If You Work Your Whole Life, You’re Doing It Wrong
I thought it was normal to hide in the back of a station wagon when my dad checked into a motel.
Growing up, the biggest vacation we took was to Disney World. We drove to Florida from Illinois and to save money he’d reserve a room with two double beds for two people. After he got the key me and my two sisters would sneak into the room so the manager wouldn’t see us. We’d pack a sleeping bag and one of us would sleep on the floor.
I didn’t feel poor as a kid, but in my early 20s I started realizing some people spent money way differently than I was taught. Like a buddy who’d spend $100 buying women shots, or my coworker who got a new luxury car every couple years.
I thought they were stupid, but it wasn’t long before I bought a BMW, dropped $200,000 on a condo, and started a new hobby flying airplanes.
I get emails all the time from people like Karen. She wrote:
“I was going through a rough patch at work and feeling unhappy with where I found myself. More like put myself. I’m smart, I went to college, have zero debt, have a really great, well-paying job, and sincerely felt, “This is it? This can’t be it. Is this really how I want to spend the next 30 years?”
It’s easy to slip into a lifestyle where we work to earn, and earn to consume. I did this, and while it’s nice to have nice things, eventually more stuff doesn’t really make you any happier. And when you realize this, you have a choice: Continue to live a life where you fill it with more stuff, or design a life filled with stuff that’s important to you.
What can you do with your time that’s important?
Bronnie Ware spent years talking with people about to die. They all wished the same thing: That they had been happier, stayed in touch with friends, expressed their feelings, and hadn’t worked so much. Number one was: I wish I’d had the courage to live a life true to myself, not the life others expect of me.
What they’re saying is to live your life filled with stuff that’s important to you. Okay, but how do you figure this out?
Ryan Holiday is one of my favorite people, and his article on deciding your why helped me build a framework around this. I started asking myself what’s important to me, and at first I came up with lame stuff like “freedom” and “flexibility.”
But I dug deeper, and “freedom” became “time” and “time” turned into the question, “What would I do with it?” and that forced the answer:
- Work on what I’m passionate about, and not be motivated by money
- Have enriching experiences through travel
- Challenge myself, and continue to grow
- Have an impact on the greatest amount of people
Now, when I’m faced with a decision about a direction to take my life, or what goals I should set, this is the list I pull out to guide me. And the result is a life that’s optimized for meaning and significance.
Three options for freedom
You can design your life to make sure you have the freedom to pursue what’s important to you. The caveat is every one of these options requires a mindset shift: You need to work to earn, earn to save, and save to invest, so you can stop working.
Many of you already do fulfilling work as teachers, social workers, or at non-profits. The pay sucks so you know you’ll never be a millionaire, but you still want a taste of freedom. A mini-retirement, a term popularized by Tim Ferriss in the 4-Hour Workweek, is perfect for you. Tim wrote:
“It is the anti-vacation in the most positive sense. Though it can be relaxing, the mini-retirement is not an escape from your life but a reexamination of it – the creation of a blank slate. This is also different from a sabbatical. Sabbaticals are often viewed much like retirement: as a one-time event. Savor it now while you can. The mini-retirement is defined as recurring – it is a lifestyle.”
I love this idea, and the execution is simple: You save up 1-12 months of spending money, and then go live your life. Travel through Southeast Asia, work on what’s important to you, or hike the Pacific Crest Trail.
Most people work until their 60s for the conventional idea of a 30-year retirement. This includes plenty of TV, mall walking, and watching squirrels or something. The risk is a lot can go wrong between now and when you’re 65 – like you could die – and did you ever have the time to do what’s important to you while you still could?
Money-wise, the conventional 30-year retirement uses what’s called a withdrawal rate of 4%. This means you can withdraw 4% from your savings and investments every year for 30 years, with little risk of running out of money. To figure out how much money you need for this, take your annual spend and multiply it by 25.
Example: If you spend $30,000 you need $750,000 ($30,000 x 25), or if you spend $80,000 you need $2,000,000 ($80,000 x 25).
Early retirement is the definition of wealth, because you don’t have to work to finance what’s important to you.
You can use the same calculation for a 30-year retirement – annual spend multiplied by 25 – because you’ll probably earn money at some point either from hobbies or part-time work.
But if you truly want to retire early, like for 45 years and beyond, you use a withdrawal rate of 3.5%. To calculate how much you need for this, take your annual spend and multiply it by 28.5.
Example: If you spend $35,000 you need $1,000,000 ($35,000 x 28.5), or if you spend $70,000 you need $2,000,000 ($70,000 x 28.5).
My challenge to you
Like other dot-com millionaires, Elon Musk falls into the early retirement category. He could get drunk every night, and spend his time traveling between his properties. But that isn’t what’s important to him:
“I’m interested in things that change the world or that affect the future and wondrous, new technology where you see it and you’re like, “Wow, how did that even happen? How is that possible?”
What’s important to him is solving big problems like space travel and multi-planetary living, so that’s what he’s doing. If you ask yourself what’s important to you and have a vague answer like “I want to be happy, and have a nice family, and be rich,” well, that doesn’t really mean anything.
Get a sheet of paper, and start writing down how you want to live. Then figure out the money part. Because when you do it this way, and you’re at the end of your life about to die, you’ll be able to say, “I’m glad I did that,” instead of, “I wish I had.”