Get ready to maximise your potential, maximise your living with empress2inspire’s new posts series “Daily Dose of Living”. These series will bring you the best in personal development and productivity every day of the week. Your best life awaits.
In today’s post we will learn about the simple math behind early retirement. Here’s the math – Your savings rate, as a percentage of your take-home pay. If you want to break it down just a bit further, your savings rate is determined entirely by these two things:
– How much you take home each year
– How much you can live on
If you are spending 100% (or more) of your income, you will never be prepared to retire, unless someone else is doing the saving for you (wealthy parents, social security, pension fund, etc.). So your work career will be Infinite. If you are spending 0% of your income (you live for free somehow), and can maintain this after retirement, you can retire right now. So your working career can be Zero. In between, there are some very interesting considerations. As soon as you start saving and investing your money, it starts earning money all by itself. Then the earnings on those earnings start earning their own money. It can quickly become a runaway exponential snowball of income. As soon as this income is enough to pay for your living expenses, while leaving enough of the gains invested each year to keep up with inflation, you are ready to retire.
Here’s how to manage your money in 2021 > https://empress2inspire.blog/2021/02/01/how-to-manage-your-money-in-2021/
If want to retire within 10 years, the formula is right there in front of you – simply live on 35% of your take-home pay, which is approximately what I did without even realising it during my own younger years.
Come back tomorrow for more daily dose on living.