How to retire by 40's: proven tips from someone who has
Updated: Oct 19
I recently "retired" after going through a stage of severe burnout in my corporate job and got laid off because of COVID-19.
When I was younger, I thought I'd work as hard as possible and save as much as I could. I was focusing on accumulating things that I felt a sensible adult should have. Now that I had more than I needed, I realized that it's not worth it - at least to me.
I've learned is that while money is nice, beyond a certain point, you can have more than enough, and it's easy to be happy without being "rich," at least if you can manage your mindset about it.
To the mechanics of managing money: When I finally realized the "stuff" wasn't going to make me any happier (what I prized was the freedom having a financial cushion provides),
Here are five tips how you can retire young
1. Work hard and safe for a downpayment to buy a home.
The benefits of homeownership are huge—especially when you're younger. A home is a long-term investment, and if you stay long enough, it can mean building serious wealth over time. Sell the house at a profit later on, turn it into an income-earning rental property when you're ready to move up, or enjoy fully paid-off housing during your retirement years (though those may be far down the line!)
I worked multiple jobs and been saving every month since I was in my 20's put aside my money in a good investment that grows. I did not touch the cash no matter whats happened. after 16 years saved, I can have enough down payment for my current home.
2. Multiply your savings rate.
Most of bank saving account. They give you 1 % interest. You can save your money in a better understanding and investment.
At some point, you have no more time left that can be used to make more money. You're working a regular job and have at least one additional income stream.
We have to find ways to make money that don't require our time.
That's called passive income, and one of the best forms of passive income is investing. When you invest your money, it makes money for you.
You don't need a lot of money to start investing, but you will never have a lot of money if you fail to invest.
There are many ways to invest and build your nest egg, opening retirement accounts like a Roth IRA or 401k, investing in the stock market, mutual funds, index funds, rental properties – the list goes on. I will post a video regarding Rule 72 that will open your knowledge about how your money will multiply.
3. Prioritize you futures over "living the good life" now
I set on a path to simplifying my life and downsize.
I was lucky that I could "retire." I brought home and convert the garage to the Studio that I am currently living in. My main house I rented out and can cover the mortgage, tax, and insurance. I had a good cushion of cash in the bank.
I started selling off my furnishings. I downsized to live in Studio. I failed in getting as "small" as I wanted to, but I have much smaller than I was- it's incredible how much you can accumulate over time.
4. Live Frugally
I drive Hybrid car, cooking my meal often, not spending money on buying new clothes, wearing clothes that I already have, shopping sensibly, and trying not to get caught up in the status and signaling of economic behavior.
Prioritizing your future means you're spending money in moderation and taking full advantage of the accumulation phase of your life. While you're making the most money, save the most money. I can guarantee you that your future self will thank you for it.
5. Buy IUL -Universal Life Insurance for peace of mind.
I glad I brought Life insurance when I was in my 30's because it was way cheaper when you get life insurance when you are younger and healthier. I got an IUL type of life insurance (Index Universal Life Insurance). IUL is different from term insurance. I can take it out as a living benefit because I get hurt or critically ill. I add more each month to this account as the future income – potentially tax-free retirement income. IUL also offers the advantage of a tax-efficient death benefit for loved ones.
In covid time, I feel I do my part to take care of myself and the people around me by taking good care of my finance and future finance.
With hindsight, my experience in the corporate world that I gave so much of my life and effort to exchange my time with money even thats mean I don't get excite anymore about my job. It doesn't feel like time very well spent, beyond the lessons and skills it taught me and the experience it'd afforded me now. I decided to pursue my passion, which is to motivate people and inspire people. Teach and help people how to be money and finance literacy.
The meaning of retirement
The meaning of retirement lies like a compulsion.
When you're working, it's usually under some form of compulsion: meeting deadlines, working with people you don't like or respect, pursuing ludicrous goals, workplace politics, and all the rest of it. And most people have to put up with this because they need to make a living. This Compulsion "HAVE TO" mindset, of course, can cause immense stress.
When you retire, this compulsion from the outside shifts more to compulsion from the inside. For example, I have plenty of projects I want to do, and getting them done is now up to me. In terms of pursuing various interests, I choose to do so on, mostly up to me. There still is a responsibility of sorts at work but in a more liberating fashion.
Retirement also provides a gift of time and freedom not to be squandered. There is an element of living freely, positively impacting others, that could not be done, at least for me, as effectively as when I was working for someone else.
Now I am a self-employed writer, motivational speaker, and financial coach, so as long as my modest income as a financial coach and motivation speakers could carry me through in the interim, I felt I'd be OK when I get older. The free time allowed me to focus on my passion for writing, motivated people, and travel whenever I like.
Retirement means to allow me to do what excites me, do the work that gives me purpose. I love to inspire people, teach and help people how to be money and finance literacy.