How Much Do You Need To Retire?

It is amazing how many people share a single vision of the perfect post-career lifestyle: waking up late, playing golf or tennis, enjoying a nice lunch, and spending the afternoon in much the same way.

Guess what? It’s probably not in your future. Why? Well, even if you work long and hard enough to afford it, you will almost certainly be bored by leisure. (I know you don’'t believe me, but I can show you plenty of evidence: testimonials by dozens of businessmen I’'ve known who retired, found themselves bored, and went back to work.)

Maybe you will be the exception. Maybe you can walk away from a lifetime of creative, challenging work and be happy to idle away the rest of your life.

Which brings me to the question of money: the second big reason your retirement will probably be different than you imagine.

Living the Fantasy Lifestyle Is Expensive

Even if you find a relatively cheap place to do it in, playing golf or tennis all day and dining at fine restaurants costs a lot of money. And the mandatory first-class travel? As they say in Little Italy, “Fahgedaboutit.”

That kind of living will cost you approximately a quarter million dollars a year.

What Would It Take to Have That Kind of Money?

Let’s see what kind of retirement nest egg you will need to fund a quarter-million-dollar retirement lifestyle.

Assuming your retirement fund can earn 9% a year (which is about equal to the long-term stock market return), you’'d need $2.8 million.

If you go for a safer yield, let’s say US Treasuries, your retirement fund would have to be about $4.2 million.

And that'’s liquid. I’'m not counting the value of your house, your furniture, your collectibles, etc. Since you can’'t earn income from those “illiquid” investments, you can’'t really count on them for your retirement planning.

To have $2.8 million to $4.2 million liquid, you would probably need to acquire a net worth of about twice that, all other things being equal.

Not too many people are worth between $5 million and $10 million when they retire. Yet many, many fantasize about a retirement lifestyle that requires that kind of net worth.

If Your Current Financial Situation Is Meager, Don’'t Despair

Accumulating wealth is just another goal...like learning to ski or play the piano. It will take you time (1,000 hours to become competent at it and 5,000 hours to master it), but you can definitely do it. And I'’ll be happy to help you along the way.

In the meantime, there are ways to bring the target a little closer. The best way, by far, is to find a retirement paradise that is less expensive than the USA. If you can enjoy living in some other part of the world, you can definitely get that great retirement lifestyle for a lot less money.

The Good News Is This: There Are Places Where Living Well Doesn'’t Cost As Much Money

Top Ten List

Why retiring outside the U.S. is appealing.

#10) The people are friendly, engaging and emotionally reachable, less pretentious.

#9) There are new celebrations and festivals constantly. Every day is an adventure.

#8) There are plenty of volunteer opportunities and your expertise is both needed and valued.

#7) The weather is better than back home.

#6) You can afford a gardener, a maid and a cook. In your "old life" this was out of your financial reach.

#5) You might not need a car. #4) The cost of living is better than at home and quality of life is higher.  #3)  The healthcare is better, easier to access and more affordable.   #2)  You won't have to work through your Golden Years.

#1)  More freedom, more choice, less government regulation, less taxes.

My personal favorite is Panama. My goal is to have a winter residence there. Living abroad is definitely worth looking into and there are many resources to help you in determing what the best situation is for you.$


Get updates on financial and retirement planning delivered to your inbox.

How to Enjoy a Great Retirement

“It is impossible to enjoy idling thoroughly unless one has plenty of work to do.” – Jerome K. Jerome

To understand what I’m about to say, you have to understand this: Happiness in life comes not from idleness but from working. Not working at a job you hate, but working at a task you love.

Happiness comes when you are busy doing something you care about . . . such as teaching, taking care of your children, painting, watering your plants, or writing a helpful memo. When you are doing something you care about, and paying attention to IT (not YOU), happiness surprises you.

The secret to a great retirement is to figure out how to get paid for doing work you would gladly do for free — and to be able to do that work when and where you want to.

Name your dream . . . pick your price. Maybe you want to be a writer. Maybe your secret passion is food. Maybe you’ve always wanted to get back into astronomy or archeology or gardening.

Somewhere in your past is a buried profession — something you’ve long ago given up on. What if you could reprise that dream?

I know a man whose dream was to be a professional pilot. After working 30 years in a wallpaper business, he took my advice and got himself a job flying part-time for a small airline. A few years later, he became a part owner. He’s making more money now doing what he loves than he ever made selling wallpaper. And he only “works” 20 hours a week.

My buddy's dad gave up a promising career in show business to become a teacher. Fifty years later, he went back into the acting business and became a professional actor. He acted in all kinds of commercials and soap operas, had small talking spots in some big movies, and did some big spots in some off-Broadway plays. He did it for 10 years, made some money, and had a great time.

The Internet has opened up a world of possibilities for “retirees.” I met a guy who trades cigarette lighters online. This happens to be something he always wanted to do and planned to do once he stopped working. But by taking advantage of eBay and all the other Internet auction sites, he is already making more than $30,000 a year doing it just on weekends. Trading cigarette lighters!

There are plenty of other examples. You can become an Internet copywriter, an Internet editor, an Internet travel agent, or an Internet teacher, for example. You can make money giving marriage or dating advice on the Internet, or even selling rubber underwear. You can use the Internet to make a living from your interest in wild roses, say, or your up-until-now useless knowledge of 19th-century swords.

Start your retirement planning right now. Ask yourself the three Big Questions:

1. “What work would I really enjoy doing?”

2. “Who would be the best person to do it with?”

3. “Where would I most want to do it?”

You may not be able to find a partner or relocate right away, but you can definitely start working on mastering the skills you’re going to need for your new line of work.

Get updates on financial and retirement planning delivered to your inbox.