How to Retire Worry Free at 65 or Sooner With $1 Million or More Starting at 25, 35, or 45 Years Old

Table of Contents (quick links):

1. Introduction
2. Interest Only Retirement Facts
3. Retirement forecast charts
   • Retire Starting at age 25
   • Starting at age 35
   • Start at age 45
4. Wealth Pillar 1: Develop a Positive Money Mindset
   • 16 Money Mindset Questions
   • How to Clear Limited Beliefs About Money
5. Wealth Pillar 2: Protect Your Biggest Asset
6. Wealth Pillar 3: Master the Financial Fundamentals
   • Rule 1: Live Below Your Means
   • Rule 2: Time Value of Money
   • Rule 3: Compound Interest
   • Rule 4: Managing Risk
   • Rule 5: Increasing Your Means
7. Wealth Pillar 4: Automate Your Retirement Savings Each Month
   • 3 Steps to Automation
     • Where To Invest
     • Pay Yourself First
     • Increase Your Earnings
8. Wealth Pillar 5: Execute With Excellence With Smart People
   • Top 25 Financial Books I Recommend

Intro

Knowing how to retire at 65 years old or sooner with at least $1 million or more is a daunting task. With fewer employers offering guaranteed income retirement plans like  pensions, many have to take 100% control of their own retirement. If that seems to be an almost insurmountable goal to achieve for you, read on.

If you’re thinking there are just as many retirement plans than there are people in the world, you’re probably right. Each person has their own vision of how retirement should look like to them. But what’s an example of a solid retirement plan? What do you need to know? How do you stay on the right track?

Those questions and many others will be answered in today’s article. I’ll share time-tested principles and strategies that have guided thousands of wealthy people to the point of retiring with at least $1 million or more at age 65. And if you want to settle down before 65 and retire at age 40 or 50 or around there then I’ll share with you what it takes to do so as well.

Before we get into the meat of our discussion today I find it helpful to first discuss just how much of your retirement nest egg do you think you’ll end up spending? It’s important to think about this now because it will greatly influence the amount of money you will have for fun stuff life vacations, travel, buying cool things for your grandchildren, etc. The bottom line decision to think about making here is do you establish an interest-only retirement or an interest with principle retirement? In other words do you see yourself spending every single penny you save within your lifetime (interest and principle)? Or do you see yourself spending just the interest accrued on your principle? Or a combination of both? Thinking about these questions can help you plan for your retirement better.

Sure, you can always make the decision later, but knowing what you’ll do now can help you avoid the pain of not having enough money in retirement to fund all your retirement expenditures. So here’s some food for thought to help you get started.

Is an interest-only retirement realistic?

If you have $1 million in your retirement savings account right now and wanted to live off the interest only at a rate of say 5% you could only spend around $50,000 in a given year.

For some people living off $50k a year is possible. For many $100,000 a year is more exciting. That will take more savings and/or a higher rate of return each year.

The reality though is the you’ll probably need money to pay for your health care, vacations, home repairs, living expenses, and so forth. Using just the interest off your investments might not be enough.

Unless you plan on covering your expenses in retirement through some other source of income, it’s best to take the interest plus principle approach to spending your retirement nest egg.

Social security income might be around for you, it might not.

Inflation will also occur no matter what which will eat into the spending power of your retirement funds. That means the spending power of your retirement money in the future will not be worth as much as it is now. That means you’ll need to have more in your fund than you think.

Not all hope is lost though. There are some investment strategies to consider if you want to make an all interest-only retirement possible. The world of deferred annuities as discussed here is one example that you can consider to help you establish & execute an all-interest retirement.

For the majority of breadwinners throughout the world though, an interest-only retirement is probably not all that feasible.

The more realistic retirement spending plan will usually involve living off interest and principle both to cover all the expenses needed and desired during your retirement years. 

So let’s cut to the chase from here and help you see how much you would need to save each month to achieve the goal of $1,000,000 or more by retirement age at 65 years old.

How much do you need to retire? Charts starting at 25, 35, and 45

If you invest starting at age 25 (40 years to invest):

If you started at the age of 25 the amount you need to start investing each month, year or upfront it outline in the table chart below. The investment amount will vary of course based upon many factors, but at this point for illustration purposes it will be projected based upon rates of 4%, 6%, and 8%.

