Retiring a millionaire isn’t quite what it used to be

May 08, 2017 Retiring a millionaire isn’t quite what it used to be

Growing up, a million dollars seemed like a stupendous amount of money.

Back in the ’80s and ’90s, the thought of winning Lotto conjured up thoughts of like ‘buying a Porsche and never having to work again’.

Fast forward to my late-thirties and, all of a sudden, retiring a millionaire isn’t quite what it used to be.

Worse still, by the time I hit retirement age in 20-odd years – hopefully sooner – that once princely sum may well be pocket change.

While the monetary benchmark for retirement age is shifting, there are a few pointers and cardinal rules often spouted by billionaires such as Warren Buffet worth taking on board for retiring a millionaire (or more!):

1. Start young 

I know, right.

Who wouldn’t give their right arm to be able to go back in time and have a good, hard word to our twenty-year-old selves?

The consensus is to start saving and investing as early on as you possibly can. That said, if you’re in your forties, it’s not too late.

Regardless of how old you are, the key is to commit to a systematic savings and investment plan – and stick to it. In other words, it’s about being patient and thinking long-term.

It’s all about the power of compound growth and making solid long-term decisions.

2. Stick within your means

This boils down to one simple word: frugality.

Easier said than done, I know.

Interestingly, it’s the one thing that the majority of wealthy people appear to have in common, going by a swathe of studies into how people become wealthy.

More interesting still is that a lot of millionaires live on around 10 percent of their income, with all of their assets – house, cars, etc – not amounting to more than 10 percent of their wealth.

Okay, so maybe I don’t need that Porsche.

3. Financial freedom’s more important than status

Want to hear something crazy?

Going by the stats, just under 50 percent of people with luxury cars are leasing them.

If you’re leasing – unless you’re writing it off through your own business – it means you can’t afford it, in my mind. Remember #2, it’s about living within your means, not keeping up with the Joneses and keeping up appearances.

Maybe you don’t need to buy that brand-spanking-new BMW; maybe that secondhand 2012 model with low kilometres will serve you just as well.

4. Devote time to building wealth

Most millionaires, it seems, spend significantly more time studying and planning their investment decisions, then, importantly, applying these learnings.

Put simply, invest a bit of time learning and studying how to save or make more money. Thanks to the wonderful wide world of the Internet, there’s oodles of reliable info at your fingertips on the subject – but be sure to do your due diligence.

5. Build multiple income streams

Get this – the average millionaire has seven sources of income.

For us mere mortals, living off only one income or salary puts us at risk.

A salary on its own won’t make you rich.

Building an investment property portfolio’s a great start, as is building up a share portfolio. Beyond that, maybe it’s time to work towards that entrepreneurial business idea outside of your day job and building up another income stream on the side.

Either way, drawing income from other sources, beyond your earned income, is king when it comes to building wealth.


6. You can’t save to become rich

Let’s say you’re 35, and you saved $10K each year over the next 30 years – in a savings account at about 3.0 percent.

By the time you hit the ripe old age of 65, you’d have around $500K.

Now, consider this. Let’s say you invested that $10K each year into shares or property (assuming, say, 7.0 percent growth), you’d literally double your money with $1m in the bank.

7. Smart decisions make a big difference

Don’t forget super.

Structured right, it’s a fantastic vehicle for long-term investment.

Why? Well, contributions are taxed at 15 percent up to a cap and, importantly, it could have no additional impact on your cashflow.

Using the $10K-per-year scenario above, and assuming an average income, you could invest just under $12K a year into super (given the aforementioned tax benefits). That same amount of money, put into super, would equate to more than $1.25m over the next 30 years’ time.

Okay, all easier said than done, right?

That said, there’s good reason the likes of Buffet are where they are.

As always, if there’s anything I’ve touched on that’s got you thinking and you need a soundboard in working your way towards your first million – like the rest of us – feel free to give me a shout our book in a free 15min chat below.

Disclaimer: all information contained within this article is of a general nature and does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us 🙂) when making a financial decision.

Jason Chew

I've been in the financial services industry for 10+ years and love coaching people to make the most of what they have.


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