Retiring Young

[alexlee]

Following the young investors thread, I wanted to share thoughts with everyone on the concept of retiring young. Most of us invest in property to increase our wealth and income. The ultimate goal for me is to be able to quit my job and enjoy my life however I want to.

Now, retiring in your 30's or 40's has its own problems. e.g. all your friends are working, so what do you do all day? Who will you go out with? I think anyone who wants to retire early has to think about what they intend to do during retirement, or risk going nuts.

So, for those who intend to retire in their 30's or 40's, what do you plan to do during retirement?

My own plan:
Do project based 'work' (renos, small developments, duplexes, units, townhouses) for a few months of the year, then spend the rest of the year not working, but keeping busy with courses (maybe go back to uni to do something I like), travel, pursue hobbies like cooking, writing, etc, spend time with my family (currently lower on my list since I'm not married and I don't have kids), etc.

Also, very important: try to get a group of peers together of similar age who are doing the same thing.

Finding such 'peers' is surprisingly difficult. Lots of my friends are interested in shares and property, but few make the mental leap to 'want to retire at 40'.

Interested to know what everyone thinks.

 

[djones]

Alex,
What financial level you feel comfortable retiring on, that is, how much equity or income and the strategy to get there...

personally, i am in a similar position thats is iam working overseas right now and sending my savings back to Aust. to fund my IP's there...

 

[alexlee]

I don?€™t really have any equity goals, but when I make $100k net AWAY from my job, I?€™ll quit. Ultimately, the goal is $1m net income, today?€™s dollars. That would fund the ?€˜waterfront mansion in Sydney, merc 500 in the garage and first class plane tickets everywhere?€™ lifestyle goal. A bit crazy, yes, but then who would?€™ve thought any bank would lend ME a million dollars? Managed to top a mil in loans about a year ago.

 

[Iggy_Type_R]

I agree with you Alex on the "bored" part...

I always wanted to retire by 30. I am 25 at the moment, and like you started investing in property when I was 21/22. However, I think I would go absolutely MAD if I did NOTHING all day. I found my calling through, and that's business. ie property is great fun and very exciting and can bring good income, but I found that business is 10x more fun, and 10x more exciting adn can bring income 10x quicker. Of course I am talking about owning your own corporation, not being "self-employed" (reference to the 4 quadrants). Have a think about that. Because a good business can give you 1m PASSIVE income after 5 years, if you build it right of course.

As for me, I will never retire. I have too much fun building business and cannot imagine not "working". Over the xmas period, I took 3 weeks off... couldn't handle it!

 

[djones]

Ok got that...

I will be in Aust. in a year or so and am currently in the U.S...

At the moment i have an IP giving me a 4.5% yield gross, also have a couple of vacant blocks of land in outer SE melb which i intend to build on next few years...

However my issue with adding more to the portfolio is that due to current yields my DSR goes down dramatically and it increases my negative gearing considerably as well. Once i am back iwill really need to inovate and do some value adds to my IPs to improve the yields.

Also that makes me think whether i should go ahead with building on vacant blocks of land first (which will affect my serviceablity) and then go for further IPs OR buy other IPs first and then build later as its land which appreciates...

As you can see too much going in my mind right now. I need to find some sound strategy to reach my goal to have 50K net income p.a in next 10 years...

 

[Sultan of Swing]

You bring up a highly valid point Alexlee.

I've often thought it'd be nice to not go to work but then as i get older I realise I need and enjoy the interaction that work gives me.

I don't think an early retirement is what I want at all but what wealth can give is choice. Do I want to work? Will I take 6 months off? Will I try a project or two?

I've had a few weeks off here and there and there are times I can't wait to get back to work. It's not that my job is my life, but it does add purpose to my life. Not the only purpose but part of an overall package. I need to feel that at the end of the day I've accomplished something, be it work related or whatever. I hate it when I look back at the day and feel that it's been a waste of a day.

I've noticed over recent years that a lot of people that retire early seem to also die early, not enough to make me think.

My father is almost 65 and still building full time. He wants to slow down but doesn't want to stop because after 50 years of building, he still enjoys it. And after such an active life, he can't see himself sitting around with little to do.

Another reason not to retire too early.... retirement has some dire consequences.... have you ever noticed to 100% of retired people die?? (Think about that one )

My 2 cents

 

[The Y-man]

My personal belief is that the financial freedom give you a choice - of occupation. It lets you choose the "job" you want. So whether its building business like Iggy_R, looking after pets, gardening, or whatever it is that takes your fancy - find out what it is, that you love to do.

As SOS points out, many who "retire" do quite literally get "bored to death" - as they were not prepared for it (well, they thought they were!). Many have worked hard over the years at their jobs, and/or raising a family - with the ultimate ambition of "retiring". When they finally get there, they go on a big holiday or 2 - and then..... nothing. Their whole purpose of getting up in the morning has vanished.

