How To Retire A Millionaire — The Secret To Early Retirement
The society has fed you the lie that if you do well in school and get good grades, you’ll get a great job and retire with enough money to enjoy your old age.
But this is rarely the case. So firstly, let’s get rid of the idea that retirement is just for old people. It’s simply when you have enough money that it allows you the freedom to do whatever you want whenever you want.
My aim was to get to the point where I could retire and live out the rest of my days in comfort without anyone telling me what I could and couldn’t do.
Yeah, I might have a bit of a problem with authority, that’s for sure. Through hard work and dedication, I managed to achieve this goal in my late 20s all from scratch.
However, times have changed and I understand that I’m not oblivious to the fact that house prices have gone up 48% in the last 10 years. The stock market is the most expensive it’s ever been and to top it all off, we’re on the brink of a recession with a lost decade of returns looming.
This is all leading to the rich getting richer and the poor getting poorer and from someone that came from nothing, that’s something I just can’t let happen.
Retiring is a lot like climbing Everest. It’s a hard challenge and some people sadly don’t make it to the top. However, the ones that put in the years of training have the best shot of summiting the mountain.
This training comes in the form of financial literacy and it’s the key to closing the wealth gap. That’s why today I’m going to be sharing the four different levels of retirement and how to achieve each one.
In today’s economic climate contrary to what a lot of people think, retirement is still possible if you have the knowledge to secure your freedom.
You can clearly break down retirement into four different levels depending on your goals and aspirations. It’s important to first know where you’re going in order to pick your path up the mountain.
Level one is drifting
Now there’s no shame in this but it is the bare minimum.
Level two is stability
This is basically drifting but with captain America shield protecting your financial interests.
Level three is freedom
There’s a very clear way to know when you’ve hit this level and it’s called the four percent rule.
Level four is abundance
Now this is the absolute summit of the retirement mountain. Some people achieved this goal at 65yrs while others managed to climb the mountain much quicker. I’m talking in their early 30s.
When you have enough money to do whatever your heart desires, with great power comes great responsibility, and when you reach this stage it’s all about helping other people up the mountain.
It’s important never to forget where you came from, that’s why I’m going to be sharing a personal story for each level of retirement so that you can plot your course up the treacherous mountain ahead.
Level 1 Drifting
At this level, you’re financially reliant on other people maybe this is student loans or even your parents. The beauty of beating this level is you finally gain your independence from those that seek to control you.
A friend of mine works a normal job and he earns a decent salary which gives him the ability to buy a car and travel wherever he wants in his free time.
However, he also lives with his parents. Now this is actually quite a good idea when you’re trying to build up your finances but it’s important not to get too comfortable. He enjoys his job but he’s definitely trapped by being paid just enough to survive but not enough to thrive.
And this is why they call it the rat race. The issue with drifting is that you can’t work all your life. This leaves you very reliant on potential inheritance to secure your retirement and not everyone has this luxury.
I know I certainly didn’t not with three sisters to achieve this level. You need a job that pays for your living expenses with enough left over to meet debt payments.
On top of this, it’s imperative that you have an emergency fund of at least three to six months of your living expenses in case an unexpected emergency occurs and throws you off your paycheck to paycheck lifestyle. Without this, you could be trapped in not just comfort but also debt.
Level Two Stability
By reaching this level, you have already beaten the majority of people as you’ve secured your retirement later in life. However, at this point you’ll be tested more than ever as the drifters will want to drag you back down the mountain.
An associate of mine is 45yrs and he’s doing pretty well and has his own house but times are tougher than they once were. He also has an emergency fund and a good investment portfolio that will provide him with more than enough once he reaches the retirement age.
But he’s finding it very difficult not to dip into his investments. He’s currently working as a carpenter and joiner but due to the current financial volatility in our economy, his wages aren’t going up fast enough to account for the level of inflation.
