Retire Early or Work Until I’m Asked To Retire
Many people who are over 50 are usually looking at this question in one form or another. If they leave early, will they have enough to live on for the next 30 years. If not, how long can I work until I have to retire. The choices could seem endless. However there is one factor that you can rely on to be an accurate indicator to answer this.
Wealth Ratio
What the heck is that? The wealth ratio is a simple division problem. Yes, we’re sure you are saying, “Don’t make me have to do math!”. This is a real simple calculation. You take the automatic income streams you have that are not generated by your working and divide them by your expenses as shown below:
Wealth Ratio = Auto Income/Expenses
What Automatic Income?
This is something that most people don’t think about when it comes to retiring. They just think about having a large sum of money in the bank and their problems will just seem to go away. We wish it could be that easy, but the fact is that without a steady stream of income that comes in automatically even if you are sleeping is what you need to focus on in this lesson.
Where Do I Find This Income?
If you started to put money aside when you were younger, you could be well on your way. Assuming you could get a 12% return on investment, you could be generating $10/month for every $1000 you have saved. If you have $100,000 saved, you have an automatic income of $1000/month. Can’t live on that? Hmm…what can you do to make it possible to live if you only have $100,000 or even less saved?
What are your thoughts on this?
Post your comments and share how you would get by.
Tomorrow, we will continue to look at this scenario and show how working with the Wealth Ratio will help you be able to retire early so you won’t have to work the rest of your life.
Until next time…