We have all heard that ‘life is too short’ and that ‘you only live once’. Everyone knows a story about someone who passed away unexpectedly, a reminder that none of us knows what tomorrow holds. We might go to bed full of life today and not wake up to see tomorrow.
It is no surprise that many people ask: Should I live for today, or for some imagined tomorrow?
Investment companies tell us that we need to invest for retirement (ie tomorrow). They say we must save so that we can retire comfortably one day. So where does one draw the line between living in the moment and preparing for the future?
I have heard many people say things like: “One day when I retire I will start a business/buy a house on the beach/rest/travel the world.” (In my case it is “play chess all over the world in an attempt to become a grandmaster”.
We seem to forget that we could be living our best years, yet we are looking past them to get to retirement. We go through each week with the subconscious knowledge that it's okay to give up 70% of our days at work because “one day, at age 65, I will retire and have all the time in the world and dictate what I do with it”.
But what if tomorrow never comes?
I am certainly not encouraging anyone to be reckless and irresponsible, but I have started asking myself where I should draw the line between being in the present and ensuring that one day when I retire I will enjoy the fruits of my toil.
I don't want to live paycheque to paycheque because I don't want to deny myself the pleasures of today in order to save for retirement. I also don’t want to not be able to retire comfortably or, worse, not be able to retire at all. So, where is the line?
I don't have the answer yet, but I believe that asking the right questions is the best place to start. Another question that I have been pondering is: Will 65 be the right age for me to retire? My retirement date is no longer fixed in my mind as age 65 but, rather, it is that point in time when income from my investments exceeds my expenses.
Rather than aiming for some arbitrary point – an age set by other people in a different time – I have set my target as the point in my life where I have enough saved to live comfortably while drawing down 4% of my retirement savings every year (4% is a comfortably sustainable drawdown rate).
Use 10X's retirement savings calculator to work out if you can retire before 65
I am working towards this goal so that I can free myself from the Monday to Friday corporate grind and focus my time and energy on projects that are close to my heart.
If you, like me, would like to achieve the goal of exiting the corporate world sooner rather than later, take a close look at your budget and fix any leaks, such as unnecessary credit card debt. Ask yourself some hard questions: Are your car instalments worth it; is your rent or bond costing you an arm and a leg?
I am not saying that you should drive a deadbeat car or live uncomfortably, but there is a line between comfort and over-indulgence. Of course, if the fancy car and the big house are what brings you joy, who am I to tell you not to live your best life.
For those who want to join me in revising their retirement date, your retirement fund, tax-free savings account, unit trusts and other investments are all tools in your toolbox as you work to build this dream. Your retirement savings fund and tax-free saving account will be crucial in your later years, perhaps post-45, as these investment vehicles do not attract tax on income earned or capital gains.
However you decide to construct your plan to reach your dream, the time seems ripe for the younger generation to re-think their retirement age. Let’s aim to achieve financial freedom way before 65. There is just too much to live for to wait till then to start living.
Start creating your own retirement plan using 10X's free online calculator
The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. 10X Investments is an authorised FSP (number 28250).
