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A 40 Year Retirement?

Yahoo Finance has an article about Gen-Z expecting to retire at 60 with enough money to live comfortably until 100. The article is skeptical as are the comments. Side note, the comments on personal finance articles are usually worth checking out.

I don't think planning to retire at 60 is unreasonable and planning to live a long time seems pretty prudent. Any individual's circumstance may or may not work out but the assumptions seem ok. They think they'll need $1.2 million and much of the article is devoted to why that is not enough for a 40 year retirement.

    1. Cash flow

    "The holy grail of retirement is to focus on monthly cash flow that can also be inflation-adjusted as time passes,"

    That was the most useful point in the whole article. Social Security is one cashflow. Taking from your savings is another. Are those two enough? If not, something will have to give. I imagine the best way to solve this dilemma would be to figure out how to add different revenue streams to your mix.

    2. Independence, not retirement

    My approach here is to continue being financially independent, setting my own schedule, continuing to make time for the things I enjoy. Right now that means engaging in the stock market, volunteer firefighting, working out and a few other things. The first one, provides our largest cashflow. I plan to continue doing that for a very long time still, maintaining my independence as I do that and whatever else I enjoy regardless of how that evolves.

    I don't plan on ever "retiring" even if at some point that primary cashflow ceases

    3. Have a Plan A

    Social Security (even if it is cut by 23% as threatened) plus income from our Airbnb rental would be more than enough for us to live on leaving our savings for emergencies, larger discretionary purchases and the occasional trip.

    4. Plan B

    Whatever your Plan A is, what will you do if something goes seriously wrong? Start working on that now, don't wait until after something goes wrong. I have a couple of opportunities related to firefighting, the endowment where I currently volunteer doing research is a potential income opportunity as a board member. This is something I continue to work on.

    5. What's your retirement number?

    This is a dollar amount that you pick up at some point from maybe an online calculator or talking to an advisor. That is good context to have but when you start to rely on your savings as a cashflow, the number that someone told you you needed when you were 40 is meaningless. Whatever you end up with is your reality. And the reality is that your savings can pretty reliably kick off 4% annually and be sustainable, maybe 5%. Someone who hasn't taken the time to learn about sustainable withdrawal rates may find that to be shockingly low but that is the reality.

    6. Managing cashflows for as long as possible

    Cultivating a couple of income streams that you can manage for a big chunk of the time you're "retired" creates a huge margin of safety. Where most people are undersaved or are cutting it close, delaying the day that you start to rely on savings allows your savings more time to grow or put differently, it would reduce the burden on your portfolio.

    Tying in with number 7 below, if you stay "young" for your age, you will have more optionality to maintain these cashflows for a longer time.

    7. Save a fortune not going to the doctor or taking meds for chronic maladies

    Obviously being able to have this outcome will be a combination of luck and good habits. Cut carbs and lift weights. A lot of chronic maladies can be reversed by cutting carbs and lifting weights. There is no downside to trying and you could save six figures and save a lot of time not waiting at the doctor's office.

    8. Rental property?

    Buying some sort of income property is a popular suggestion in these sorts of posts. Obviously you have to come up with some money to buy a property but what happens if you can't rent it for a time? Can you afford the mortgage if renting becomes a struggle?

    9. Monetize a volunteer gig?

    If you're primary motivation for volunteer is to one monetize it, I think that will make it harder to succeed. Volunteer with some organization that you love being associated with or love the volunteer work. Worry about monetizing it later, if that is even possible. Play the long game.

    10. Monetize a hobby?

    Not every hobby can be monetized. Not everyone will be good enough at their hobby to monetize it. If you've been doing a hobby for a while then it would be very reasonable to figure out what it would take to monetize that hobby. You may or may not succeed but you'd know the path.

    11. Start a new, part time or seasonal career?

    Learn something completely new to you and different from past work. That could be a source of energy to pursue this new part time or seasonal career for an extended period. The options are here limitless.

    12. Sell stuff on Amazon?

    OK, I don't know what this means exactly but two people from the fire department do it. I do know it is possible for you to store the stuff or have Amazon do it. This is probably worth learning about.

    Depending, this could also be an eBay thing or Etsy.

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