Move over Baby Boomers. The Millennials are here and they’re kicking your butt when it comes to retirement! According to this CNN Money report (click here):
Millennials are the first generation to shun traditional retirement and seek financial freedom instead — when income from savings is enough to cover expenses, and working becomes a choice, often long before the age of 65. Becoming financially independent and retiring early, a process known as FIRE, can be achieved at any income level by saving a high percentage of your salary, or cutting your expenses — or both.
Meet 29 year old J.P. Livingston (not her real name, author of The Money Habit). Livingston quit the workforce when she was 27 after she had accumulated over $2.25 million dollars in her portfolio by working only 7 years in NYC. Livingston says: “Let the Baby Boomers have their “retirement,” with its delayed gratification and uncertain benefits” Young people like Livingston are gaming their income, saving rates and investments to become financially independent and retire early — a process known as FIRE. (Financial Independence Retire Early)
While most Americans commonly spend most of what they earn and fall short on traditional retirement savings, today’s young people are the first generation to plan for financial freedom: 63% of affluent Millennials prefer financial freedom over retirement, while 37% are saving to leave the workforce altogether. Millennials have a different slant on the way they look at life and rightly so. After seeing so many people lose their careers and jobs while still in their 50’s and 60’s (during The Great Recession) Millennials vowed to kick the status quo and drop out of the rat race on their own terms. No more working 9 to 5 in some cubicle from age 25 to 65, the Millennials desire Financial Independence now vs forty years from now. To heck with retirement!
CNN Money stated they have started a new series and will be profiling many of the new Millennials who have achieved Financial Freedom independence early (20’s and 30’s)and on their own terms. Perhaps we Baby Boomers should pay attention and learn a thing or two. I retired early in my 50’s thanks to achieving my own sort of financial freedom BUT how cool would it had been for me if I were in my 20’s and 30’s instead!
We can start off by browsing J.P.Livingston’s most-read post where she outlines her four step approach to early retirement (click here). She lays out her method this way:
I call these the savings equation and the nest egg equation. As you can see, there are four universal levers we can use to ultimately grow our nest egg, and mastering them in the right order can send you hurtling at light speed toward retirement. In typical order, here are four skills you will find you need to master to retire quickly.
- Master spending control
- Expand your income potential
- Deploy your money for optimum growth
- Minimize your tax exposure
If you’re in the over-fifty crowd, don’t give up. J.P. Livingston has a two part series whereby she gives FIRE advice to a 53 year old man who fell on hard times and thus saved nothing for retirement. In classic Livingston go-getter style, she doles out this advice:
There’s a lot of work ahead of you. You need your energy to build and implement a plan that’s going to require consistent work and effort. So don’t waste it beating yourself up for what you should or shouldn’t have done in the past. We’ll come back to your experiences insofar as they are helpful in informing you how to change your behavior going forward, but self-flagellation in and of itself isn’t going to help anyone. I don’t care. You shouldn’t, either. You judge yourself from here on out based on what you accomplish of the new plan.
To read more about J.P. Livingston’s financial advice plan for Baby Boomers, click here.
I’m sort of agreeing with this new Millennial style of thinking. I really don’t think there is anything such as retirement anymore. Millennials believe, and perhaps rightly so, that by the time they reach their 60’s, Social Security and Medicare might not be around. Perhaps we Baby Boomers are the last generation to enjoy such plentiful government benefits. Maybe it is time for us to grab our own lives by the horns and map out our own financially free destiny. Livingston advises that we should always keep an eye on our Net Worth and our expenses. She, just like me and most of our ilk, are constantly finding ways to cut our expenses. It just becomes a normal way of living. Owning a home is also J.P’s route to financial freedom.
In any event, check out the links I’ve provided above and keep an open mind. It’s a whole new world out there and it’s never to late to teach an old dog (me) some very new tricks!
Live well and prosper, my friend. Live well and prosper.