I'm generally an even-keeled guy. I don't get worked up about much. I understand that different people have different perspectives, so I try to be respectful when others disagree with me. Having said that, there are indeed certain things that piss me off. Here are a couple that are centered around the idea of planning your retirement based on how much of your paycheck you should save.

Myth #1: You Need to Have 70% of Your Income

For instance, I get mad-dog lathered up at traditional advice about how much to save for retirement, such as this article at Business Insider (echoed here at The Wall Street Journal):

So how much are you supposed to be saving in order to finance 20 to 30 years post-work? The commonly accepted rule of thumb is that you'll want about 70% of your former annual income — at least — to continue living at or near the style to which you've been accustomed.

In 1988's Cashing In on the American Dream, Paul Terhorst wrote about retiring at age 35. Although his aim was to show readers the path to early retirement, he also sang the praises of temporary retirement -- retiring young with the idea that you might go back to work later in life.

As I mentioned a few days ago in my article on the five types of retirement there's another way to mix work with financial independence. In Work Less, Live More, Bob Clyatt makes the case for semi-retirement.

The Way to Semi-Retirement

In many ways, Work Less, Live More (published in 2005) reads like an updated (and more detailed) Cashing In on the American Dream. Even the author bios sound similar. Here's how Clyatt describes his background:

What do you want out of life?

Maybe that seems like a strange question. What do goals have to do with getting rich slowly? Everything! Having a personal mission is key to running your life like a business. Your goals help you decide how to spend your time and money.

When I think about the difference between people with purpose and people without, I always think of my friend Paul.

One of the fundamental ideas I try to promote here at Get Rich Slowly is your savings ought to be invested for long-term growth. You ought to use the magic of compounding to create a wealth snowball.

Naturally, you want put your money into an investment that offers a reasonable return and acceptable risk. But which investment is best? I believe -- as do most financial experts -- that you're most likely to achieve high returns by investing in the stock market.

But why do so many people favor the stock market? How much does the stock market actually return? Is it really better than investing in real estate? Or Bitcoin? Let's take a look.

Note: During the month of March, I'm migrating old Money Boss material to Get Rich Slowly -- including the articles that describe the "Money Boss method". This is the second of those articles. Part one answered the question, "What is financial independence?"

For the past several years -- since I published the Get Rich Slowly course in 2014 -- I've been trying to teach people to think like a CFO. Here's my fundamental premise: You should manage your personal finances the way a business owner would manage hers.

To illustrate why I think this is so important, let me introduce you to my friend Harlan...

There are a lot of great personal finance books out there -- here are a few of my favorites -- but despite the diversity of titles (and subject matter), they all share a remarkably similar format. These books are money manuals in which the author shares prescriptive advice. They tell the reader how to get from point A to point B.

From time to time, somebody will publish a book like David Chilton's The Wealthy Barber, which provides financial advice in the guise of a story, but these attempts are very, very rare. (It's a bit ironic that one of the oldest, most revered personal finance books -- The Richest Man in Babylon -- is story based, yet few have followed in its footsteps.)

All this is to say: For years, I've believed there's a hole in the market waiting to be filled, a place for a story-based book about money.

When I write about retirement and retirement planning, I frequently mention that I aim for my savings and investments to last another thirty years. So, for instance, when I use retirement calculators to determine how long my nest egg will last, I use 78 as my projected age of death. Several readers have written to ask how I arrived at this number.

For example, Richard wrote:

I’m wondering why you’re only projecting out 30 years. You’re only 48. I’m 54 (and retired) and, in my projections and calculations, I go out 40 years. I probably don’t need to plan out that far, but you never know. My last surviving grandparent died just a couple years ago at age 99.

Continue reading...

More about...Retirement, Planning

Nearly everyone I know wants to become financially independent, to retire early. But most folks have no idea how to do so. The method I describe in this article is simple to understand, although it might be tough to implement. I call it the "Money Boss method".

With the Money Boss method, you manage your personal accounts as if you were managing a business. Doing so allows you to maximize profit and pursue Financial Independence – or any other any other money goal you choose.

For more on this concept, check out the Get Rich Slowly course, which teaches you how to become the CFO of your own life. Continue reading...

More about...Planning

It's time for another episode of Get Rich Slowly Theater, boys and girls! This week, we're going to enjoy a thirty-minute YouTube video exploring how the economy works. Think of it as Economics 101, but instead of a semester spent sitting in a classroom, you get all of the info in the time it would take you to watch an episode of Big Bang Theory.

Here's the video:

https://www.youtube.com/watch?v=PHe0bXAIuk0

As you probably already know, I'm a nerd. I'm such a nerd that during my spare time I like to read books about money. But more and more, regular personal finance manuals aren't enough. I crave something nerdier! And so, I've begun to research the history of retirement. Right now, I have four or five books on my office desk that are all about the origins and evolution of retirement.

Turns out, retirement wasn't always considered desirable (at least not for employees). In the olden days -- back in the late 1800s -- "mandatory retirement" caused a great deal of resentment among older workers and there was a popular backlash against it. People wanted to keep working, but as big corporations rose to prominence and power, they pushed for a younger workforce.

I haven't really read enough about the history of retirement to write intelligently on the subject, but I wanted to share a quick observation on the nature of retirement in 2018.