Note the significant amount of interest you gain by earning just a couple more interest points in return each year.

Note: Remember the numbers may change depending on your rate of return, withdraw rate and inflation.

If you invest starting at age 35 (30 years to invest):

Note: Remember the numbers may change depending on your rate of return, withdraw rate and inflation.

If you invest starting at age 45 (20 years to invest):

Note: Remember the numbers may change depending on your rate of return, withdraw rate and inflation.

We’re going to talk more about the “time value of money” and “compound interest” later, but you can see from the estimates above that just waiting 10 years from 35 to 45 you’d have to invest a bit more than $1,100 more each month out of your own pocket to reach a million at 65 at a 6% annual rate of return. The take away here is, if you have time to you advantage, get started now!

Now what do you need to know and implement to actually make this retirement savings goal of a million a reality at 65 or sooner?

The answer always comes down to education first.

So, after a great deal of research over the past 15 years and implementing these 5 phases myself, I’m going to pass these 5 wealth pillars on to you now to provide you that financial education.

Wealth Pillar 1: Develop a positive money mindset

What is a money mindset anyway?

The deeply held beliefs you hold dear about money (consciously or unconsciously) is what we call your money mindset. We also call these your personal values about money.

Your values in any regard are those deeply held emotional beliefs you have about anything. Those deeply rooted emotional beliefs you have about money is what determines the emotion you feel and therefore the action you take with each dollar you receive in your life.

The spectrum of beliefs people have about money are of course all across the board.

One of the many money mindset exercises I like to do and discuss with students I coach and mentor is to explore the feelings and thoughts by collaborating upon the financial probing questions below.

Take a moment and give this money mindset exercise a try.

Pay special attention to your feels as you go through these questions and take note on paper or journal of your answers. The objective here is to help you become more conscious about your view and relationship with money so you can stay consistent with achieving your retirement goals:

Top 16 money mindset probing questions

1. How do you define the term “money”? Write that down on a piece of paper or journal.
2. What do you feel right now about the word “money”?
3. What is the purpose of having money? Why does it even exist?
4. Do you believe there is a lack of money “out there”? Or is there an unlimited supply?
5. Is it possible for someone to make “too much money” if they legally and morally earn it? If yes or no, why?
6. What causes some people to have more money than others?
7. Would you behave differently if you “suddenly” won the lottery? If so, how would you behave differently? If not, why?
8. Do you believe it’s okay to earn more money than your parents, spouse, partner?
9. Do you believe money is good, evil, or something else?
10. What inspires or motivates you to earn money?
11. If you believe in a Supreme Power such as God, the Universe, etc how do you think He/She/It perceives the value of money?
12. Do you believe giving money to the poor or to charity is important? Why?
13. Does money really corrupt a person by having too much or too less of it? If yes, why? If not, how so?
14. What would you do with your life every day if money was no issue whatsoever?
15. What kind of worries about money hold you back from doing what you really love to do every day?
16. How much of your day do you spend worrying about money? Why?

Each person will answer those money probing questions differently.

We’re all different. We come from different back grounds and education. Financial intelligence will vary too across the entire spectrum. Most of the world’s population lacks the financial education needed to reach sustainable profits when retirement arrives (whatever age that is).

And that is the reason to develop a positive relationship with money. If you want an abundance of money when you retire, your mindset must be abundantly primed to accept and put to use such wealth.

A must read essay about money I’d recommend is from Ayn Rand’s book Atlas Shrugged called francisco’s money speech.

For some it may take some time to clear the negative beliefs about money. You can be assured though that as you persist towards becoming conscious of the limiting beliefs you have about money, you can learn how to clear them. From there you’ll be amazed how much richer and wealthier you’ll become in all aspects of life as your money mindset is healed.

How to identify & clear limiting beliefs about money

While we all have negative thoughts about overcoming certain situations in our lives, it is the long-held beliefs that impact our attitude and actions about money. In fact, your beliefs influence 95% of the decisions you make including your decisions about money. The limitations and the expectations you have for yourself are all built on your beliefs.

This great video by Tony Robbins does a great job of explaining how to experience real change by learning how to associate pain and pleasure in a positive way to money and overall life success.

