One Million Dollars Only

Retire at 40 – How to achieve retirement at 40 comfortably?

Retiring at the age of 40 could be a real difficult and near-impossibility for most average income earners and they believe such a retirement age are for the super-rich and those who earn more than the average income on monthly basis. Most investment bankers and financial advisors will often advise you to cut around 25% of your gross monthly income and invest it in a kind of balanced index fund and leave it for some specific years. This however may be impossible for extremely low income earners.

If you can refrain yourself from extra spending and invest around 15-25% or more of your monthly income at your early working days, you will definitely have enough to invest or use in starting your own business even before you reach the age of 40. Investing your money in some solid IRA or some share building investments, which allows you to automatically invest money into stocks or funds for just $4 or more.

Another great simple and automatic way of investing is by opening a Vanguard account which allows you to buy a huge variety of index funds like the popular S&P 500. These are viable investments that can make you leave your regular day job even before your each 40.

You need to note that the present annuity factor at age 40 is 17.3163 for an annuity paid for a lifetime only. This means that you will need to contribute around $17,000 on yearly basis if your salary is around a $100,000 a year. This is quite impossible for low income earners who hardly have anything left after paying their bills. It is therefore imperative to have a solid saving culture to achieve the aim of early retirement.

One of the best steps you can take is to ascertain your current monthly income before tax and then calculate how much you have saved and how much you will save from other sources of income. Subtract your liabities from your income and assets and then you will be able to figure out how long your financial resources will be able to last you. It is ideal to have more than one source of income for you to retire at such an early age of 40.

It looks as if saving and investment options are the main ways of retiring early but one wonders how much one will; need to save or invest to retire at the age of 40. If you can save some money and start your personal business before the age of 40, you might want to take a risk by quitting your regular job and building your business to huge success that you can manage after retirement.

When you are able to set up a part-time business before you retire then your mind can be rest assured that you can manage your business on your own and the success depends largely on your dedication. You may even retire long before your 40^th birthday when you start your own business.

Retirement Planning. How to Plan and Create an Income during Retirement?

Retirement Planning is one of my pet peeves and even though I have not been posting for quite a while does not mean I am off the subject J. Over the last few months, I have been re-organising my finances and taking on new challenges of managing a new organisation that have taken up most of my time.

I know most of us do not think about retirement planning most of the time and that planning for retirement can sometimes be one of our last priorities when we are faced with loads of work and family issues; myself included. However we should engage some of our time for this activity and anyway planning for retirement should not be a worrisome activity and it can actually be fun thinking about what we want to do after years of working. Retirement with at least one million dollars would certainly be fun.

In this post, I want to address the issue of planning for your income during retirement. For many of us, our plan is to save sufficiently so that we can draw from the nest egg, with whatever we can also withdraw from our corporate pension plans or Social Security, to last us for 20 to 30 years. For others, their plan is to be able to create an additional income source that could either be passive such as rental income or investment returns, or from a home business or even online business such as Ebay or general internet marketing.

My thinking about planning for retirement income is bias towards an income from small businesses and property investment. Small business, especially businesses which provides basic necessities to the people staying in your neighbourhood, are more resilient against market movements but the returns may not be spectacular.

Cafes serving students in the local university or college, local unpretentious hair saloons serving the local community, grocers and even a magazine shop can provide a nice little income while keeping ourselves active. Taking the idea further, this would mean an investment into several of such businesses with or without a few active partners. Even in businesses, I believe in diversification and investing in a variety of businesses, providing essential services, will be a strong component in our retirement plan.

Go look at what the local shops are doing. Talk to the ladies running the hair shop and understand their operations, talk to the manager running the college café and you will see that creating a few little businesses is not a daunting tasks. The income you derive from such small businesses, after paying all your staff, may not buy you that Ferrari but it will be more than enough to pay for that holiday in France and a great bottle of pinot noir in Burgundy. Go try the Boeuf Bourguignon in Beaune and you will love your retirement. We want to enjoy our retirement so go plan for how you will create that retirement income.