First we need a purposeful plan. Otherwise it's too easy to spend everything on fur coats and cigarettes.
Do you want to work at your current job for the rest of your working life? What would you like to do in retirement? Would you rather start doing that in 5 years or in 50 years? If you do want to work your current job the rest of your life, do you want to donate a substantial amount of money to help children or restore ecosystems? Take time in a quiet place to think about it. It may take hours or months to answer these questions for yourself.
As an example, let's pretend that one Richie is disillusioned at work when the boss continually rejects Richie's investigative articles. The other Richie enjoys their current job but is passionate about child wellbeing and has found a trustworthy way to donate $30,000 per year to improve the lives of sixty-thousand poor children (saving the sixty-two who would have died) by providing deworming tablets.[1][2] They currently have no savings and estimate it will be approximately forever before they can realize their dreams.
Well, I have a surprise for you. It turns out that when it boils right down to it, your time to reach retirement depends on only one factor:
Your savings rate, as a percentage of your take-home pay
The Richies make a plan:
Muckraking Richie: I could imagine doing this for ten more years, but then I want to do investigative reporting full-time.
Budgeting Richie: Then we need to start saving 66% of our income.
Both Richies: That seems too hard.
Muckraking Richie: Well, maybe it's time to start an anonymous blog. I've been toying with the idea anyway. That could keep me content for awhile.
Budgeting Richie: How about we save half our income?
Both Richies: We can do it.
They need to save half of their income starting today which gives them $30,000 to spend each year. That's $10,000 per person per year, or just low enough that their life might not be weighed down by having too much stuff to maintain. They'll also still be spending 3.5 times more than the Lee family, normal, average people globally. Ok, this is possible. Let's get started.
Previous Next
References
2020 ©