Retiring At Age 25
My birthday is coming up, it’s actually next Friday on May 23rd and I’ll be turning 20. My long-term goal was to have enough money in the bank to retire by the time I was 25. I’m obviously not going to to retire then because I enjoy what I do, but that’s when I want to have the ultimate safety net.
So to turn this into a post: how do I plan on banking enough money to retire at 25? And first off, how much money are we talking about here?
My number that I want in the bank is a mere $5 million. Taking some very rough estimates, the bare minimum in which I can survive off of is around $40,000/year. It’s most likely higher than that now since I like to live comfortably, but I could easily live off of $40,000/year. If I had $5 million, I’d put 1 away into a savings bank or something like that as my living fund. Assuming the bare minimum, I could live for 25 years off of that money. So where does the other $4 million go? Most of it probably into long-term investments. Things like mutual funds and CD accounts, and then other things like real estate and other business ventures. Hopefully in 10-20 years I could turn that $4 million into $8-10 million (again just guessing here and thinking out loud), and then I could live very comfortably for the rest of my life.
Now how will I get there?
- Keep doin’ what I’m doin’. Affiliate marketing simply makes too much money to put on the back burner right now, even if I do spend a lot of time on it. People make $30/hour at their full time jobs 40 hours a week. Affiliate marketers make $300/hour; the average Joe would have to work 400 hours a week to make that much money. Given only 168 hours in a week, it’s completely impossible for them to make half that much even if they spend all day and night at their job with no sleep :).
- Take some time to expand into other areas and businesses. Like I said, affiliate marketing will continue to be the bulk of my income until it slows down (which I don’t know when it will). But it’s never bad to spread my eggs around, even if it’s only an extra $1,000/week. Money is money, and I can take that money from other projects to pay for living expenses, while banking and/or investing 100% of my affiliate profits.
- Help more people. Karma is real, and the more I help people, the more I end up getting in return. I’ll continue to run this blog, as well as go into some other projects that’ll help you guys make money.
- Relax. I can’t think of making $5 million as a struggle, or else I’ll overload myself with too many projects and get overwhelmed and non-productive. I need to keep things in perspective, take one project at a time, manage multiple projects effectively and relaxed, and take vacations when I need one.
- Engage in offline businesses that I enjoy. There’s nothing wrong with having as many safety nets as possible, and it would actually be fun to do something that I enjoy. In my recent interview at Can’t Get Rich I talked about how I’m becoming a certified personal trainer, and how I want to eventually maybe start up a gym. I also love golfing, so who knows I may take some money and invest it into a golf course. I have no idea what’s going to happen, but I want to end up doing more things that I enjoy.
Alright just some usual uber thinking out loud, maybe you’ll take something from the post.
Funny you post this. Justine Henin the number 1 ranked(I think) women tennis player in the world just retired today at the age of 25.
Glad that you are keeping this blog up after you retire.
Hey Paul.
Welcome to the club buddy! I actually retired at 23 (compounded money like ridiculous with internet stocks during the dot com bubble).
Back then, I always thought that “yes” now I can retire and not have to worry about working again. Of course, now, with a few more years on me, I look back at what i’ve been doing the last few years, and it seems like once you have a bit of money, making more money is not as difficult.
“They” teach you that compounding money is the way to become wealthy, but TRUE wealth is created when you cycle your money as well. What I mean by that is taking money from high risk/high reward, putting a bulk into something a little more conservative, building that up, and once again, moving it somewhere else.
The first thought that comes to mind is that really is diversifying your assets. which is correct, but what is really behind the thought process is a somewhat reverse funneling system where you take high risk/high reward cash and slowly funnel it into low risk conservative money (thats where you put most of your nest egg).
Email me if you wanna chat.
Kunal
Ever heard about interest rates? with 5mil in your savings you would get 150,000 – 200,000 per year just from interests… (you talked about burning the money, why would you?)
If you have that much money, I suggest trying your hand at commercial real estate. Even though the economists keep talking about recession, I have seen only growth here in San Antonio. Find a broker you trust and learn a little bit about real estate cycles. I know many millionaires who do nothing but play golf and go to meetings to collect checks once a month. Hopefully, someday you will get there too.
