In my previous post about why we care about money, we explored the reasons why saving money might be important beyond simply wanting more material possessions.
In this post, I’d like to explore the more specific topic of why it is that we want to retire.
Before we can answer this, we need to define what it means to “retire”. Using good-ole Dictionary.com, the definition of “retire” is “to withdraw from office, business, or active life, usually because of age”.
This is a nice definition, but it is not necessarily how I define retirement. For me, retirement has less to with age than it does with financial security. If you don’t believe me, go into any local Wal-mart or grocery store and ask an elderly worker above that magic retirement age why they are still working. I bet it’s not because they just love to work.
For me, retirement means:
• Being financially secure enough to no longer need employment income to survive.
Now, let’s clarify a few things. This definition is not a knock against being employed. I actually enjoy my career and am in no rush to leave it. In fact, during retirement, I plan to still work part-time on a variety of initiatives.
The key word in my definition is “need”. If you “need” to work because of money or are dependent upon the income, then you are not ready to retire.
During the Great Recession, companies all around me were downsizing and reducing their workforce. Good, hard-working people were losing their jobs and having a really hard time finding new ones. The one major fault with employment income is that it can be taken away from you at any time for no reason at all. When you save your money for retirement, you reduce your dependence on how much you need employment and how much longer you will have to work.
This is why I want to retire. Not to escape from work or to spend my days drinking margaritas. I want to give myself the peace of mind that I can pursue my ambitions without having to worry about money.
How I Plan to Retire:
If you’re interesting in seeing what tools I plan to use for retiring, then click here to see my design. You should know that there are a great deal of tax-sheltered methods you can use to save money. And if you’re really smart about how you save your money, you don’t necessarily need to wait until age 59-1/2 to touch it.
Beyond that, there are numerous books and websites out there about developing passive income streams. Passive income streams are money you make outside of working. Examples are things like rental house income, income from investments, revenue from selling things online, income from owning a business or running a blog, etc. Again, if you are clever about how you set these up, you may be able to supplement or even replace your employment income.
Again, remember that simply saving your money without a purpose is nonsense. When you’re working on your plan for retirement, make sure you know the reasons why you’d like to retire. Let those goals be your driving force.
Photo Credit: Rocks Looking onward by ClareMarie, on Flickr
1) How Your Retirement Income is Different from Now
2) Will You Have to Work Until Age 80?
3) Will Your Retirement Cost $2 Million?
Invest It Wisely says
I don’t actually want to retire. I do want to be financially independent, because I hate the idea of having to work for others to survive. 😉
@IIW, I know what you mean. I’d love to know that my family and I would always be secure no matter what my employment status was. This is the goal we are constantly working towards.