I just read that Gen Xers, ages 35 to 48, are starting to feel vulnerable when it comes to retirement. Many of us doubt we will ever save enough to afford the traditional retirement. According to a new study by Allianz Life, 84% of Gen Xers don’t think retiring at 65 is realistic. This study looked at both the Baby Boomer and Gen X. They found that Gen Xers were much less hopeful about their ability to achieve retirement goals and about their overall financial situation than their boomer counterparts. About two thirds of Gen Xers think the amount you need to save for retirement is way out of reach.
However, both Gen Xers and Boomers “just have this feeling that everything’s going to work out.” Isn’t that a bit too optimistic? If you don’t plan for the future, you’ll be forced to adapt to a situation you might not like. The good thing is that Gen Xers still have plenty of time to turn things around. We still have about 20 years to get ready for retirement.
One reason why retirement seems so difficult is because of the projected amount of retirement funds you’d need. We’ll use CNN’s calculator here to illustrate the point. A median Gen X income earner with the median retirement saving will fall short by almost a million dollars by the time he reaches retirement age. The easiest thing to do here is to slide the saving rate to 25% and he’ll be much closer to the projected goal. Increasing your saving rate is much more difficult in real life, though.
Another issue here is that the traditional retirement isn’t the right fit for everyone. Many of us are hitting our midlife crisis and are rethinking our career and life plan. The career we started out with doesn’t look so good anymore. Some of us really can’t endure 20 more years in the same job. Also, the traditional retirement sounds pretty boring. I don’t want to take up leisure full time. I need some challenges to keep life interesting.
Build a life you don’t have to retire from
How about building a life you don’t have to retire from instead of aiming for the traditional retirement? The main idea is to figure out a way to function financially without your day job. Yes, it is possible. I and many other people have done it. I don’t have a day job anymore, but I’m still working part time and I’m enjoying life now instead of waiting for the traditional retirement. The truth is I probably wouldn’t reach retirement if I had stuck with my stressful job situation. How do we build a life you don’t have to retire from?
Build your non-job income
The first step is to build your non-job income. Most people depend solely on their day job to provide a living. This is perfectly fine for a lot of people, but not for those of us who aren’t happy with our job/career. I knew I couldn’t handle 5 more years in my old job, let alone 20 years. The way out is to build other income streams outside of the day job. This isn’t easy and the amount of income will be very small when you first start out. You need to keep working on it and eventually the income streams will percolate into a more substantial sum.
Here are some ways to make money outside of your job.
- Rental property – A lot of people retired early with rental properties. Once you have a few rentals with good income, then you’ll probably be able to leave your job. Being a landlord is not for everyone, but it is one of the best ways to make money outside of work.
- Stock – I love my dividend portfolio. This year it will provide us with over $10,000 of income and it doesn’t require much effort. The stock market can be volatile and you need to find a strategy that works for you.
- Lending money – There are many ways to lend your money. You can invest in CDs, corporate and government bonds, peer to peer lending, or hard lending to investors.
- Sharing – The sharing economy is booming. You can rent a room out, share your car, rent out your parking spot, and sell your old stuff. These are all a great way to make a little money on the side.
- Drive – Join Uber and become a driver.
- Freelancing – Work part time on the side on projects you enjoy.
- Blogging – I don’t recommend blogging. It’s a lot of work and you need to be pretty lucky to make money.
- Start a small business – You can open an online store, house sit, or consult part time. The possibilities are endless; just watch Shark Tank a few times to see all the crazy ideas that generate millions of dollars.
- Hobby income – You can leverage your hobby to make money. One of my friends deejays on the side and makes a little money while having fun. You’re the expert with your hobby and newcomers will gladly pay to learn.
- Sell your opinion – Sign up to be part of focus groups. A good assignment can pay $100 for 90 minutes of sitting around and chatting.
- How do you make money outside of your job?
There are thousands of ways to make money outside of your day job. You just have to try different things and see if you like it better than the day job. If participating in a focus group is more painful than your regular work, then don’t do it.
It’s great to make extra income on the side, but it will take a very long time to surpass the income from our day job. I’ve been working on it for over 5 years and I haven’t been able to surpass my old salary yet. Luckily, we don’t have to surpass the income from our day job. We just need to be able to pay for our monthly expenses and that can be reduced. The key here is to reduce your expenses to a level that you’re comfortable with. Some of us can live on $2,000 per month and some of us can’t.
Since I’m married, I just aimed for 50% of our expenses. We spend about $4,000 per month and my non-job income can cover that. Eventually we’ll be able to cover 100% of our expenses and Mrs. RB40 can quit her job, too. We probably can get there in less than 10 years.
Of course, the less you spend the more money you’ll have to save. I saved all of my take home income for two years before I quit my job. This gave our passive income a big boost and also gave us a lot of confidence that we’d be fine with me being a stay at home dad/blogger.
There you go. That’s way to build a life you don’t have to retire from. You need to be able to pay the bills without your day job. The key is to make money doing something you enjoy and keep your spending reasonable. This is the new retirement and more people are taking up this challenge. We are enjoying life and working on things we want to. The traditional retirement isn’t very enticing to us and we’d rather work a little every day. As we get older, we’ll reduce the hours and work in a more limited capacity. We probably will never stop working completely because we like to keep busy.
Are you taking up the challenge to build a life you don’t have to retire from?