What would you do if you could retired tomorrow? Many people dream of that day, but in most cases they do just that, dream. When you are tired of traveling (trust me it does happen) and spending time with your grand children (I only have one but that happen even quicker!) what do you do with the 16 hours each day, in every month, of every year for the rest of life? This is a question that most retirees never ask themselves until after they have retired.
Many people look forward to retirement so they have the time to play golf or tennis, paint or even become an avid reader. While these sports, hobbies and activities provide an excellent distraction for your busy work life, it’s hard to golf or play tennis 40 hours a week to fill the void in their lives that the average retiree has created by retiring.
Some Americans don’t realize that work is an activity that in many cases helps keep our sanity, keeping our minds focused on things other than other problems and our bodies active to avoid atrophy. If you doubt this look at stay at home Moms and Dads that no longer have small children to chase after. More often than not too much solitary time results in poorer mental and physical health. The happiest people in the world are typically the busiest people for they have things to look forward to and that is what keeps us happy.
While there are people that adapt easily to a stay at home lifestyle, most retirees feel as though their life has a large void after retirement. The dreams of retirement are replaced by the reality of sitting around the house and annoying their spouse. I know of retired men that had macho, manly jobs take up need-point or quilting as a way to have something to do in retirement. Can you imagine scrimping and saving your entire life to be able to make bed spreads in your retirement years?
The many flaws in the retirement ideal are what caused me to write the book Achievable Wealth. The idea of complete retirement is one that came up in a time when most Americans had labor intensive jobs that they simply couldn’t perform after a certain age. Life expectancy was much shorter, so the age of 65 became the accepted age people would retire, because they only lived a few additional years on the average.
Not only is retirement in the traditional sense not the best use of the end of your life, the financial burdens retirement put on the typical American family is immense. With complete retirement at 65 the average American could easily live an additional 25 to 30 years and this is if you are in your forties or fifties. That number could be high as 40 to 50 years for a person in their twenties if the average life expectancy keeps increasing. Even if you were to live 22 years beyond retirement this means that 1/3 of every dollar you make in your working life would need to be put into a retire fund or paid in taxes to be re-paid through social security (and that would be just for your retirement tax, not tax on your income!)
You and I have listened to the great masters of retirement income and wealth talk about compound interest and higher interest rates to accumulate more savings for retirement. While this is a good strategy, you really don’t accumulate more for retirement through compounding, you simply keep pace with inflation, make up for times of loss (like everyone just experience in the stock market) and have a hope of retiring with the same buying power you had when you put all this money into your account.
I think I have a better plan. I am 47 years old and work at my primary profession on an average of 2 to 3 days a week. I used a strategy I call “income replacement” to gain financial freedom. Income Replacement is the idea of using small business ventures, passive or near passive income streams and turning expensive hobbies into income generating micro businesses to generate income, replacing the salary or the profit from your primary business.
The plan for my life was a little different than the traditional retirement plan followed by most Americans. I wanted to enjoy my life, my wife and children throughout my life and not drive everyone insane penny-pinching my way to a funded retirement plan. I wanted to semi-retire early in my life so we could travel and experience some of this world before we were too old or our children were no longer at home.
Retirement is needed for a life lived by default, meaning a life that isn’t planned. You select the career path, not because it’s what you love to do, but because someone told it was a safe and secure career that you have an aptitude for. I live my life by design. I am professional photographer, a professional that I will do in one form or another until the day I die. I chose this profession when I was 14 years old and other than spending time with my family (and travel, riding my Harley and Viper-alright it’s in the top ten!), I am happiest with a camera in my hands.
I am also an author, I have written 13 books and counting. I love to write, for me it is like yoga or meditation, it relaxes me because I must focus on what I am writing. As long as people find what I am writing interesting enough to read I will never quit. Without going through everything I do, I have designed my life to include the things I truly enjoy doing, so why would I ever quit doing them. A few years back I realized that financially we didn’t need to keep our photography business open. I thought about it, “without a studio where would I photograph (something I love to do) and what would I do those 2 days a week that I enjoy as much as photography?”
The idea here is a simple one, if you plan your life, old age will take care of itself. If I couldn’t do what I do now investments and passive income streams would provide us income for the rest of our lives, but these investments and business ventures would have never been started if I was penny-pitching trying to fund a complete retirement for the two of us doing nothing for the last 1/3 of our lives. For a complete guide to Semi-Retirement, creating income streams, investing for larger gains and asset protection, go to Achievable Wealth book at Amazon.com
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