I think it was Peter Spann that said in one of his seminars - "Retirement is the great middle class dream".

Cheers,

The Y-man

 

[WillG]

Hi alexlee,

'So, for those who intend to retire in their 30's or 40's, what do you plan to do during retirement?'

I have a list longer than my arm with things I would like to do but cannot find the time becase of my day job including 'further study', music, travel, building houses, rennovations, time with family .......

I hope to have a level of financial independance in my 40's so I can work 6 months per year and 'play'/invest the other 6 months.

When you are married and have kids you will have MUCH less time for yourself and you will grow a new set of 'things' you want to do.

I had done the working and travelling overseas thing at your age and started my portfolio at 28. 7 years down the track with wife and daughter, things have changed but that's life. I enjoy different things now and have different goals.

I guess what I am trying to say is, keep investing and don't think too much about what you will be doing in retirement, because it's gonna change anyway.

Good luck

 

[MPmelb]

Hi Everyone,

This is a very interesting thread, and something I have been thinking about for a while too.

A bit of background: I'm 35, single, and work in sales in Melbourne. I started investing in IP when I was 32 and now have 3 properties in eastern Melbourne.

I work as a real estate agent rep selling new home and land packages. I personally don't like it and the market is dead flat. I don't like the weekend work and no social life which entails.

I want to buy lots more IP, but I'm not earning much money which means I can't buy any more negatively geared property. I'm just earning enough to pay the mortgages off each month, so I'm living a shoe string existence.

I love travel and have considered working overseas, maybe in London. But it is hard to leave my family here who are dependent on me due to poor health.

I also want to start a business. I want to retire young in the next 5 years if possible, but also don't want to be bored to death.

Can somebody offer some advice for me, cos I feel totally lost in life.

 

[WillG]

Hi Everyone,

This is a very interesting thread, and something I have been thinking about for a while too.

A bit of background: I'm 35, single, and work in sales in Melbourne. I started investing in IP when I was 32 and now have 3 properties in eastern Melbourne.

I work as a real estate agent rep selling new home and land packages. I personally don't like it and the market is dead flat. I don't like the weekend work and no social life which entails.

I want to buy lots more IP, but I'm not earning much money which means I can't buy any more negatively geared property. I'm just earning enough to pay the mortgages off each month, so I'm living a shoe string existence.

I love travel and have considered working overseas, maybe in London. But it is hard to leave my family here who are dependent on me due to poor health.

I also want to start a business. I want to retire young in the next 5 years if possible, but also don't want to be bored to death.

Can somebody offer some advice for me, cos I feel totally lost in life.

Sounds like you need to change jobs weather you work in Aus or overseas. This may make you a bit happier and possibly give you more $$'s to invest.

You probably need to put some agressive strategies in place if you intend to retire in 5 years. Unless your IP's double or tripple in value in the next 5 years, you probably cannot retre of them. This leaves you shares, business, highly paid job, tattslotto ...

 

[Amarantha]

I intend to study things that interest me, such as foreign languages, musical instruments and martial arts, and also to spend time doing all the stuff I'd rather be doing than work, such as travelling, cooking, fishing and the like. I can't imagine running out of things to do

 

[keithj]

Things to bear in mind if planning to retire in 30's-40's

Kids
If kids are still at school then you need to be there every day to deliver them. And to raise them, which is v. time consuming.
Most people have travel high on their list of ‘things to do when I retire young'. Travel is tricky with kids, only during school holidays - most expensive & busy time.

Partner
Make sure your partner is happy with seeing a lot more of you. Also make sure they support the decision to reduce your income. Make sure your joint budget changes accordingly.

Social Life
There are lots of slightly/much old retirees with lots of time on their hands – they do social bridge, tennis, golf & volunteer work.
These older retirees are a new set of new people to meet with more experience of life. If they retired early there's probably a lot to learn from them. And they are useful contacts.
You are bound to have a few friends who work part time, or have their own business with time for long lunches.

Challenges
SOS mentioned needing challenges - there are plenty out there - the difference is that you get to decide the challenges, not your boss. Every January I make a list of the challenges/plans for the year and update my list of 101 things to do before I die.
And investing is a lot easier when retired – there’s time to investigate more options and meet REAs when everyone else is at work.

When to Retire
Do you retire as soon as you have a passive subsistence level income or do you wait until you have a comfortable income, or a high income?
Consider risk.

Risk
Expect your attitude towards risk to change. You’re likely to never take another big risk for fear of losing the comfortable retirement.
Consider worst case scenarios – what will happen to vacancy rates if the only industry/mine in Woop-Woop (where you bought all those c/f +ve IPs) closes down?


