How to build a Life you don’t have to Retire from

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.

How to build a life you don't have to retire from

Retirement Target

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.

How to build a life you don't have to retire fromBuild 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.

Reduce expenses

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.

Not retiring

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?

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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36 thoughts on “How to build a Life you don’t have to Retire from”

  1. I love this post Joe – you basically summed up everything in a couple hundred words 🙂 My wife and I are currently 25% retire (she went part-time six months ago). When we first got started saving/making more money, we set the goal to retire early. I am now won over to your way of thinking that the key to happiness is creating a life that you don’t want to retire from! We’ve been building up our side income through investing, blogging, and selling stuff. So far, we are in a great place!

    The trick for me is finding stuff I can do and love once I phase over to FI. I know I enjoy blogging, and do make a bit from it, but I’m looking for something more. Maybe teaching… we’ll see! Thanks for such a great and uplifting post!

  2. I like the idea of building a life you don’t need to retire from. I can’t see myself fully retiring anytime soon, although I hope to be financially independent at a young age. I enjoy working and I recently took a pay cut for a dream job. There’s so much to see and do, and the financial freedom is already allowing me to do the type of work that I WANT, and I can see myself exploring that for a long time!

  3. Gotta love CNN. Calculator won’t let you save more than 25% or retire earlier than 50. I save 45-55% and plan to “retire” at 45.

  4. Great advice. Income diversity is often overlooked by people who aren’t enamored with personal finance, but it’s really important for many reasons.

    This post reminds me of the ‘semi-retirement’ concept that I’ve seen floating around in the personal finance blogosphere. There’s truly something to be said for participating in work that isn’t soul-crushing. I think a good way to do this is to build a small/medium nest egg, then transfer to a more enjoyable line of work even if it pays less. As long as you cover your base expenses, you can let the nest egg grow while working part time or in a less lucrative career. Of course, it would depend on being able to support your lifestyle with that type of work, but I think if I hated my career I would be very tempted to go this route.

    • Semi-retirement is the way of the future. Working part time on something you like is much better than not working at all. I think life will be too aimless if you don’t work at all. I’d advise going with a medium/large nest egg just in case.

  5. Hi Joe, my wife and I have followed more or less the model you lay out. We work part time (with the ‘part’ gradually occupying less and less of our lives :)), rent a ‘mother-in-law’ apartment in our home on a short-term basis (one week to two months), have a side gig or two that brings in a little cash, and work at investing our nest egg in relatively safe, income producing assets. I believe traditional retirement is dead, and I tend to think that’s a good thing with respect to both quality and quantity of life. Many people struggle mightily with the old model of working intensely for 40 years and then not working at all. That’s a formidable transition challenge! It’s good for the mind and the body to stay engaged, productive, and contributing to society in some way.

    • The traditional retirement model is on the way out. Most people haven’t saved enough for that so they will have to figure something out. A little work is good for your soul. 🙂

  6. Sometimes it helps to invest in skills that will help you have a career you can love. I went to social work school at 40,worked full time at agencies for a while and then created my own practice.I have spent the last 30 years working 20 hrs a week,making a reasonable,albeit modest income and loving what I did everyday. I am now 70,FI and still doing work I love…only now it’s 10 hours a week. My work keeps me engaged, involved in a community and mentally challenged.Doing good work also is a source of great satisfaction.
    Coaching, message therapy,fitness work all require an initial educational investment but all also allow one to work for oneself.No one gets to decide how long or how many hours you get to work.
    Love your blog.Thanks for doing the writing work

    • Thank for your comment. That’s an amazing life you’ve built. I think younger people are learning about this alternative and many of us are trying to do what you did. I like it much better than the regular 9-5 doldrums.

  7. Surely no one likes working 9-5 at a job they don’t really like, but in most cases these 9-5 jobs are a source of guaranteed income. You know that at the end of the month, you will have money in your account and you can easily pay off your bills and save as well. It takes a lot of courage to give up on this mental satisfaction to go pursue something you love knowing that you will struggle financially. What would you suggest to someone who would like to quit their job, but still has bills including a mortgage to pay off? Should they still take this big step? Or should they wait until at least they have managed their debt a bit better?

    • I would wait until they are more financially secure before quitting the job. Perhaps find a better paying job and try to save more. The key is to build more income from other sources. I wouldn’t have quit my job if I didn’t have other sources of income.
      Keep at it and good luck!

  8. I don’t like retirement calculators that won’t allow you to choose savings above 25%. Why that limit? Lots of us are saving more than that…albeit most people are not.

  9. IT makes sense to live the ideal life, and you make great suggestions on how to get it. Building passive income not only helps someone retire early, it will also help them get the confidence to let go of a traditional career. Hopefully my dividends and future rental income will sustain my expenses until forever.