Avid golfer here, work at a course that has turned public to private. I know you just were thinking out loud but if you ever invest cash into golf you really need to think very long and hard about the course you’re investing in. Tough business to really make it.
S.it. My plan is same as yours, just that i’m 3 yrs ahead. so we’ll see if I’ll make it by the age of 25-26.
If i’ll end up working on the web sites and create them and work as hell and not be more creative like hire people to do work for me… Not sure if I’ll complete my mission :-P.
So I need to do something diff. Launch some new biz. and find some new angle.
Nice post. Congrats on being so successful at such a young age. I will be very interested to see what other businesses you go into in the future.
Good luck – $5 million is a great start – but you will not be able to live off $40k a year for the rest of your life, so that is unrealistic as far as an earnings base. Unless you plan on being single, never having kids, no vacations, no private schools, a used car every couple of years, no vacations.
I am not the most frugal person I know, nor the biggest spendthrift, but $250k a year would be tightening the belt – yeah I live well, but it is not LIfestyles of the Rich and Famous. Instead of setting an arbitrary age and goal, just do what you enjoy and put away money for the future. The worst thing you could do is get complacent and then try to get back in the game. Bank while you can, just like every other low barrier to entry segment, affiliate marketing will become less lucrative and much harder over time.
Haha – 40K/year? No way in hell you would ever want to live off that but I hear where you’re coming from. When I graduated from college I thought I could live off like 20K/year easily (of course that was early 90s) – you’ll spend a helluva lot more as you get older. There is no way you’ll enjoy life on 40K. These days, even if you have just one kid, a house, investments, sports, vacations, etc., you would want a salary of 175-300K for the family.
Now before everyone blows up at those numbers, we’re not talking about average folk. We’re talking upper middle class wealth. In most big cities, you have dual income families *in professional jobs* pulling in 200-300K year.
If I were you at your age, given the numbers you posted, I’d set a yearly target of 300K/yr in 2008 dollars (which don’t go far either so learn your investments!).
Good luck.
Get some municipal bonds returning around 4% a year tax-free. 40,000 a year with no depreciation in the underlying capital ain’t bad.
If you have no debts (mortgage paid off) $40k / year is enough in WNY. Assuming that increases at 3% / year for inflation, and you can get 9% on your investments, you can withdraw 6% and maintain your base savings. So with $1mm in the bank, you can withdraw 6% / year. That’s $60k in year 1, $61,800 year 2, $63,654 year 3, etc. etc. Doesn’t include whatever you do with your other $4mm.
Paul, put 2 mil into the bank, and you can comftorably live off the intrest. As for 5 mil by 21, I have faith that you could do it.
Hey Paul,
In 10-20 years, that $4mil will turn in to something along the lines of $15-20mil if you’re getting around 10% interest (which is very reasonable in a good mutual fund). Now if you got 10% for all 20 years for that $4mil, it would turn into something more like $30 mil (rule of 72…divide 72 by 10 so around 7, divide 20 by 7, get a little less than 3. 2^3 = 8. 4*8 = 32)
At any rate, I’m sure you’ll reach your goals. If you have your care and house paid off, the $40k/year is more than reasonable at first depending on where you want to live. A good book I recommend is Retire Young Retire Rich by Robert Kiyosaki (Part of the Rich Dad series). He talks a lot about real estate and about the passive income it can produce, so you might be interested in it. The whole Rich Dad series is a good read.
Jon
With 1mil in the bank in a decent savings account you would earn 30,000 a year to love off (not nearly enough) without even toughing that million so it would last way longer than 25 years…
Sorry about the previous posts spelling, should have reread it before hitting “add comment”. I’m having a fight with my keyboard all day today.
First, congrats and good luck with your goal. When I was 19 the only thing on my mind was Girls, College, Girls, playing Football and Girls. I wish I would have been more $$ focused back then.