Identifying limiting beliefs takes practice. And there are many strategies one can take to help bring your limiting beliefs to the surface so they can be cleared. Read this article I wrote about the 5 steps on how to identify and clear limiting beliefs.

Many times it will require someone else’s help to point out your blind spots about your money beliefs. We cannot clear what we are not aware of!

Working with a success coach or mentor is highly suggested. I continue to mentor students I personally work with each day on many things including clearing limiting beliefs. You’re welcome to book a free 30 minute coaching call with me here and we can talk about your goals and situation about money and discuss a solid plan to help you.

Wealth Pillar 2: Protect your biggest asset

Imagine you have a big black box in your garage. Inside of that black box is an engine that is forecasted to generate about $70,000 USD this year alone into a bucket below that holds the cash for you to spend. That money in the bucket you will use to pay for your annual household expenses.

Year after year that same engine will generate 3% more than the previous year. For the next 40 years it will continue to produce.

The total lifetime money production that machine in the black box will generate comes to $5,655,094!

The tragedy though is that black box machine still sits in your garage between a bucket of tools and your sleeping bag, unprotected. Not insured. It could be destroyed by a neighbor kid at any time. Then what?

The black box machine in this analogy is of course your capacity to produce income. And that earning ability came at a heavy price.

You and possibly your dear parents sacrificed a great deal of time and money to develop your earning ability. You want to see that breadwinning power generate a consistent income to care for you and your loved ones in this life. And if all goes well, you want to have a good nest egg to pass on to the next generation as a financial legacy.

Most people don’t blink an eye at buying insurance to protect themselves and their car or house. But what about insuring or protecting your breadwinner earning abilities?

What does retiring comfortably mean to you if your ability to be a breadwinner suddenly stopped months or years for some reason? In other words if you were forced to stop working, what would happen to your income each month? How would you continually fund your retirement savings plan?

Some might have family to take care of them. Many will chance it, thinking becoming disabled wouldn’t happen to them. In reality though the statistics of actually become disabled are scattered. It’s all a game of probabilities. And so much depends on the type of work you do, your diet, type of health and conditions, age, etc.

Check out what the New York Times article revealed about the scattered stats about the possibilities os becoming disabled. It should help you make more sense of things.

Some gamble, some invest. It’s up to you, of course, but for myself I invest to protect my biggest asset which is being the best, most productive breadwinner I can be.

If you became disabled or heaven forbid passed away, you need to have a plan. It’s the wise thing to do.

If you’re thinking, “hey, I can’t afford disability or life insurance” I totally understand. The key here is just do your best to secure as much insurance as you can at this time in your life and then increase it in the future.

The peace of mind is worth it. And your future self will thank you.

At least get started. This free risk calculator will help you determine the chances of becoming disabled which they call your “personal disability quotient” (PDQ).

That’s all I’ll say for now about protecting your ability to earn income as it relates to assisting you to stay consistent with securing a comfortable retirement nest egg to live off of.

Wealth Pillar 3: Master the financial fundamentals

As any master will say, success is always found by practicing the fundamentals. It’s no different with matters of finance and retirement.

There are 5 fundamentals you need to implement that will greatly influence how financially successful you will be in the future:

1. 1. Live below your means
   2. Know the time value of money
   3. Leverage the power of compound interest
   4. Manage your risk
   5. Increase your income

Rule 1: Live below your means

We all want the latest, coolest car, a beautiful, spacious home, the next fancy phone, relaxing & adventurous vacations. Those things should be enjoyed of course, but not at the expense of your future retirement goals.

Living below your means is critical. There really is no “magic” involved with increasing your savings. You simply save more than you spend and your savings will increase. It’s that simple.

It takes real effort to consciously make decisions on your families spending habits. But that doesn’t mean you have to live off rations. You can still enjoy your life while being more considerate.

Being a frugal family means that you take some extra time to find a good bargain and work to avoid any waste. While that doesn’t mean you have to spend all your time at thrift stores and yard sales, you may consider buying something used first. Or cutting out meaningless expenses that aren’t bringing value to your life.

One great exercise is to print out your last three months bank statements. From there identify which of your expenses you feel you need in your life to make your family happy. What you might find is that you don’t use that gym membership or you eat out too often.

You are in charge now. It’s time to master your finances be creating a solid retirement savings plan.

