Maintaining Your Lifestyle In Retirement? Most Can’t.
Growing up, every parent wanted their kid to be a doctor, lawyer, or CEO. And based on recent salary data from the Bureau of Labor Statistics, you can’t blame a parent for wanting their kid to have a high-paying job.
According to the BLS, the following are the highest paying occupations in the U.S. based on average salary:
- Oral and Maxillofacial Surgeons.
- Physicians (Other).
- Internal Medicine Physicians.
- Family Medicine Physicians.
- Chief Executives.
Physicians, lawyers, and executives consistently dominate the top 10 lists in income, but why are they nowhere to be found in any top 10 lists rating job satisfaction?
That’s because a high level of stress goes along with these types of “traditional” and popular jobs/careers. According to the American Psychological Association, worker burnout among these traditional professions is at an all-time high.
Burnout is especially acute among physicians, where the suicide rate is the highest in any profession. For example, did you know that based on a recent survey of physicians, over 60 percent indicated that they would retire today if they had the means? So, why don’t these physicians – or many professionals – have the means to retire? I’ll get to that in a second.
It strikes me that these top-earning professionals want to retire but can’t. Despite their high incomes, they don’t have the means to walk away from their jobs. I’m sure many could walk away from their jobs if they wanted, but the problem is they wouldn’t be able to maintain their high-flying lifestyles. They’d have to downsize their houses, cars, and living expenses – no more fancy vacations and no more country club memberships.
Financial independence is being able to retire but maintaining your lifestyle without working.
Where did these physicians and other professionals go wrong? So why don’t most professionals have the means to walk away from their jobs and maintain their lifestyles?
The answer is because of their attitudes towards money. The few who can walk away from their jobs early, on their terms, and still maintain their lifestyles have different attitudes towards money. Instead of being slaves to their money, they turned the tables to make their money work for them.
When you’re punching the clock, you’re trading time for money. The more time you take off from work, the less money you make, and when you can no longer work, the money stops altogether. Until you can break yourself free from the time clock, you will always serve it.
The problem is that many professionals make financial choices impossible to break free of the clock. They spend their money on things like cars, toys, and vacations that only drain their pocketbooks. They drain their money further by paying principal and interest on mortgages and consumer debt they don’t need. It’s a money pit they must feed continually, or their lifestyles will suffer. If they stop working, all the luxuries that they’ve accumulated will go away.
The smart ones – the professionals who successfully break the cycle – approach money differently. They leverage money and put it to work for them. Warren Buffett once famously said, “If you don’t find a way to make money while you sleep, you will work until you die.” And that’s the key – making money while you sleep.
Passive income is the key to financial freedom.
One job title I could live with is Ambassador of Freedom, a person who can do what they want, where they want, when they want, how they want, and with whomever they want. That’s my kind of freedom, but that kind of freedom can only be achieved by taking a different approach to investing. While most investors focus on appreciation, the smart ones focus on passive income.
The average investor pursues returns on their investment (ROI) entirely based on appreciation. They buy stocks low and hope to sell high. Investors who plan their retirements around mutual fund and ETF fund-heavy 401(k)s and IRAs are also banking on the appreciation of their assets to fund their retirements. The problem is that most investors lose money on the markets when considering inflation. In addition, stocks are too volatile to offer stable retirement planning.
Stock-centered retirement planning isn’t planning for financial independence; it’s speculating that you’ll have enough to get by when you retire. For example, everyone with 401(k)s hoping to retire at the beginning of this year now has, on average, 12% less in their accounts because of the drop in the markets from inflation fears and war, and high gas prices. Those investors now have 1/8th of the amount they had hoped to retire with.
Smart professionals don’t speculate. They parlay their raises and bonuses into income-producing assets, not bigger houses and faster cars.
They pursue real estate and income-producing businesses that they can invest in passively through private company investments to leverage the time and expertise of others to generate passive income in their sleep. They then take the income from those investments and reinvest them into other income-producing assets until, one day, they’ll have enough passive income streams to eclipse the income from their job – allowing them to walk away if they want and still maintain their lifestyles. That’s how it’s done.
On top of the cash flow, assets like real estate and income-producing businesses also appreciate over time. When adding in significant tax benefits through private investments that stocks don’t offer, these assets provide a triple-threat of wealth-building benefits that offer professionals the best chance to break away from their jobs.
What’s stopping you from walking away from your job today if you want to?
If you can’t, then maybe it’s time to adjust your approach and attitude towards money and put your money to work for you instead of the other way around.