Ep. #35: How to Retire in Ten Years

Who wouldn’t like to retire in ten years? It’s possible for anyone. Listen to this episode to find out why.


Welcome to Rich & Thin™ Radio, the only podcast that helps you get more bank with less bulk. Today’s episode is for every listener who would like to know how to retire in ten years. I’m Kelly Hollingsworth and with this topic, I’d like to welcome the entire human race to the podcast, because who doesn’t want this kind of freedom? I think we all do, so I’m glad you’re here, everyone on the planet, and now let’s dive in to how to retire in ten years, or at least set yourself up with the flexibility to do that if you want to at any point.

The first thing I want to say about having the ability to stop working at any moment just because you want to, is a pretty easy place to hang out. But I do want to stress that it is a circumstance, it’s neutral, like every other circumstance. This means that even though it’s a pretty good neighborhood to live in, the ability to just stop working whenever you want, you still have to manage your mind to enjoy it. My husband tends to worry more about money than I do, and sometimes he walks out to the kitchen for breakfast looking like he’s been through a war while he was sleeping, because he’s been up all night fretting about money. This is less frequent lately, maybe all this mind-management stuff I’ve been talking about is rubbing off on him against his will, or maybe we’ve just crossed the threshold where his brain thinks we’re safe, but the point here is that no matter what the circumstance, no matter what number is attached to your net worth, you can still worry about money. U.S. News reported back in 2011 that a “survey of 457 individuals with liquid assets of $3 million or more found that 40 percent don’t perceive themselves to be wealthy.”

So wealthy is a state of mind, there’s no doubt about it, but another thing that’s equally true is all the mind-management in the world doesn’t exempt you from basic math. If it costs you more to live than your net worth will generate for you, you aren’t there yet. You have to keep working.

The next thing I want to say is that more people are able to retire than are probably aware of it. If you can cash out of your current situation, whatever it is, and take your money to a state or country with a low cost of living, you might be able to retire right now. My friend Anton and I used to joke about going to Bali and buying a palace. Is Bali still inexpensive relative to the states? I think it is. I just did a quick bit of internet research and it appears, if I did the currency conversions correctly, that a 3 bedroom apartment inside the City Centre will run you about $460 per month. So if this research is correct, and you are location-independent, you might be able to stop working right now if you want to jet off to Bali.

And here I’m not suggesting that you should pack your life into a suitcase and do that. I spent 3 years living in the Virgin Islands to save 90% on my federal income taxes each of those three years, and I can tell you, those were the longest three years of my life. Even paradise is a circumstance, and it’s a circumstance that many of us can find tedious after a while. I used to come back to visit the states, and I’d spend hours in the supermarket, ogling the produce. They just don’t have good produce down there, or on most islands, I would imagine. And I much prefer cold weather to hot weather, so it wasn’t the best place for me to live just to save money on taxes.

But in any case, the point here is that a little creativity and a dash of adventure go a long way to boosting your retirement ability, and this is a good thing to know because as a nation, we Americans are in deep trouble, as far as retirement goes.

Kara M. Stein is a commissioner, one of five commissioners, who make up the U.S. Securities and Exchange Commission, and last week she gave a speech at the Brookings Institution to warn us all of the coming retirement crisis. She said:

Since World War II, Americans have planned their retirements around the expectation of combining a pension, Social Security benefits, and personal savings to provide sufficient income for their golden years. The combination of these three sources is commonly referred to as the three-legged stool of retirement. It is based on the understanding that any one of these legs has historically been insufficient standing alone, but that together, the three legs create a strong foundation. In recent years each of these legs has become wobbly. Due to a number of factors, the financial health of the Social Security trust fund has been declining. According to the 2018 Trustees Report on Social Security, the fund will be depleted by 2034. That is only 16 years away. At the same time, the availability of employer-provided pension plans has also been declining. Few private sector workers today have access to a pension, and many public sector pension plans are facing severe financial problems.

So that’s what she had to say in her speech, and before I go further, let’s be clear exactly what she’s talking about. The latest forecast is that the social security trust fund will be depleted by 2034. And what happens once the trust fund is depleted? If we keep operating as we are now, with social security taxes coming out of the paychecks of working people, and that money being paid to retirees, it’s expected that benefits will continue at about 79% of what they’re scheduled to be. Twenty-one percent is a big cut, and it’s not certain that the line will hold there. Taxes are based on the political climate, and can be voted out as the political climate changes.

