Like me, most people were trained to think that getting a high-paying job and working till social security kicks in was all we needed to live a good, comfortable life. Many of us spent a lot time and money getting a university degree or even a PhD. We then started working 5 days a week and tried to work our way up the corporate ladder, sometimes even maliciously. When we make more money, we tend to spend more money, e.g. to buy a bigger house, a fancier car, a $5000 home gym, expensive clothes and jewelry, tech gadgets, sound systems, and more. We also may even eat out more often. Since we’re busy working and we have enough money, we just continue on with that ever-more-expensive lifestyle and accept that we’ll just keep living like that until we can retire, which is when we’re 67 years old to receive full social security benefits. Of course, we’ll probably have some retirement investment accounts, like a 401K, which you can withdraw without penalty starting at age 59.5. With this lifestyle, we’d have to work most of our lives and maybe take 2 or 3 vacations a year, aside from holidays like Thanksgiving and Christmas.
The problem with the above lifestyle is
- we’d have to work for a very long time (until we’re 67 years old!)
- by the time we’re 67 and retired, we’ll have all the time in the world to enjoy life, but we may not be as healthy to do so as we are when we’re younger
- if we lose our high-paying job, there’s no guarantee we’ll get another high-paying job, and if we do get another high-paying job, we may not even feel like doing that kind of work as we get older
- our retirement income from social security is on average only 40% of our average monthly earnings over 35 years.
If you’re fine with the above, then carry on, but most people would rather retire early, like in their early 50s, but the only way to do that is by having assets that generate sufficient passive income to replace your day job. You can start a small business, like a pizza restaurant, and have employees do all the work, but that’s risky and not really passive since you’ll likely need to be more involved in day-to-day operations, say, 50% of the time. You could invest in the stock market, but unless you have a lot of money to invest, you won’t be getting sufficient returns to replace your day job. The safest and easiest alternative is to invest in real estate rental properties, like what this physician couple did. Before doing so, though they made a lot of money as doctors, they had no time to enjoy life and they would not have been able to retire early.
Whether you invest in real estate rental properties or have some other income-generating assets that you own (not a job), the key point is that having a high-paying job is not the goal; it should only be a temporary mechanism to create income-generating assets, like real estate rental properties.
While your co-workers are busy backstabbing each other to get a promotion and spending more and more money to live a more luxurious lifestyle, e.g. fancy cars and designer clothes, you really should focus on how you can spend your money on generating passive income, like real estate, so that by the time you are 50 years old, you can quit your day job and retire early. By that time,
- your former coworkers may have job titles like Senior Director or Vice President whereas your job title would be something like “Retired Real Estate Investor With No Boss, No Commute, and No Stupid Meetings to Attend.”
- your former coworkers may have a high salary, but you could be making the same amount or even more without having to work
- your former coworkers may feel special because they have to travel the world to attend conferences and meetings, i.e. for work, whereas you could travel the world whenever your want for fun!
- your former coworkers would have to commute to an office 3-5 days a week, do what their bosses say, attend boring/stupid meetings, have a quick breakfast, lunch, and/or dinner because they’re too busy, work some weekends and maybe in the early morning or at night if your coworkers are in a different time zone, and get frustrated with incompetent coworkers or office politics. On the other hand, you’d just wake up when you want, take your time sipping your morning coffee as you hear the birds chirping in your backyard, and decide what you feel like doing rather than doing what your job requires you to do.
- your former coworkers would be driving fancy cars (depreciating assets) whereas you’d have more appreciating assets (e.g. more rental properties). You may have driven a simple car before retiring early, but once you replace the income from your day job, you can also just buy a fancy car if that makes you feel better.
Now, don’t get me wrong. Passive income from real estate isn’t 100% passive like income from selling stock. Depending on your situation, you’ll either need to be a property manager or you’ll have to hire a property manager. Either way, the amount of work is a mere fraction of a typical 9-to-5 job.
Conclusion
Having a job, whether it is high-paying or not, and working for someone else should never be the goal. The goal should always be to acquire income-generating assets to achieve financial freedom so that you can have the time and money to live how you want, that is, unless you want to keep working until your 67 years old!