Retire Young

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I have “retired” several times in my life: in my early fifties, again when I turned sixty, and then at sixty-five. My definition of retirement may differ from yours. It’s about starting and investing in the next stage of my life each time. I expect many more retirements.

I learned very early that I couldn’t loaf for the remainder of my time on the planet. The first time, we went to Italy so that I could learn how to cook. We had a great time, but I was ready to go home after about a week.

I tried golfing, but that bored me very quickly. I realized I didn’t want to put in the ten years or so of hard work to become respectable on the course. I also don’t like the rules of tucking in your shirt or wearing one with a collar. It reminds me a bit of public school. I also didn’t like golfing, period.

So I was left with figuring this retirement thing out for myself. Because all of the other definitions out there didn’t match how I was experiencing it.

I learned that the retirement or freedom mindset had nothing to do with my age. In reality, I have been retired for most of my life. Work isn’t working when it is your choice, and you love to do it.

Whether you are 25 or 75, retiring young is a state of mind.

How can you create a meaningful life that motivates you to bounce out of bed each morning and take on the world?

You may be asking, how can I build the wealth so that I can truly make choices in how I spend my days.

Being wealthy in retirement is about living your life the way that makes sense for you, and having money left over to invest. It can happen when you are 35 or 75. Age has nothing to do with it.

Here is what I would do to help with that challenge if I were 25 years old today.

I would hunt for a property that I could purchase for $400,000 to $500,000. I would beg and borrow the downpayment needed to buy that rental property. I’d find a way to live in part of it and rent out the other. I would then work to make a 15-year amortization of the mortgage possible. This means it would be paid off after 15 years.

When paid off, I’d re-finance it at 50% market value. Let’s say the value after 15 years is still $500,000. I would then take out a mortgage of $250,000 and start the process over the next 15 years. I would take that $250,000 from the refinance and put $100,000 in a safe liquid investment for my heirs to use to pay taxes upon my death.

I’d take the other $150,000, purchase my next property, and do the same thing. Another choice is to invest the entire $250,000 in a relatively safe stock such as a Bank or REIT and collect the 7% annual dividend. That would generate some $17,500 per year in dividends.

I would re-invest those dividends back into my investing for 15 years.

I would use compounding for 15 years and then reassess. I’d spend my 86,400 seconds per day doing only those things consistent with who I am, focusing on those things that matter: family, spirituality, business, investing, environment, and a small pod of friends.

Retire Young means that regardless of your age, you are in a position of wealth (spend less than comes in each month), and each morning, bounce out of bed to take on your day with desire and excitement.

You decide what that day will look like. It’s the joy of being able to Retire Young.

Once in a while, it will be a topic of this newsletter, with a different challenge in mind.

Stay tuned for future editions and my podcast, where we share this journey.

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