be the biggest counter to rethinking the traditional concept of retirement as you and I know it. The traditional route has been followed by my parents, my grandparents, and most everyone before them. So why switch things up?
To be honest, it all comes down to a matter of opinion. The anecdotal evidence supporting a different approach to retirement is mounting.
In my opinion, it makes sense to search for the happy medium. Enjoying your younger, more energetic years doesn’t mean you have to live like a hermit in old age. Inversely, being overly frugal in your 20’s and 30’s so you can live like a king in your 60’s doesn’t cut it either.
Thus, the old model doesn’t make much sense to me. How can we get a better understanding of what our future holds? I don’t mean counting down the weeks and months from t-minus 40 years either.
Calculating your way towards financial independence
Plotting your course towards early financial independence seems complex on the surface. One of the best ways to simplify things is using our often-forgotten friend from high school – MATH!
Mr. Money Mustache has an excellent blog that maps out some math to get you started thinking about this stuff. Substitute “retirement” for “early flexibility” and you’re golden.
MMM has a chart which maps out how much of your take-home pay is saved, versus expected years until you are able to live off it. Saving half of your total income could potentially allow you to live off the interest within 17 years!
“Early flexibility” can mean many things – mapping it back to the concept of retirement, it can be particularly powerful. As you’ll read in the next section, being well-off financially at an earlier age gives you much more flexibility.
Moving to a new country or new part of the one you live in might be a future goal. It definitely is for me! Financial independence equals “mobility ability” aka your ability to remain flexible as the tides change over time.
Imagine a sit-down dinner with the family: older aunts and uncles, grandparents, you name it. Now picture making a casual comment to them. Rather than remaining steady in the workforce for 40-odd years, you plan on a series of mini-retirements instead. How does everyone react here?
My own grandparents would probably look over at my mom and dad, asking for reassurance that I hadn’t lost my mind.
The concept of mini-retirement is not new but I want to be sure it’s on everyone’s radar. Tim Ferriss has championed this idea for a long time. Using the math from MMM above, you can actually map out how long you’d like to take your break and what the necessary savings will be.
Mini-retirements are an enticing idea that many people who want to build wealth and their own brand think about. This concept actually dovetails with my next tip perfectly; you will need to be sure you can afford a break before you actually pull the trigger.
Build your own brand to be sustainable
The ebbs and flows of work life are inevitable. In this day and age, it would be nothing short of remarkable to hold down the same job with the same company for 40 years. Unless you model your career after Milton in Office Space, some changes will eventually happen.
A great way to future-proof the inevitable is to build your brand to the point you can be sustained by side hustles during a mini-retirement. After college, we’re quick to learn that recruiters hate gaps in the resume!
Personally, I am working on a number of side projects in addition to my full-time gig. My actual job is demanding and takes up the vast majority of my time, but keeping things moving on the side sets you up for a quick career pivot that won’t leave you rusty and unable to get back into the workforce.
This year, I’m working with new ventures at Northeastern and learning more about startups. I’ll be helping early-stage companies with go-to-market strategy and how to best leverage all the digital channels that are out there. Applying that knowledge could eventually turn into a consulting gig. Just make sure you can stay sharp and have a project to tackle when the right time comes along.
To recap – while there’s nothing inherently wrong with the old model of retirement, having a serious look at alternatives never hurts. Using the above advice, start thinking about what retirement means in your own life.
I wish I had started doing this all myself even sooner than my mid-20’s. It’s never too early to put the big picture in perspective and figure out how to chart a career course you enjoy and can thrive in.
All opinions expressed on this blog are solely those of Home at 30 and are in no way affiliated with any other organization or institution. The purpose of this blog is to give general education and information about investing, wealth, careers, and college; It is not intended to be professional advice.
Author: Joe Savoia
Joe is a 2014 graduate of Northeastern University and currently works in a field sales role for technology company Acquia. He has worked internationally as one of Acquia’s earliest Australia-based employees and helped in the early stages to develop that region. Today Joe is based out of Boston and lives in Somerville, MA. Joe’s primary interests vary widely, including everything from robotics/AI to finance, blockchain, and the rapidly evolving world of tech we live in.