Retirement Approaches for 2024 and Beyond

The old way is so boring.

Put in 40 years. Collect your company match. Retire at 67. Collect Social Security. Live 20 years, maybe more, until you pass.

Retirement is changing. People are changing. The American dream is changing.

Your retirement plan doesn't have to be cornered into "when I have enough in your 401(k) plan I can quit."

You can start taking control today.

But you need the right approach.

You want to retire TO something, not FROM something.

So the question becomes: what life am I heading toward?

I've worked with many clients on a quest to retire early. But "retiring early" means different things to different people. Here are 6 different mindsets I've explored:

Work Optional

What if you love your job? If you get paid to do something you love, what’s the sense in leaving?

“Work optional” refers to getting yourself in the financial position where you have the option to leave your job, but you don’t have to leave.

This mindset gives you a win-win scenario: if you love your job, you get to stay and get paid, all while having the power to leave if you feel like it.

If, however, something changes—the job isn’t as fulfilling as it used to be, your health changes, someone in your family needs you, etc.—you’re already in the financial position to leave. You simply exercise your “option” to leave your job and start the next chapter.

There's seemingly no downside to approaching retirement this way because you enjoy the outcome regardless of how the future plays out.

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FIRE (Financial Independence Retire Early)

The FIRE mindset is designed for people who want to take control of their time as fast as possible. People adopting this approach are trying to live as frugally as they can to save up to their early retirement number: 25 times their annual expenses.

I’ve heard stories of people driving $1,500 cars, living on ramen noodles, selling most of their clothes, and some even postponing their PTO to reach their number. Generally, it’s about sacrificing in the short-term to get a much more pleasant long-term reward.

Why 25 times, you ask? Well, it’s based on a theoretical “safe” withdrawal rate of 4% each year. In a perfect world, you average 7% investment returns every year, and inflation averages 3% or less. That means, ideally, you’re taking out the difference of 4% without draining your account.

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Example:

Annual living expenses of $100,000 x 25 = $2,500,000.

Once you get to $2,500,000, you’re set. According to this model, you could theoretically withdraw $100,000 for life and have $2,500,000 when you die.

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There are some shortfalls of this approach. First, the 4% withdrawal rate doesn’t account for sequence of returns risk, which is when you hit get bad investment returns in the first few years you retire. If this happens, you’re at risk of running out of money faster.

Additionally, it doesn’t account for large expenditures outside your current lifestyle, nor does it factor late life-stage expenses like healthcare and long-term care.

Caveats aside, you may find this approach simpler and easier to track. If you’re looking for a great way to start your early retirement journey, this mindset might help you.

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Barista FIRE

I personally love this idea for some of my clients, especially if one of your questions is “what should I do about health insurance if I retire well before Medicare age?”

With Barista FIRE, you are trying to reach financial independence as fast as possible. All of the same elements of a financial plan are true—save what you need, manage investment risks, withdraw the right amount of income, etc.

However, this mindset would propose that you work a lower-stress job like…you guessed it…a barista.

This doesn’t corner you into serving hot beverages if that isn’t your cup of tea (see what I did there?). You can also stock shelves, become a retail sales rep, and other different roles.

What’s unique: you can work for an employer who is willing to give you part-time hours and medical insurance.

You aren’t really working for the income. You’re working because:

1. The group medical plan is better than your other options
2. You may psychologically benefit from structure and routine at a part-time job

Picture yourself helping someone start their day with a cup of joe knowing that your financial future is already secure!

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Encore Careers

Did you get 10 years into a career and think, “man, what if I had gone that other direction when I was trying to choose my path in life?”

With an encore career, you are not actually retired physically, though you may be mentally and emotionally in a retired place.

What I mean by that: you reached your financial goals to retire from your current job. You’ve always wondered, “what if I could be an engineer, or a teacher, or a nurse, or a non-profit leader?”

Maybe it’s that you want to make a difference in a different way, or maybe it’s that you just want to challenge yourself with something new.

Since you’re financially independent and not worried about the salary, and encore career let’s you experiment with a new purpose without worrying about the money stuff.

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Sabbaticals

Perhaps you don’t need to retire as soon as possible—you just need a break. But not like a 2-week tropical vacation…like a 6-month to a year hiatus from working.

You may consider planning for time to rest, recharge, and refocus.

Just like any other financial goals, sabbaticals are something that financially you can plan.

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Giving Back

Can I share my personal vision?

I’m a Christian and want to help mobilize the gospel of Jesus.

Part of my vision for building my business is to serve the right amount of families with the right amount of revenue.

I want to keep serving others with their financial plans because I feel that’s a calling and a skill that I’ve been uniquely given, and I don’t want to waste it.

However, I want to use the time freedom of being self-employed to start sharing my faith and building churches overseas—specifically in Japan.

What does this have to do with money?

Well, I want to use the funds to not just get myself overseas, but also others who want to join me. I want to support missionaries financially who have been giving a calling and just need money and resources to fulfill it.

And locally, I want to start contributing to reform in my city and help organizations who want to be part of the solution rather than running from the problem.

That’s why my financial independence plan is to keep running my business and use the revenue to help others.

I share this because you may also have a similar desire, you just don’t know how to put the plan into action—and that’s why I became a financial planner.

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Your Next Steps

You don’t have to retire at 65, turn on Social Security, then live your next 30 years wondering about the purpose of it all.

If you want something to drive you long-term, try adopting one of these financial independence mindsets to keep you going.

If you don’t know the first step to take to get on track, then get your free copy of 9 Common Mistakes When Retiring Early, where I dive into early retirement concepts deep enough to educate you, but not so deep you want to give up.

If we don’t know each other yet, then get to know the real me.

Or send me a message.

I would love to help you customize your journey to early retirement, whatever that means for you.