870: Is Retirement Age the Wrong Goal? by Craig Stephens of Retire Before Dad on Retiring Early & Financial Independence

Automatic TRANSCRIPT

This is optimal finance daily episode. Eight seventy is retirement age, the wrong goal by Craig Stevens of retire before, dad dot com. And I am, Dan. I'm your host here on the show and welcome to the Friday edition of optimal finance daily where I read to you from some of the best personal finance blogs on the planet before we get going with our final post to the week. I wanna thank fundraise for their support their frequently mentioned as a recommended tool in the blogs that I narrate here and for really good reason fundraise enables, you to instantly access high quality, high potential private market real estate projects from high rises in DC to multifamily apartments in L A, and each real estate project is carefully vetted, and actively managed by fund rises team of real estate pros fund rise is the future of real estate investing so visit fund rise dot com slash oh. F t that's F. U. N. D. R. I S, E dot com slash FT to have your first three months of fees. Wave. For now. Let's get right to our post as we start, optimizing your life. Is retirement age, the wrong goal by Craig Stevens of retire before dad dot com. I named this blog based on a goal I set back in two thousand two to retire at age fifty five one year before the age, my dad retired the objective drives, many of my financial decisions it has all the markings of a smart goal specific measurable, achievable relevant and time bound, but now that I'm older and think more critically about money and family. I have started to question whether retirement age is the right goal several factors have led me to rethink the logic seventeen years later retirement, define I've always thought of my goal in terms of traditional retirement, that is to withdraw from active working life. The day. My dad retired was the last day he ever earned money from job. You could say he's my retirement role model sometime before I turned fifty six I'll stop working forever to. That's still the current plan, at least, but the word retirement can be interpreted in other ways one can retire from career, but not stop working for money. For example, an NFL star that retires from play. It becomes a commentator. I could declare myself retired from my career at age fifty five or any age really whether I'm fully prepared to retire or not, then keep working on something else that I'm more passionate about during a living, even though I wouldn't need the money since I already retired. I say this ingest. If you read a lot of early retirement blogs, this may sound familiar at this stage, in my savings journey, I expect to exit fulltime work at or before age fifty five, especially the kind of work that involves a commute or firm weekly time commitment, but I do enjoy entrepreneurial work when it's at my own pace, and I may want to continue that kind of work in semi retirement, perhaps, before age fifty five or after since I have a business now this is more likely than it was a decade ago. Then again, I'm not all that ambition. When I have enough money laziness might kick in a better retirement goal may be to retire when I'm good and ready without a specific. Target family demography we've committed to paying four years of. In-state undergrad. Jewett college tuition for all three of our children. The year I turned fifty five our oldest child will start his freshman year. If I retire in the same year we must save everything we need to pay for college before. Then that fact alone makes me question my retirement goal. If all three kids, follow a traditional four year college path, they won't be fully graduated until I'm sixty three which is about the average retirement age considering the expected cost of a four year in state college education for the class of twenty thirty seven I am terrified by the numbers working through that year to cash flow. Education costs makes a lot of sense unless we can sufficiently build our five twenty nine accounts and supplemental income streams well ahead of time retiring before our kids finished college could put our long term retirement security at risk, I've aggressively saved for college since each kid received their social security card, but it's still a track when we're done paying for college seems like a safer retirement goal. Considering are substantial financial committee. -ment education travel considerations, the whole point of setting a retirement age goal was to free. My time for extended periods of travel after fourteen months of backpacking, the world, I had no idea if or at what age I'd begin and stop reproducing new humans my youngest won't graduate high school until I'm fifty nine. So the idea of traveling for several months of the year before, then doesn't make a lot of sense. Our daughter will need to finish high school and go to college before we can even think about leaving for any extended periods assuming our kids all follow a traditional college path, we can still take adventurous summer vacations with the family from now until college. But the extensive retirement travel, I envisioned when I was twenty seven years old will likely have to wait until I'm sixty when we become empty nesters alternative measures, instead of retirement age, if retirement age isn't the right goal? What is a random number shortly after the dot com bust in the year two thousand a co worker told me that if he ever got back to having? Two hundred thousand dollars in retirement savings, again, he'd retire. I don't know how we came up with that number. It seemed a bit low and completely out of the blue but he lived a simple life outside of work and could probably have made retirement work on that amount. He lived in a paid for manufactured three bedroom home in an over fifty five community in Florida. He traveled for work and kept his expenses, low his wife, worked his idea of splurging was to buy a cold beer that didn't come in a can or an occasional frontal to my knowledge. He worked at least another decade, well into the great recession eventually he did retire. But I'd guess that he saved well over the two hundred K goal. He declared in the year two thousand there's nothing wrong with modifying goals. We should all keep an open mind. About the goals we pursue financial independence because of all the nuance around the word retirement. The term financial independence is often a favourite financial goal rather than retirement age financial independence, is when you have enough savings or passive income streams to support your desired lifestyle in purpose. Luethi your so-called F. I number is calculated by estimating your annual spending and multiplying it by twenty five then aim to save that amount in cash and invested assets aiming for the F I number is a specific measurable, achievable relevant and time bound goal to the only concern I have with this goal is, if asset growth is mostly a result of market returns. The market can retract and the goal could become unachieved, and that would suck if I retire at age fifty five no market tumble can take that away from me net worth net worth is an easy number to calculate, which makes it a good candidate for setting measurable goals. It takes just four steps to calculate net worth, or you can cheat and use an automated daily NetWorth calculator net worth includes the value of your primary. Home, your cars businesses, and your other assets using the F I number is a preferred measure, because it requires a higher liquid savings target and the money is more accessible for living expenses. My net worth goal would probably be somewhere around two to two point five million with the stipulation that it must remain above the goal amount for a year or two before officially declaring victory market, corrections, have scary impact on retirement account. Savings conclusion I've been a student of finance and investing for my entire adult life. This is what I do for fun on Saturday nights, but perhaps I placed too much focus on this one financial goal. Maybe I'm shallow then again, I don't want to buy a sweet new sports car with all the money I earn and grow freedom is my tesla. Instead I could focus on more noble purposes like helping others donating to good causes and working to make my community and the world better place for now. I remain focused on being able to retire before I turned fifty six hoping that I become securely financially independent. Well before then, and that point can either set more meaningful goals or peacefully enjoy life without the constant nag of trying to achieve something difficult. You just listen to the post titled is retirement age, the wrong goal by Craig Stevens of retire before dad dot com. And thank you again to fund rise for their support fundraisers, frequently mentioned in articles from our authors, right here on the show because it's a great tool. Come by fundraise dot com slash left. E to get your first three months free. Private market real estate has historically provided excellent ongoing cash flow, even as it supports long-term growth, private market assets. Like these are a strategy for diversifying beyond public market investments, and even other kinds of real estate like publicly traded, reits, and fundraise is the future of realistic. Investing the platforms innovations power and investor, I model by eliminating the bloated costs and middlemen that have traditionally weighed down real estate investing saving investors time and money unparalleled transparency, and realtime. Reporting. Let you see how the development of speech. Civic properties impact your overall portfolio. So come check it out visit fund rise dot com slash oh. FD. That's F. U N. D R, I S, E dot com slash oh, f t to have your first three months of fees waived, and that is it for today and for the week here at optimal, finance daily, as always, thank you so much for listening. Have a great weekend, and I'll see you back here on Monday where your optimal life awaits.

Coming up next