I retired in late 30's mostly through IP with help from shares & business.
And I most definitely would not consider returning to the commuting, office politics, stress, deadlines & hassle of working. Lots of people say they enjoy work – I enjoyed work, but I enjoy retirement more. Time is the most valuable resource we have.

For me, retiring was always a top priority - I always planned to retire by 30 - I may just have been able to do it, but the missus & kids happened & outgoings skyrocketed. By my mid 30's I started working a bit from home, then went part time, then took 'just one year off', and now there's been more than a couple of years off. So it was an easy slide into full retirement. And being in IT there's no chance of me returning.

 

[DaleGG]

Hi

A long time ago, I set a retirement goal of age 45. With 2.5 years to go, it is very fast approaching.

Financially, it will be easy to do.

Emotionally...now, that is another matter!

I could retire now (and sometimes it is tempting) but the sheer knowledge that I don't HAVE to work is so empowering and allows me to continue.

However, I am excited at the thought of retirment and what it will bring to me in terms of the time that I can spend researching more investments and then enjoying the wealth that has been developed.

The main thing that I wanted to share though is:

So few of us actually plan for our retirement...regardless of the retirement age. Yes, it is an important thing as otherwise it is too easy to lose purpose and to feel lost.

Might I suggest that we share ideas on what to do in retirement?

My time will be spent:

mentoring & assisting the people who take over my business
managing my property investments
trading shares
record keeping for my trusts and investments
travelling
indulging my hobbies (not that I have THAT many outside of work)
playing chess
reading
learning new skills from courses
taking up golf (again, after a long, long lay off)

Of course, there will be so many more things to do.....I think I may be busier in retirement than I am working....

Have fun

Dale

 

[The Y-man]

A long time ago, I set a retirement goal of age 45. With 2.5 years to go, it is very fast approaching.

Hi Dale,

I hope your succession plan is comprehensive and moving along nicely!!

Cheers,

The Y-man

 

[Merovingian]

Hey Keith,

Great post.

You say have managed to "retire" before the magical 40 mark. When did you start, i.e. first investment property? Care to shed some light?

Thanks.

 

[Ross]

Fantastic and motivating thread guys, agree with the majority here, can think of numerous things to do when ceasing being an employee.
Aim to be in a "position of choice" by 40 and most certainly a solid passive income by 45 ..............reminding myself of this every day and putting my financial goals down on paper ( excel spreadsheet - projections etc ) is what gets me out of bed and off to work everyday ......knowing that I have passive assets working for me while I sleep and that I wont have to be an employee until my 50's or 60's

Keep up the motivation !!!

 

[Qlds007]

I am with Dale

I decided to retire at 39 do nothing but managing my investments and spend my days,weeks and months playing golf and travelling.

After 9 months of finding i was the only one at my age up at the golf course during the week and the kids were at school, most of the year so travelling was limited to school holidays and weekends.

Well i did the garden for a while but my wife kept telling me i was under her feet and pleaded with me to go and do something.

That was 18 months ago. Wanting to help and assist people i decided to start my finance business up again giving clients information on a range of financial services.

Working from home i can suit the hours that i work still enjoy time with the kids as well building up the business for my oldest daughter who is keen to take it over when the age is right. Clients come to my home or i visit them in a pair of shorts and shirt.

Certainly retiring early can have its benefits but you have to plan for retirement whatever the age.

I now enjoy myself more than ever before and love the fact that i can help out others to empower them create wealth for themselves.

 

[The Y-man]

So, for those who intend to retire in their 30's or 40's, what do you plan to do during retirement?

I wanted to go and teach. I thought it would be fun. So I managed to get a slot as a part time lecturer, to see what it was like. I enjoyed it so much, I've ended up doing that for the past 5 years as my second job (while I take annual leave in my "day" job)!

That is why when people ask me, "Are you going away on your holidays?", I have to say, "No, I will be otherwise occupied....."

Cheers,

The Y-man

 

[kaf]

Nice thread everyone!

Both hubbies and my family is back in Europe so we hope to retire in time to go back several months of the year to spend time with parents when they get too old to come and see us...

Better get a move on though!

kaf

PS. Well and then there is the hobby-vinyard in the back of the Sunshine coast, getting hubby out of the job he sort of enjoys, sailing around Australia and the the world, volunteering in the community, time to read all those books, sleeping in in the morning if I want to...

 

[Cheeks]

When I "retire" I actually plan on splitting my time between managing my investments, searching and developing new opportunities, travel and hobbies (always liked the idea of golf but never had time for it, also plan on curing my sea sickness with plenty of boat trips).

But in addition to this I also plan to work on a contract basis for either 3 or 6 months of the year. This way I get to chose the work I want to do and therefore it'll be more interesting. I also think it will remind me to be more appreciative of the time I'm not working contract.