And now let’s talk about pensions. If you’re not covered by a pension, you know it and you can plan for that. My larger concern is for the folks who are covered by a pension and are relying on it.

The Fortune 500 company my husband works for went through a bankruptcy restructuring and the judge wiped out $9.8 billion in pension benefits that that company had contractually guaranteed to its employees. My husband was one of those employees, so thank God we weren’t counting on that money in our retirement. It disappeared in one fell swoop and then it was gone forever.

And another thing to notice about what she said:  “Many public-sector pension plans are facing severe financial problems.” This means that even if you don’t work for a private company, if you work for a government entity that has offered you a retirement plan, a pension of some kind, that, too, can be wiped out in certain bankruptcy proceedings.

So here’s what I want you to notice. Anytime you’re counting on money coming in from someone else—a pension plan offered by a government entity or a private company, or the social security system, or any other payment from any other person, even an insurance company, you might not get your money. That’s just the way it is. Someone else has it, and anything can happen, and often does, before it’s handed off to you.

So the three-legged theory of retirement in my mind is not really a stool at all. Retirement is a unicycle. There’s just you and your earning ability and what you manage to save for yourself. That’s all you can count on for sure. And oh by the way on that, a few months ago we did a four-part series in this podcast on how to get rich, and the fourth episode in that series, I think it was Episode 16, was on how not to lose your nest egg to a scam. That episode, interestingly, is the least popular episode of this podcast so far, and I think that’s fascinating. Why is this? Is it because no one has a nest egg yet and there’s nothing to protect, or because they think that protecting it is too complicated to pay attention to? I don’t know but it’s an interesting question to ponder.

In any case, I agree with everything in Commissioner Stein’s speech on the coming retirement crisis except for one thing, and it’s this: In her speech, she said that with all this going on, “the ability to achieve financial security in retirement is increasingly tenuous” for many Americans.

And here, I have to quibble. Well, actually, I’m going to do more than just quibble. I’m going to come right out and suggest that we do a complete 180 on this, because the ability to achieve security in retirement is something you decide on. No government can tell you how able, or unable, you are to achieve something. That’s up to you, and whatever ability you set for yourself, that’s exactly how able you are going to be.

I’d like you to think of your earning ability as a dial in your brain. If you dial it down to nothing, that’s where it will sit, and your earnings will reflect that. If you dial it up, that effectively opens up your brain and puts it to work in figuring out how to earn more.

Now this is where people like to start drawing distinctions. They like to say, “oh, that’s easy for you to say. You’re smart or you’re a lawyer or you’re married or you don’t have any kids, so it’s easy for you, and what do you know?”

The answer to this is that I know a few things. The first thing is that the smartest people often don’t earn the most money, because they get in their own way. They over-intellectualize everything and make it a lot more complicated than it has to be. And by “they,” in this scenario, I mean me. We had a joke in law school. The “A” students make professors. The “B” students make judges. And the “C” students make all the money. If I had been a “C” student in law school, I shudder to think what I might have accomplished in terms of earnings in my legal practice.

It’s not about IQ, my friends. My friend Dennis likes to talk about his wealthy grandfather. He said that his grandfather always told him, “Business is easy, Dennis. Every day, you go to the office and you open the mail, and you put the bills on one side of your desk, and the checks on the other. If the checks are more than the bills, you go to lunch.” And I asked, “What if the bills are more than the checks?” And he said, “Then, you go to work!”

So let’s not get confused here. Earning money is obvious, it’s obvious how to do it, and business is about basic math. Do the dollars coming in exceed the dollars going out? If you can add and subtract, you’ve probably got what you need to be successful at this. There’s not much more to it than that.

What it takes is not IQ. It’s a decision to earn more money. That is the first step for anyone who wants to retire in ten years.

And of course the next question is how much money is that? And here’s where I want you to trust yourself and not run to some calculator online, especially not one that’s run by a salesman who’s peddling overpriced annuities and insurance. Let’s say the number is a million dollars. A million dollars doesn’t buy what it used to, and I found a post at financialsamurai.com that says $3 Million is the New $1 Million, but it’s a starting point.