This leaves him short of money when he’s providing for his family and paying a mortgage because it just doesn’t stretch as far anymore. Instead of spending money from his retirement pot and being dragged back down to just drifting, he’s done something really quite special and that’s profiting from a hobby in his spare time.
He enjoys going to airsoft sites. This is a bit like paintballing but some would argue a bit more realistic. It certainly hurts when you get here after attending many of these events.
He felt that he could run one himself so he found some land to rent and originally planned for the site to operate only on Sundays. However, due to extremely high demand, he’s now hired someone to operate it throughout the week.
And he has even branched out to include corporate away days where staff can get their anger out on each other and go back to the office ready to work as a team again.
This gives him the extra income he requires, and therefore, saves him from raiding his investments. This combination of hobby and business is extremely effective as the benefits are two-fold.
Of course it provides you with extra income but also saves you a fortune as the money you would be spending on a hobby goes straight back to you. To achieve this level, you want to be focusing on three main areas.
Firstly, you can never be stable with high interest debt around your neck. So paying off anything that isn’t ultimately making you money is essential.
Secondly, in order to be able to retire in later life, you need to be investing into the markets. A great way to do this is through a rough IRA in America and an ISA in the UK.
These are tax advantage accounts that will allow your money to grow over time completely tax-free. I like to invest in index funds with this type of account as it’s a more reliable option over the long term, and requires far less maintenance.
Thirdly, you need to recognize your existing skills and stack them effectively in order to create extra income. It’s all about identifying your unfair advantages so that your skills stack can’t easily be replicated.
Level Three Freedom
This is the stage where you retrain yourself from day work and get paid based on your value rather than your time. My old chiropractor started out by just doing the basics cracking backs and getting dollar but he quickly realized all of his time was being sold.
And he hit the point where he couldn’t make any more money unless he put up his prices. But the problem was doing this may have caused his clients to walk.
Well, maybe they wouldn’t have walked due to their bad backs. So in order to gain real freedom whereas income wasn’t tied to how many hours he was working in a day, he had to get out his wand and magic.
There’s only 24 hours in a day but for a lot of us, that time has been taken up by little tasks that don’t pay us the money. He worked out that during the half hour he saw a patient, approximately 10 minutes of his time was wasted with them just getting ready.
And another 10 minutes was wasted doing a warm-up massage to get them prepared for their back correction. So really his skill was only required for 10 minutes.
So he employed a masseuse so when his patients arrived, they immediately went up for a massage. This essentially tripled the amount of money he could earn but he didn’t stop there.
After realizing that once he’d fixed people’s back problems they didn’t return. He implemented a membership program. This is because it’s much easier and cheaper to retain a customer than to acquire a new one.
In this level, you’ll have invested 25 times your desired annual salary meaning you should have an endless pot of money if you only withdraw four percent per year.
This is known as your freedom figure and it’s different for everyone. For example, if you want to live off fifty thousand dollars per year, you’ll need to times that by 25.
This means $1.25 million invested in a fairly liquid asset would be required if you want a bit of diversity from investing in the stock market. Bitcoin was the best performing asset of the last decade.
Level Four Abundance
This is F*U money the kind of money that most people only dream of that allows you to turn down any opportunity that you’re not interested in because it just doesn’t matter.
In order to achieve this, I combined all of the levels into one. I secured a nine-to-five job and built up my investment portfolio, built a profitable business, and expanded into multiple different businesses and investment assets while maintaining the ability to be able to adapt to disruption.
For over three decades, the main difference between financial freedom and abundance is the willingness to embrace the new. I was one of the first people over 50yrs to be on TikTok.
At this point, it’s not necessarily about making more money but it’s about making more impact. The biggest problem is people reaching the abundance level and spending all their time trying to conserve what they have rather than giving a leg up to the talented generations.
Most people will read this post and not take any action. So your competition is far less than you might first realize, and after that first step up the mountain, you may even surprise yourself with the momentum you gain.
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