I’m in my 30s and my goal is to retire with $5 Million by age 55. Maybe when I start pulling down the big bucks like you I’ll adjust that goal a bit. :)
I gotta to say Pau lwne you extend yourself out like this….you sound full of $%^#.
Great advice buddy…i wonder why i should retire with $5 million bucks only when i could be making more money every damn year…Paul what you just say is lessen your work load and not retiring…I don’t see myself leaving the internet for something else. To be honest the sweetest fun is enjoying what you are doing while u make good $$$ from it. Fuck it aint going no where even if i got up to $64 billion $$$$$$$$$ is what we are fucking talking about dude!
Good Luck to you Paul, I know you can do it. You have proven yourself so far and are an inspiration to most. Take vacations, stop and smell the roses, and live life to the fullest. I so believe in Karma and that you reap what you sow. Thanks for your blogs and your sharing. You seem to be able to achieve anything you set your mind to, and retiring at 25 should not be a problem for you.
Another nice and sweet advice buddy….i just shouldnt be listening to this dumb kid all the time. lol JK :D But this post is bringing out good points from the view of others way to go!
Wow, that’s a heck of a goal, eh? I really wouldn’t even WANT to retire that early in life, but heck.. if that’s your goal than more power to you ;)
Good stuff, playboYYYYYYYYY!
I got a goal for when you turn 21… Go to Vegas and make it rain on some bitches at the strip clubs and nightclubs. Fun stuff I tell you.
wow hahahahahaha me laughing like hell over here! sure thing throw some cash on stripers it is a striper thingy! hahahahaha! Don’t push me im a man! lol
Let’s hit up a round of golf sometime. I do suck but I am going to work on my game this summer. ;)
I plan to retire at 25 im 19 at the moment wish me luck
Just out of curiosity, how much are you making on average now?
Bwahaha. Its ok Smiley, the kids gotta get it out of his system.
Could always rock it this style :)
http://www.aol.com.au/lifestyle/story/the-rise-and-fall-of-a-porn-king/459771/index.html
And you live in Texas Diorex. Try San Diego!
putting your money in the bank is like giving the bank free money. there are much better returns else where. Especially when you are talking in the millions as opposed to thousands.
yep. I was just about to say that the same thing. $250,000 a year is definitely the benchmark for when you start to life comfortably and not have to worry about balancing budgets. Mind you, that’s only if you don’t spend like a spastic and indulge in ferrari’s and expensive hobbies.
forgot to say, that congrats on securing diorex.com. I was thinking of backordering it myself and republish your blog posts. It’s much better now that you own it and have your blog back by popular request
Nice article, Smaxor
I really enjoyed reading it…
:)
Paul,
How much money do you make a month net? it’s astounding to me how much people are making with this affiliate marketing thing. I am stuck in a 9- 5 jobs and all my bosses are quite cocky and self – assured and half arent’ even making $100K a year! and these are people in their 40’s and 50’s!
Are you guys exaggerating these incomes?
All that paper is technically worthless… Americans will realize this soon with the inevitable dollar collapse and the total implosion of the economy. Yes Karma is real, a real bitch.
Golf! Thats pretty gay dude. Otherwise, pat yourself on the back. Good job
To be able to retire early at any age is a great achievement. It doesn’t matter whether you are 21 or 35. Having 5 million is a lot of money, but don’t go MC Hammer on us. You don’t need a million dollar house and 20 cars that cost 100k each. There is smart rich and stupid rich…
Shudogg Dot Com – Make Money Online Blogging
Best of luck man! I’m sure you will make it. You may want to bank on a bit higher. $40,000 isn’t very high rolling.
Good stuff. definitely very good stuff here :)
some people say why to retire when you can make more money. I wonder what they will do with all this money.
I wish I could retire at that age, very unlikely saying it’s in 4 years and I’m still a beginner at this. I will keep pushing though to try and make a living from it someday.
Thanks for the info on this blog.
Hopefully I have enough money to ‘retire’ at 25 so I can travel the world… :)
woah thats pretty sick, retiring at 25. Although, like you i don’t think i could ever do it, i would feel useless if i was just around and not working.