Hopefully, your new empowering money belief you’re learning about today has you reconsidering immediate satisfaction and thinking instead about what you need to do now, to become financially successful in the future. 

Rule 2: Know the time value of money (TVM)

By not having your money working for you as we speak you are literally losing out on millions of dollars that you could have 40 years from now. That is the time value of money.

The earning capacity of the money you have available right now is worth far more than that exact sum sitting around doing nothing for years on end. Any sum of money right now has the potential of earning interest and therefore will be more valuable in the future if you invest it wisely. That is the concept of the time value of money.

When might be the best time to start saving for retirement?

The only effective answer is NOW. Again, every day you wait you lose hundreds or millions of dollars you could have in the future. Play around with this time value of money calculator to see what I’m talking about.

We’ll discuss this in more depth in the next section about compounding interest.

Rule 3: Leverage the power of compound interest

Compounded interest occurs when you earn interest on top of the interest you have already earned.

Take $100 invested at 10% per year which becomes $110 by the end of the year. That $10 of interest added to your original capital of $100 generates more interest. By compounding that $110 alone without any further money added, year after year, it becomes $270 in 10 years if left alone.

Where the fun really begins is when you add money and more time to that $100.

To see the effects of compounding money over time review the forecast table below:

If I said to you in 40 years from now I will give you $4,525 but you have to give me $100 today I believe you would easily find a way to give me that $100, right? That is how compounding works.

Adding $50 extra each month to be compounded 10 to 40 years

The next step is to add some extra money into the equation, even if it is just a little bit a month. Doing so can result in a much bigger nest egg for you in your retirement years.

We are going to add $50 per month in this example. At the end of 40 years, I will now give you $284,465!

Compounding $500 a month between 10 to 40 years

While $50 might be easy to find, the question I am asked is what happens if I add more. Well, it only gets better. 

We are now looking for $500 per month. There are a number of ways to earn extra money. You can see my recent blog post 22 Proven Ways on How to Make 100 Dollars a Day or More to get some ideas.

No matter what you choose to do, there are many opportunities to use the skills you have or develop new skills that can earn you an extra $500 a month or more.

By adding an extra $500 a month and compounding over a 40 year period you can acquire $2,803,923! Now you can’t tell me that isn’t worth a little extra effort each month.

Rule 4: Manage your risk

There is risk in everything, period. The more correct knowledge you acquire the better you can lower and manage your risk. But even if you’re a freaking genius about real estate, stock picking, or anything else you’ll still have risk to manage.

Hedge funds exist for this very purpose of managing risk.

When bonds go up, stocks go down. So if you have money in both asset classes, the risk of losing money is managed better instead of having money in one stock alone. That’s the basic concept of hedging.

The tolerance level you personally have is unique to you, your goals, your timeline, health, growth desire, etc.

You can manage your financial risk properly by doing these three principles:

1. Know the value. In other words, don’t just give your money to someone or some “thing” or company out there unless you know what exactly they will be doing with your money. What will your money being doing each day? Where will it go? To what companies? What will those companies with your money be doing? What is the likelihood of seeing those companies grow and become more profitable over time?
2. Diversify your investments. The best investors of all time don’t put all their money into stocks alone. They spread their money out, but not too much. Warren Buffet says, don’t put your money in too many baskets that you don’t have time to tend to the egg.”
3. Allocate your money. While spreading your money out among bonds, stocks, real estate, etc is about diversification, allocation has to do with the amount or percentage of money you put into each of those investment classes/categories.

• • For example, take Ray Dalio, the guy who manages the worlds biggest hedge fund on the planet. Learn more about his risk management principles here and his site here. For the time being though, following is a chart showing the asset classes his fund invests in and the percentages allocated to each class:

Rule 5: Increase your income

As you strive toward the goal of freeing up cash to add to your automated savings goal, you should now shift gears to look at ways to increase your income each month.

The first thoughts that pops into people’s minds when talking about increasing income is “I can’t work any more hours” or “my boss won’t give me a pay raise”. But have you considered the options outside of your 9-5 job?

Here are some income boosting ideas to consider.

Wealth Pillar 4: Automate your retirement savings each month

Developing the discipline to manually invest your money to be compounded over the years is extremely tough to do. Most people fail to manually save for retirement because it takes a great deal of self discipline.

Having to consciously think about socking away money every day/week/month takes a huge level of consciousness, planning and work.