If have a million dollars and you earn 10% on that money, that’s $100k before taxes. Who knows what the interest rate will be when you retire? Who knows what you’ll earn on that money? None of us can know. All you can do is start with a starting point, and a million dollars is as good a starting point as any. If you want a more cush retirement, you need a bigger number, but let’s stick with a million for the sake of this discussion.

Approximately 50% of Americans have less than $5,000 in retirement savings. Let’s say you’re starting at zero. If you want to retire in 10 years, that means you need to sock away $100k per year for each of those ten years. This can come from your earnings as an employee, from a business, from investments, or from renting out rooms in your house. It doesn’t matter where you get it, just that you get it.

Now I want you to imagine that we’re not talking about your retirement. We’re not talking about your survival. When the stakes are high, many of our brains shut down, particularly around money. The numbers are just too mind-boggling. So let’s pretend this business of collecting $100k per year for each of ten years is a game, and the world is your Monopoly board. Actually, let’s not imagine a Monopoly board because too much in that game is contingent on the roll of the dice, and in earnings, it’s not that speculative. It’s all up to you.

So where do you start in this game, once you’ve decided that you’re going to play along with us? The first thing you do is you gather the low-hanging fruit. If you’re underearning, stop it right now. Employees, march in there and get your raise. And I don’t mean the piddly raise they give to long-term employees who’ve become as permanent as light fixtures. I mean a raise. What they’d have to pay a newcomer that they hired in off the street, who doesn’t know half as much as you and they’d have to spend time and money training, if they could even find that person, which they probably can’t.

Whatever they would have to pay that person is how much you should be making so go in there and get it. Let me know if you need help. It’s all about getting clean in your thinking, on what you services are actually worth, and crafting the message that conveys that. These two steps are money, and they matter to getting the raise that you want. One of my clients told me her employer wasn’t giving out raises that year, and I said, “How did you ask for your raise?” And she said, “I asked them, are you giving out raises this year?”

And when I heard this, I went screaming over the edge of a cliff. Don’t do this nonsense to yourself. If you don’t know exactly what to say to make to your employer to make it clear why giving you a big raise is their best and only option, get in touch with me immediately, because I can help you with that.

Now back to our game. We’re gathering the low-hanging fruit. If you want to play this game of getting more money for what you’re currently doing, if you want to take it up to Level 2, don’t just ask for a raise. Quit, and let them hire you back on a consulting basis. The last job I had was back in the ‘90s. I was underearning, because I fell for that stupid geographical negotiating tactic that goes like this: “Well, if you were working in our New York office, here’s what we’d pay you, but you’ll only be working in our Atlanta office so we’re only going to pay you this.” If I had known then what I know now, I would have asked that firm, “Do your customers in Atlanta pay you less than your customers in New York?” And of course they would have said no. They charged everyone the same, no matter where they were located. The customers in Alabama were paying the same as New York and the cost of living is WAY lower there. So by the same logic, I should have asked to be paid without regard to geography. But I didn’t, and there was no way they were going to find someone to do what I was doing at the “Atlanta” rate I initially accepted, so the day I quit they had to hire me back on a consulting basis at three times the money. That was $100k per year right there, my friends.

Now, I know many of your brains are saying, “Listen lady, that won’t work. It may work for some people, but it’s not going to work for me.” Or you may be thinking that it just doesn’t feel right. But think about this: if you’re not going for more money now, in October 2018 when the stock market and the economy are both flying so high we’re all at risk of oxygen deficiencies, when are you going to work that out? After the next crash, when everyone’s pulling out their empty pockets like rabbit ears and saying, well gosh, with the economy the way it is now, we can’t possibly pay you more money.

I’m just saying… Seize the day. If this were just a game that you were serious about playing, you would see this window and you’d jump on it. It wouldn’t feel so confusing. Have you ever seen the opening episode in a season of Survivor where they let the players who are fresh off the boat grab at a stash of survival gear within a certain narrow time window? None of these players say, “OH geez. Maybe next time this stuff is offered, I’ll go grab some of it. They don’t do that. They get their butts in gear and they go after it. They get after it because there’s a lot to be gotten in that narrow window, and they don’t want to miss, it, and this is where we are in the economic cycle right now, so allow yourself to do the same thing in real life. Get it while the getting’s good.

