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RETIRE FOR 2 YEARS, BEFORE YOU RETIRE

25/9/2014

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Editor: Crass Cash
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Before you embark on the great unknown of retirement you should try it out first.  What do I mean by this? Well you need to see if you can live off of what you think you can.  Most people have a magic number of what they think they're going to need in order to supply them with enough income to retire one day.  

This is fine, but some people have no clue how much they're going to need to retire.  What's the greatest fear of people who are retired in the USA?  It's not dying or public speaking.  It's running out of money!  The traditional metric is that you need 25 times your annual income in investable assets.  I've even heard 11 times.  I like to see 33 times, especially if you're going to retire young.  Note, this also does not include the equity that you have in your primary residence or any other asset for that matter that does not produce cash.  A million dollars of assets tied up in boats, homes, and raw land does nothing but drain you of cash.  It doesn't give you any.  

Regardless, the only true way that you're going to be able to figure how much you need is to live it.  If you think you need $80,000 to live off of, but you actually "need" $100,000 you're in trouble.  But if you think you need $80,000, but in reality you're perfectly happy doing everything you need off of $50,000 than you're in better shape than you thought.    

In project planning this is called a 'dry run'.  It's like taking a boat out for a day with the previous owner to see how it works.  Now here is the caution that you need to realize.  It's not perfect.  Your expenses when you're retired are going to be different than when you're working.  You'll probably travel more, but you'll also spend less on gas because there's no commute. You'll probably eat in more, but spend more on entertainment.  Try to imagine how you're going to spend your time when you're retired.  This will also help you transition when the time comes due. 
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    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

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