  10. Even millennials are facing retirement crisis with rising student loan debt, underemployment, and the uncertainty of social security. Like Gen Xers though, there’s this inexplicable optimism that all will work out.

    I’m adopting your approach, building a life I don’t have to retire from.

      • I’m interested in aquaphonics where you grow fish and plant veggies at the same time. You used the water from the fish tank to water the plants and the plants filter the water for the fish. Yes, it’s quite a lot of hard work but once I get it running, it should be easy from then on.

  11. I think most FI’ers are trying to build exactly that. Nobody wants to sit on couch watching Netflix all day (at least not every day). I hope to have more hobbies and goals than I can ever accomplish.

  12. We took the pretty traditional route of saving a ton of money so we could live on 3-4% of it each year.

    But now I’m starting to see the benefit of the different income streams, and might bulk up a few as interests develop and when I have more free time (assuming that happens when the kids get older).

    In the meantime, I’m mostly continuing to live our every day frugal lifestyle.

  13. I think there are a lot of options for retirement out there, but I am really surprised that 84% of Gen Xers think age 65 is unrealistic. I am at the late edge of it, but if I worked to age 65 I would have several million dollars. It is truly, as you said, a function of your savings rate. You don’t have to want to retire early to save, but it sure makes for good motivation.

  14. Joe,

    Interesting concept and agree that we will all look at doing some work when we retired.

    We have a dream of opening a small cafe, where we will sell bakeries we will cook home, it’s not to make money but enjoy the companies of customers.



  15. hey RB40,

    This is a nice way to define what I actually want to achieve:
    ” 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.”

    I will also have to take a good look at the non job income lust you have and pick some to work on.

    But for now, My focus is to pay myself first, focus on investing and enjoying the combo work-life as much as I can. If I can add later on some more life and some less work, that would be awesome!

    Amber Tree

  16. It is far more unrealistic to think you will be able to work forever than to plan to retire. Even if your health holds out, the corporate world often starts looking at people in their fifties as past their prime. If you lose a job like that after 55 it is not likely you will get another one like it. Better to plan for a longer retirement by saving more, living beneath your means and looking for alternate income streams than to plan to work until 70 or beyond.

    • Cathy is right. Living below your means and investing the surplus is the Best way to prepare. Not everyone is cut out to be a landlord, drive an Uber, blog, etc. All valid recommendations but not likely for everyone.

      • That’s when either turnkey property investments or property management comes into play.
        Also the dividend investment portfolio guarantees income.

  17. Joe I am totally onside with building a life you do not have to retire from. I used working for a corp as a stepping stone until I had built up enough assets to become financially independent. At that point I had already worked out my own exit strategy and knew what I wanted to do next which involved work that I really enjoyed, flexible hours and far less stress. The game plan is to work until my health runs out and during that time enjoy as many interesting experiences as possible. The word retirement doesn’t work in this situation and I now explain to people that I’m doing a “Victory Lap” to celebrate my having crossed the financial independence finish line. Has a nice ring to it don’t you think?

    • I like the Victory Lap. That’s a great way to look at it. It’s too bad so many people are stuck in a situation they don’t like.

  18. I will share an example of someone else who is taking up the challenge of building a life he doesn’t have to retire from.

    About nine months ago I was at the 24-hour Blenz Coffee Bar on Denman Street in Vancouver. This guy came up to my table and then pointed at a book I had underneath another book on my table. He recognized it as my “The Joy of Not Working” and asked me if it was a good book. I said, “I think so given that I wrote it.” He was very surprised that I was the author because he had read the book and liked it a lot. I found out that he is an Engineer working in one of the Oilsands projects in Fort McMurray, Alberta. He lives in Vancouver and works two weeks in Fort McMurray and then gets two weeks off.

    About a week ago I was in the same Blenz Coffee Bar in Vancouver and ran into this guy again. This time he told me that he dislikes being an Engineer. His plan is to quit in the next two years. He is only 31 years old but has already saved over $500,000. Get this: He saves 85 percent of his after-tax income. In the next two years he will save another $200,000. Being of Persian descent, he plans to return to Iran where he can purchase 2-bedroom condos for around $100,000 each. He will buy 5 condos outright and have a decent rental income for the rest of his life. What made me feel some satisfaction is that he told me my “The Joy of Not Working” was a big influence in his decision to get out of Engineering as fast as he could and enjoy life a lot more in the long term.

    No doubt when this guy achieves his dream many people will be saying how “lucky” he is. But as Ralph Waldo Emerson stated, “Shallow men believe in luck … strong men believe in cause and effect.”


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