Freedom 55 and Other Lies

Investments and Insurance Planning, Calgary

Turning 30 was the most difficult birthday for me. It's different for everyone, but for me 30 was old. I still didn't know what I wanted to do. I wasn't settled. We didn't have much in the way of assets, savings or investments. I felt lost and a little hopeless. Age 55 still seemed so far away. When we are young it seems so easy to think that we will have it all figured out by the time we are older. Somehow, we think that we will have lots of money by then.

How much money will you need to stop working at age 55 and start doing whatever it is 55 year olds do?

What would a 55 year old need right now to retire? Let's assume a scenario with a married couple with grown kids who own their home. To maintain their lifestyle, let's say they will need about $5000 per month.

They do not yet qualify for any Government pensions, so the $5000 must come from their savings. To generate the $5000 a month to fund their lifestyle they will need to accumulate $1,000,000. They will need to earn a 6% return on their money to make $5000 a month.

2 Questions Arise:

Where the heck can you get a 6% return without exposing the capital ($1,000,000) to too much risk? 

How did they get the $1,000,000 in the first place?

Let me put this into perspective. How do you save $1,000,000?

A 30 year old will need to save $1700 per month for 25 years with an average annual rate of return of 5%.

A 35 year old will need to save $2500 per month. 

A 40 year old will need to save $3800 per month.

You can take more risk to see if you can get a higher rate of return (that's what most people do) but keep in mind that will increase your risk of losing more as well. Alternatively, you can save more each month.

You can also delay freedom longer than age 55. Based on your current situation, at what age will you have your freedom? Just follow this link to McKenzie Calculators and put in your own numbers. We love this calculator.

Your 50's can be your peak earning years, so why would anyone want to quit working so soon? At this stage of my life, I'm settled. I know and understand my strengths and weaknesses and now, I never want to retire. I want to create the lifestyle I want now and live it for as long as I can. I'm no longer focused on retirement or a "future target number".  I'm focused creating a sustainable cash flow to fund my lifestyle right now and for years to come. The whole freedom 55 marketing scheme is utter foolishness. What's important is living everyday with purpose and a plan. 

For Nancy and I, creating that cash flow includes having both passive and active ways to earn income. Every month we earn a little money from several businesses. Writing, rental income, investments and giving advice. We love what we do and will do it for many years to come. For us it's freedom 45.

You also can take control of your life!  Stop letting other people or circumstances dictate how you live.  Our son and his wife are only 24 years old and have 14000 subscribers on their YouTube channel. They are now earning money from google for advertising on their channel. When Nancy and I were 24, we wouldn't imagine doing something like that. Check out their channel (Ayla and Caleb)

There are countless ways to earn extra money doing what you love. It takes creativity. Do some research. Be willing to try something new. Forget about Freedom 55 and focus on Freedom 25, or Freedom 35, or Freedom 45. It's your life and your money, why not enjoy more of both now? 

 

 

Want to get your financial house in order? Then book an introductory meeting in our calendar below and we'll help you get clarity around your goals and values, complete a financial summary on one page and show why a written quality financial and investment plan will provide your highest probability of success in reaching your goals and creating financial security for you and your family. 

Your Trusted Advisors,

Willis & Nancy

587-755-0159

 

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