The next thing I want you think about is taking a good hard look at your salary or your income and the reasons you’re not earning more. Recently I was listening to Dave Ramsey and he was talking to a woman who makes $30,000 per year and is in debt. He asked, “Why do you make only $30,000”? and she said, “Because I have five kids,” and Dave’s response was basically, “Oh, of course. Say no more.”

And now, if I hadn’t already jumped off a cliff once in this episode, I would do it again right here, because WHAT IS HE TALKING ABOUT? If a man called in and said, “I have five kids and I’m in debt, what should I do? I only make $30k per year,” I’m pretty sure Dave, or any sane person on the planet, would say, better get after it. You had them. Now you better figure out how to feed ‘em. So figure out a way to earn more money.

Every excuse not to earn money becomes a reason to earn it when you flip it over. “I can’t earn money because I have five kids” turns into “I’d better earn some money because I have five kids.” “I can’t earn money because I didn’t go to college” turns into “I can earn money because I’m not tethered to $100k in student loans like everyone else is.” “I’m too old to earn money” becomes “I’m ten years from retirement age. I’d better earn money.”

We tend to get really situational about money—who can earn it, who can’t, and why–but the truth is that earning starts with a decision: I’m going to earn more money. If a mother of five decides to earn more money, God help anyone who gets in her way. She’s turned herself into a momma bear with that decision, and we all know what they can do if they get a mind to rip someone’s head off. There is no stopping a momma bear once she’s decided what she’s going after.

And the same is true for you. Once you make the decision to make money, it happens. This is a podcast for entrepreneurs, so the obvious decision, if you want to make money, is to start a business that makes money, but let’s say you have no business ideas. You’re playing this retirement game with us, but your mind is drawing a complete blank as to strategy.

If this is you, there’s a get-out-of-jail-free-card in this game, and it’s called sales.  Why sales? Because all other things being equal, it’s among the highest-compensated endeavors on the planet, and on balance the competition is pretty low, because no one wants to do sales. Everyone wants to be an entrepreneur or a lawyer or a dentist or a plastic surgeon or something else, anything but sales, but here’s a secret: if you choose any of these things to do, you still have to know how to sell, whereas if all you do is sell, you can leave the rest of the legal and business and medical headaches on someone else’s desk, all those people who wanted to be entrepreneurs and lawyers and doctors, and you can go home, and take your commission check with you while they’re worried about all that other stuff.

Sales requires skill but no formal education. Certainly no student loans and no letters behind your name. You can learn how to sell, how to develop a reliable sales plan that works if you work it, from about $100 worth of books you can buy online. If you’re really serious, and then you just work your sales plan. Rock-star salespeople routinely make well over $100k per year. You can bank that for sure if you decide to become one of these people.

If this doesn’t sound good, you don’t want to become an accountant, learn QuickBooks and take a basic accounting course. You do not need a masters’ degree. With quizbooks knowledge and a basic accounting course, you can do accounting for small businesses. At $50 an hour, you can earn enough to cover basic living expenses and bank $100 grand working 60 hours a week. A lot of people  do that. Don’t want to work that much? Charge $75 an hour and work 40.

I could go on and on about ways anyone can earn enough to retire in 10 years, but the point here is not to browbeat you with all the options. The point is to illustrate that there are so many ways to earn money that anyone who wants to retire in ten years can do it if they put their mind to it.

Who among us has ever truly decided to earn more money and didn’t make it happen? If you have, please send me an email and tell me about it. kelly@richandthin.com. If not, please rest assured that there won’t be any such emails coming in, because this doesn’t happen. It’s simply not part of the rules of how this game is played. The decision to earn more money is a magical switch that opens a gate in this game that sets you on the path to the pot at the end of the rainbow. You still have to take the journey, you still have to do the work, but in this century, in the greatest economy in the world, and if you’re in America, in the most profitable country in the world, there has never been a greater opportunity to make money. If you can’t see your opportunity, all that’s going wrong is that you need to work on your brain and that’s what I’m here for. Let me know if I can help.

Thanks everyone for joining me today. Let’s get going on our retirement. We can all retire in ten years if we want to, and I hope you have a great week.

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