People like you and I who are not full time investors for a living simply don’t have the time and skill to cherry pick stocks every day, analyze financial charts constantly, research, manage funds, allocate, etc, etc, etc.

The good news is you don’t have to become a super ninja investor with magical self discipline to secure a solid retirement for yourself.

Leave the self discipline to systems! All you need to do is focus primarily on earning the dough.

For the sake of analogy; using systems to automate your savings goals allows you to literally tap into the same unseen disciplined power that automatically pumps your heart every second that injects the life sustaining nutrients where they need to go throughout your body.

So when you automate your savings you are literally allowing that disciplined power to automatically inject the cash you are earning into your financial body. Your money is now working for you without you needing to consciously think about it.

3 Steps To Automating Your Retirement Savings Goals

1. Know where to invest your money: Research and collaborate with your financial coach/fiduciary/advisor for help on this. Tony Robbins, Ray Dalio, Warren Buffet, and many other top investors in the world say that if your career is not in the financial investment industry it’s best to simply invest in ETF’s and/or index funds consistently over 20 years or more. Index funds have been proven to out perform actively managed funds from mutual fund managers and solo day traders. Again, do your research, but that’s what I do and have discovered to be best for me.
2. Automatically pay yourself first: When you get paid, before you spend money on literally anything, get into the habit of paying yourself first. Set up an automatic withdraw at your bank or with your employer to deposit a set amount each week/month to automatically be deposited into your retirement fund (Roth IRA, 401K, etc.)
3. Increase your means: Focus on increasing your income while increasing your savings rate where needed to reach your retirement savings goals in the time frame you desire. More info on this later in this article.

There you have it. You do those three investment steps you’ll be on the path to securing a very solid retirement.

Need help implementing the 3 steps above? Click here to book a free 30 minute financial coaching call. We’ll discuss your situations, answer your toughest questions and collaborate with each other upon the best plan of action to take for you moving forward.

I don’t have 20 to 40 years to invest, what now?

If you’re looking at the compounding investment chart above and are saying “I don’t have 20 to 40 years to invest!”, well, you’re not alone. 

Nearly 1 in 4 don’t have enough retirement savings to give them the comfortable lifestyle they deserve. The good news is that you are asking the question now, not another 10 years down the track when it really may be too late.

While you might be a far closer to retirement age than most, not all hope is lost. You will, however, have to work smarter by thinking outside the box a bit to free up or earn more cash to invest each month. Many people in their late 40’s, 50’s even 60’s do one or more of the following to retire in 5 to 10 years from now:

1. Invest in real estate. Historically, investing in real estate is one of the top wealth building asset classes on the planet. Examples: buy & lease residential homes or find and fix up homes and resell them at a profit. Yes, it takes education & time to do well, but comparably speaking it’s much faster than saving money for 40 years.
2. Start a business off-line or online. Owning and running a small business is also among the top list of wealth building strategies on the planet.
3. Reverse mortgage your home. This is where you can use some or all of the allowable equity in your home to live off of or supplement your income.
4. Become a money lender. Learn how to lend out money to secure positions on property aka hard money lending.
5. Rent out your home to cash flow it, move to a smaller place.
6. Legally pool your funds with other people to do any of the above.

How much of your income should you automatically save?

Different financial advisors have different rules, but initially, you should be setting goals to reach an automated savings goal of be investing 10 to 30% or more of your income each month.

Remember, once you’re in the habit of paying yourself first before any other expense you’ll be on the path to be financially free.

If 10% is too much to automatically have deposited each month in your retirement fund, then start off with what you can and then increase it by 1% each month thereafter until you reach your ideal savings goal percentage each month.

If you have no idea about how much you can possibly start saving it’s important to learn how to set up a spending plan.

I’m not talking about a budget here. I’m talking about having a plan that helps you spend your money the way you need and want to.

The creation of your spending plan first starts by looking at your expenses to identify cash that can be redirected toward your automated savings goal of 10% or more each month.

Login to your bank account and print off the last 30 to 60 days of bank transactions. What things do you spend too much money on? Cap those expenses and invest the difference.

For example, if you can cut your expenses on dining of $180 a month, see if you can cap it at $100. From there add that $80 to your automated savings plan.

