I was on Twitter the other day and noticed the pool of minds all swimming toward a life of financial freedom take two different paths. I never realized that some people in one mindset don’t consider the other on the same track.
As I dug further, I realized retirement has an entirely different definition to both and some people hold some hardline rules defining what exactly retirement is all about.
I started my journey a long time ago before I knew I was even on a quest. It wasn’t until about three years ago that I realized it was possible for me actually to retire early.
I had read some stories of people, who with their average paychecks, manage to figure out a strategy to get them out of full-time employment permanently.
I was debt-free at the time and was investing regularly, but had not assembled a solid plan for ‘retirement.’ Then I assembled a plan for myself and began working on it. Recently I started this newest blog you are reading to document the journey. I thought I was like everyone else.
I wasn’t. I found that out while on Twitter the past month and especially the other day.
Financial planning strategy; The first path is to live frugally and invest heavily.
The first tribe of people had day jobs at some point. Some dug themselves out of debt and began investing. Some have never had a debt problem and began investing at an early age. These people all live well below their means. Frugal living is what they chose to do to create the lump sum funds to invest their way out of a job.
These people you would hardly notice as you walk down the street. They are frugal with their money and sharp with their investments. They know how to manage money better than most money managers. Here is a side note. I’m not sure what I think about the profession of money management.
If these people were as good as they say they are, wouldn’t they be already retired? If a money manager is over the age of thirty, and he or she is exceptional at their job, wouldn’t they have already amassed enough of a portfolio to get themselves out of their job as a money manager?
There are average people out there doing their own investing who are retired by thirty or forty. Surely a trained professional would have already figured it out for themselves. But, this is probably a different topic for a different time.
Financial planning strategy; The second path is creating income with personal businesses and income streams.
The second path I see is the entrepreneurs. These people have created retirement by creating personal businesses for themselves. Some of these people have gone so far as to create full-scale businesses. They open offices and hire full-time staff.
They dress well, and you can probably tell they make a good income. Many used to have regular jobs, but have broken out through creating more revenue for themselves than their job paid them. These people are not always frugally minded. They make a good amount of cash, so they spend a good amount of cash.
They are the same as the first group in the sense that they no longer have a job where other people are directing their lives. Both these groups get out of bed every morning because they want to not because it is what you do to keep your job.
This crowd is the ones who would probably get bored with the usual definition of retirement.
Financial planning strategy; What is the definition of retirement
At the core of all this is the definition of retirement. Some say retirement is when you’ve worked long enough, and the government and society tell you it’s ok not to work anymore. Social security age dictates this, and many think people are lazy if they don’t work until that age.
Then there are those people who consider retirement to be having enough money set aside, so all you need to do is sit in a rocker and watch time pass by. Maybe you go down to the local coffee shop every morning to have breakfast with your friends.
My grandparents were like this. My grandfather had businesses for years. At sixty-five, he sold out and took his nest egg, and sat on the porch. I don’t begrudge him for it. He worked hard his whole life and deserved to enjoy his own definition of retirement.
Then there are the crackpots, the misfits, as the saying goes from the Apple computer ads. These are the people who are defining retirement for themselves. They have their own ideas of what retirement should feel like and set out to build it.
Financial planning strategy; I run down the middle.
For me, I run somewhere through the middle. I am frugal with my spending. I’ve cut my monthly expenses low and live well below my means. I don’t have a job anymore.
I also don’t have enough to carry me through for the rest of my life, so I spend my time creating income-producing assets and money through what I call personal business ventures.
My definition of retirement is getting out of bed every morning and designing my own day. If I want to go on vacation, I work it out and go. No asking permission or trying to schedule days off. The only thing holding me back are constraints I put on myself.
I have clients and customers. I usually choose to put their needs first. But, again too, I have designed systems where their needs get met perfectly while still giving me the freedom I enjoy.
Maybe something will happen in the future where I will need to get a regular job again. I don’t know what the future holds. This is my definition of retirement now, and I’m going to stick with it.
Financial planning strategy; You need to concentrate on your own path
What all this boils down to is you need to define your own way. Define for yourself what FIRE (financial freedom Retirement Early) means to you. There will always be the naysayers out there trying to put people in boxes by saying you can’t be a member of this tribe if you don’t think as we do.
Screw that; I have a path I’m on. It’s working for me. I know the longer I continue on it, the better my life will become. Sketch out how your path will look.
What I thought was interesting as I started looking at this is that both hard-line camps had the same goal to not work for someone else, but they had different definitions of how retirement should look. I like my idea.
Till next time, be safe,
Kevin