If you answered yes. You are right! And this is great news.
You are 21 years old and you will retire at 54 and you will die at 88.
That is 33 years of living and working and 34 years of living and not working.
You have 67 years left to live, it is more than 3 times the life you have already lived. Make treasure of it. Every single day. Day in day out.
The key starting point is to think about a minimum set of life standards that will let you live well and without worry.
You will have different minimum standards for a comfortable life from your sister or brother or mum or dad or your friends. That’s fine, but make an effort to find yours.
We will help you out on finding yours if you want. Just drop an e-mail on the Contact page.
You need to be able to retire when you are 54 and you have to have an idea of how much you need per month to live comfortably after you blow off your 54th candle.
Imagine that you think $2,000 is enough, and any amount above that is a bonus.
$2,000 per month makes up $24,000 per year.
This means that you need $24,000 cash every year after you reach your 54th year of life until you are 88.
That is $816,000. Yes, just a little bit less than a million dollar. Surprised?
What does it mean? It means that soon after you blow all the candles of your 54th birthday cake, and the party is over and you go check the bank account just before going to sleep, the figure that should be written there should be $816,000. If this will not be the case, do worry.
If you have that amount instead, you can either decide to give your notice at work or you can sell any business that you might be running (if it is profitable) and so on and so forth. You have reached retirement age! Time for another celebration.
The important question is: how do you achieve this?
With the following: Willingness + Discipline + Target.
You have a target already, i.e. $816,000. You’ve got to find Willingness and Discipline.
Actually, you have to find only the willingness because you already possess Discipline. Wondering why? Easy, you have a well written WMS.
Good. So you have a target ($816,000), Discipline (WMS), let’s find the willingness. What about looking at your peers that are broke, or the vast majority of retired people that live in poverty. Do you want to be in that same position? I hope not.
Then you have found the internal drive that you need to reach the age of 54 with what you need: enough money.
OK, you have the 3 ingredients you need. But now what? Easy. Start saving, start cutting expenses and start becoming worry-free.
Do you know that the average American salary is $2,800 per month, or $33,000 per year? Well I am telling you this with a certain degree of confidence.
If you save 15% of your monthly net salary, that will be equivalent to $420 p/month (15% x $2,800), or $14 p/day, or $0.60 p/hour (ok this one is an overkill).
Do you agree that it does not sound a lot? $420 per month.
If you save this amount every month (without investing it) until you reach your desired retirement age of 54, that would have amounted to $166,320 (420 x 12 months x 33 years)!
You might have started laughing because you know that you need $816,000 by the time you retire but you only have $166,320 in savings.
The brightest should have already figured out how to close the gap of $649,680 ($166,320 - $816,000)?
By turning yourself from a “spendor” into an investor! Welcome to the club.
We are almost there.
What do you do with the $420 that you save each month? You invest them!
It is good to assume that over 33 years the amount that you invest every month, will grow on average at 5% per annum. This means that your wealth will grow at a speed of 5% per annum. Which is very fast. You will learn why once you will be introduced to the 8th wonder of the world: Compounding ("Snowball effect 1.0").
Therefore, investing your $420 per month at an average investment rate of 5% per annum it will give you exactly $832,130 which is $16,130 more than what you actually need (i.e. $816,000).
You can do 2 things now: spend the extra $16,130 for a nice holiday, or reinvest them...
I told you it was doable.
Ouch I forgot. Enjoy also your 2 grand a month until you will be gone for a better place!
コメント