Wealth Pillar 5: Execute with excellence with smart people

The road to riches is bumpy. Each of us will have plenty of ups and downs but there is one thing for certain. You can’t know it all, or see it all, or get all the answers by yourself. This is the time of course to seek out smart financial people to learn from and associate with as often as you can. The smart people you connect with can help you stay committed, stay on the right path and help you where needed with execute your retirement savings plan with excellence.

You might be wondering though, where does one find trusted financial help to count on along with knowledge and guided & personable help?

There are 3 things I do that I’d suggest you do as well:

1. Start reading/listening to the best financial books on the planet
2. Collaborate with financial coaches & mentors

Read – listen to the top 25 financial books on the planet

Over my lifetime I’ve read hundreds of books that have consolidated knowledge and wisdom for me that I’m very grateful for. If you are not reading or listening to something of value each day I’m going to challenge you to get started right now.

I went through all the books I’ve read over time and summarized the top 25 below. Most of them are business/financial related but I threw in some best books in other categories like health as well to help you acquire knowledge to help you truly retire worry free not just financially but with your health and mindset:

1. Money Master The Game, 7 Simple Steps To Financial Freedom, by Tony Robbins
2. The Essays of Warren Buffet
3. Rich Dad, Poor Dad by Robert Kiyosaki
4. 7 Habits of Highly Effective People by Stephen R. Covey
5. The Law of Success, Napoleon Hill
6. The TAO Of Warren Buffet
7. The Master-Key to Riches by Napoleon Hill
8. The E-Myth Revisited: Why Most Small Businesses. Don’t Work and What to Do About It by Michael Gerber
9. The Speed of Trust: The One Thing That Changes Everything by Stephen Covey
10. The One Week Marketing Plan by Mark Satterfield
11. Mastery: The Keys to Success and Long-Term Fulfillment by George Leonard
12. The 4-Hour Workweek by Timothy Ferris
13. Principles: Life and Work by Ray Dalio
14. The Experience Economy by Pine II, B.Joseph , James H.Gilmore
15. Killing Sacred Cows: Overcoming the Financial Myths That Are Destroying Your Prosperity by Garrett B. Gunderson, Stephen Palmer
16. The Science of Influence: How to Get Anyone to Say “Yes” in 8 Minutes or Less! By Kevin Hogan
17. Unique Ability: Creating the Life You Want by Catherine Nomura
18. The Biology of Belief: Unleashing the Power of Consciousness, Matter and Miracles by Bruce H. Lipton, PhD
19. Nail it Then Scale It
20. The Charge by Brendon Burchard
21. The Enzyme Factor
22. Good to Great
23. Delivering Happiness
24. Cashflow Quadrant
25. 5 Day Weekend

Collaborate with financial coaches & mentors

The biggest trap many people fall into when it comes to achieving great success in life, including making your retirement plan a reality, is thinking it can all be done by yourself.

Every person of great achievement has had coaches and mentors in their life to train, teach them, keep them on the right path, provide accountability, point out blind spots, provide clarity, boost confidence, and enhance personal capabilities.

Invest the time and effort to find a financial coach or mentor you resonate with and do all you can to connect them him/her.

It might cost you a little money, but it’s an investment that will reap great rewards.

One of the sites you can consider using to find live financial consulting is here.

Another approach is to seek out a financial fiduciary who will teach & guide you and always act in your best interest as they invest and manage your money for you for a small fee around 1 to 2% annually. Fiduciaries are legally bound to always act in your best interest.

It can be tough though to find a fiduciary to work with or for you if you don’t have at least $50,000 accrued that is liquid, ready to have them invest for you.

If you are in the class of not having $50,000 or more available to invest quite yet reach out to me here and we can discuss your questions and see if having me be your financial mentor is possible.

Summary

Congrats, you did it! If you read this whole article awesome job. Having the right mind set is key to reaching any level of success, including financial goals like retirement. The key to really achieving your retirement savings goals is to get started immediately. There is no better time to start than NOW.

Start by automatically saving a certain percentage of your income and set clear savings goals. Knowing the fundamentals of finance will lead you in the right direction.

And lastly, get the right people to work with you during your journey. If you’d like some hand-holding with planning out your retirement and finances click here to schedule a Free 30-minute strategy call with me. We can talk about your toughest financial questions and discuss the best plan of action to take for you.