How Long To Financial Freedom?

It's got nothing to do with how much
you earn

So you want to be financially free? Of course you do, who doesn’t!

Okay, so the next question you probably asking is how long is that going to take you?

Well that depends on how much you earn, right? The more you earn, the faster you can become rich, and the faster you can tell your boss what you really think of Hawaiian shirt day. Right?

My Early Retirement Plan - 4 Years Down

Counting down to financial freedom. 

2020 is now fully locked and loaded, which means I am now more than 4 years in to my original plan for financial freedom. The financial wrecking ball known as Junior 2.0 will be crashing through our budget any day now, and in preparation for his grand entrance I made some changes to our original plan.

This new plan still sees me targeting financial freedom by 2030, but it is going to be tough going – especially in light of how we have been tracking against our original plan. This post will explore our progress.

My Early Retirement Plan - Version 2.0

Previous plan downgraded to
junk status. 

The imminent arrival of Stealthy Junior version 2.0 means that our original early retirement plan is quite simply not going to cut it anymore.

Junior 2.0 => Early Retirement Plan 2.0.

Back in 2016 when I put together the original early retirement plan we had a target date of 2030. But that was with expenses of the 1 child variety (and a little naivety around what a child actually costs).

The Gateway Drug To Financial Freedom

Financial Freedom - it starts with the
first step. 

Okay kids, we need to talk.
Please, have a seat and listen up...

I have become deeply concerned and really worried, because I have heard there are some people going around telling you that you should try some Spending Less Than You Earn.

Now I’ve been there, and I know how it goes.

Is Property A Quick Cut To Financial Freedom?

A home for your investments?  

Recently I have been seeing some complaints around how the 4% rule is a pretty inefficient approach to financial freedom.

The argument is that you can achieve your required “freedom income” a lot quicker by investing in a couple of rental properties. And I must say, the thinking and reasoning seems pretty solid!

What's Your Financial Freedom Percentage?

A cheesy retirement stock photo. 

Whilst early retirement may not be for everyone, financial freedom is something we are all going to have to achieve.

Unless your retirement plan consists of living off your children, or seeing how many cans of baked beans you can buy with a SASSA grant (the answer is around 150), you are going to need to become financially free by the time you stop working.

Making More Moola

Money - defies the laws of Physics! 

Regular readers (I am calling you Stealthies from now on) probably know this already, but there is pretty much only one way to generate wealth. It really is as simple as spending less than you earn, investing the difference and then allowing compound interest to do all the hard work for you.

And since it is the investing part is which builds your wealth, the amount you are able to invest each month plays a massive role in generating wealth. The more you can invest the better.

My Early Retirement Plan - 3 Years Down

Counting backwards 

3 down and 12 to go! This means that, time-wise, I am 20% of the way to financial freedom. Unfortunately, investment-wise, I am not as far along…

Over the last few years, the markets have been incredibly frustrating. I see it when I do my monthly investment tracking, and I see it in the emails I receive from the blogs readers. (I am also getting a lot of mail from people who are frustrated with their current providers due to poor performance – I must mention that the kak returns of late have more to do with the poor market performance and less to do with the providers. Although if you are with a high fee provider you are probably suffering more…)

My Early Retirement Plan - 2 Years Down

Counting backwards... 

2 down and 13 to go!

Time flies when you're having fun, and I can't believe I am already 2 years into my Early Retirement Plan. That’s a little over 13% done, 13 years to go, and in keeping with the 13's -  I am unfortunately 13% behind were I hoped to be.

I am disappointed, especially considering that 2017 was an above average year for markets. Oh well! Still plenty of runway left to try make it up.

Let's take a quick look at the scorecard.

The Lividend Approach To Financial Freedom

Homer approves! 

Lividends - I made a word! A word which represents what many investors aspire to.

You see, there are a number of ways to get to financial freedom. You could amass a portfolio of rental properties. Or you could create a business that runs itself. But a method which a lot of people dream of, is to build an equity portfolio large enough that you could live off the dividends - otherwise known as Lividends (patent pending)

My Early Retirement Plan - 1 Year Down

Counting backwards - a useful skill

Time to take a quick look at the scorecard.

I am now a little over 1 year down of my Early Retirement Plan so it is a good time to take stock and see how I am progressing. Spoiler alert - I am a little behind where I should be.

Am I worried about this?

Spoiler alert - No :)

My Plan To Retire At 45

Complicated maths can prove
anything!

Since the start of this blog, I have been laying down the groundwork for an early retirement plan. I have discussed a range of boring totally interesting things like Budgets, Inflation Rates and Investment Returns, How To Generate Wealth, and The 4% Rule for Retirement. So all the theory is in place, and now it is time I reveal to you how I plan to make use of all of this to retire early - my goal is to hang up the gloves my keyboard at the end of 2030 aged 45.

10 Steps To Financial Freedom

There are only 10 types of people in this
world - those that understand binary, and
those that don't. 

Even though this is a 10 step plan, Early Retirement and Financial Freedom can be as easy as 1,2,3.

You see steps 1 to 3 are actually by far the most important. But, having said that, they are also the toughest and will definitely take some sacrifice. If you can get past step 3 then you are more than half way there, because by then all the good stealthy habits needed to retire early and become financially free are already ingrained on you, and the rest will just follow naturally...

Calculating My Retirement Cost Of Living

Wow, very mature Stealthy Wealth,
very mature... 

I have stated before that the first step in determining how much you need to retire, is to determine what your retirement cost of living will be. So with this in mind I had a look at our current budget and used it to get an estimate of what our expenses would be during retirement. This would then be the starting point to work out what sort of lumpsum we would need before we could do the Big R.

What is the 4% Rule for Retirement?

The 4% Rule - The coolest rule by

far!

A magic formula for retirement - does it exist? It does, and it is known as the 4% rule!

This ingenious little rule takes out all the complications of retirement planning, and allows you to figure out exactly how much you need to safely retire. It also allows you to determine how much you can withdraw from your retirement savings each year without having to worry about running out of money. And it makes provision for inflation.

Pure awesomeness - Lets investigate some more!

What is Early Retirement Anyways?

As the sun of your working career
sets, retirement looms ever nearer...

Okay, so as you know this blog is about living the Stealthy Way in order to spend less, save more and with the ultimate goal of retiring early - in my case at the age of 45 instead of 65. But the question is, what is retirement, and what is early retirement?

So Wikipedia defines retirement as "...the point where a person stops employment completely." But for me, there is more to it than this.

There Is Only One Way to Generate Wealth

An almost relevant picture on generating

wealth. 

Much like Highlander, there can be only one, and in this case only one way to generate wealth. But this is in fact a good thing. You see, especially when it comes to money, simple is better, and because there is no other way to generate wealth, we can just knuckle down and get cracking. And the sooner you start, the sooner you you can achieve early retirement! So how do you generate wealth?