All of us have our own idea of retirement. But not everyone is able to achieve that ideal retirement dream. I guess a big reason for this is that retirement is sometimes associated with age and the common mental note is that retirement starts at age 60 or 65 – an age that is too far down the road for many. Well, regardless of what age you want to retire, you will never achieve your retirement dream if you do not start preparing. Here are four things you should do now so you may, not only retire but, retire early.
Work hard. If you follow people who have retired early, you’ll find their secret to a successful retirement is not too difficult to decipher. At a certain point in their lives, they worked hard. They worked really hard.
Actor/comedian Kevin Hart summed it best, “Everybody wants to be famous, but nobody wants to do the work. I live by that. You grind hard so you can play hard. At the end of the day, you put all the work in, and eventually it’ll pay off. It could be in a year, it could be in 30 years. Eventually, your hard work will pay off.”
Often times I think we take our work for granted so we give mediocre effort. We have an idea of what we want to have or how we want to live when we retire, but what we do on a day-to-day basis does not match our dreams and goals. We know what we need to do, we just don’t want to do the hard work. While we can, we have to be thankful for the opportunity we have to work hard, because at a certain time or age, we will not be capable of doing so and usually when that time comes, it will all be too late.
Save. The great Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Saving is actually that first step in planting that tree. The more trees you plant, the more shade you’ll have. By the time you retire, you won’t be twisting and twirling and squeezing yourself in that one tree you planted because you have planted so many. By the time you retire you can freely spread your arms and walk around without worrying about the heat or the rain because the trees you planted will make sure you are well covered.
I have met people who have retired comfortably. And what complements their hard work is them being able to save throughout their working years. In fact, what is more inspiring is that even after retirement they have continued their saving ways. We all tend to make saving an afterthought because we feel there’s no sense to saving, since we don’t know what lies ahead. Well, that’s the point, we don’t know what’s going to happen tomorrow or a few years from now, so we have to prepare and make sure we are ready for the worst.
Take educated risks. Filipinos in general are risk averse. We shy away from risks, yet when asked what they want to do after retirement it is ‘setting up a business’ – probably the riskiest of any investment, that first comes to mind. We have to understand that though it is ok to take risks when we retire, the best time to do so is years before retirement. This way, we still have years to recover in case we lose our investment.
This also doesn’t mean that we just go for any investment that makes us a ton of money. It is also important to do our due diligence when taking risks. We have to know what we are getting into. A lot of times we get too caught up with the returns that we don’t really understand how it works and what are the risks involved. As Buffett once said, “Risk comes from not knowing what you are doing.” So the more we don’t know, the more risks we are taking.
Invest. We can only go as far as our body takes us. Investing gives us that extra horsepower to let our money work for us as we work hard and save. Investing can fast-track our retirement as it can grow what we saved in the long term. You can have different investment strategies that will allow you to attain passive income. You can start by passively investing in pooled funds/stocks or you if you have enough capital you can invest in real estate that you can use for rental income. However way you do it, the key is you start as early as possible because in investing, the most important aspect is time. Once you lose time, you can never get it back.
Jeremy Jessley Tan, RFP® is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 63nd RFP program this July 2017. To inquire, e-mail email@example.com or text <name><e-mail><RFP> at 0917-9689774.