Entrepreneurs tend to love and enjoy what they do so much that they never want to retire, but being a business owner can be stressful. You need to keep the big picture in mind.
One way to massively reduce work-related stress is to know when you can stop working and maintain your lifestyle of choice; work becomes optional. That time is often a lot sooner than you think.
A client of mine recently had a heart attack and died on the golf course. He was 64 years old. He retired two years ago. Another friend died at 52 years old; we were due to work together.
Both of my parents died within 12 weeks of each other aged 63 and 64. My dad always said to my mum that life would be great when they retired. Sadly, they never retired, but they probably could have done if they’d looked more closely at their finances. I don’t want that for anyone else, or for me.
My goal has always been to help you achieve what I like to call a ‘work optional lifestyle’ as quickly as possible, so you can enjoy your time on this Earth (which may be less than you think) to the fullest.
Work is optional when:
- You have enough resources in place (investments, pensions)
- You have income-producing assets
- You can afford to maintain the lifestyle that you want for the rest of your life without fear of running out of money
- You know the exact date that you can stop working and plan accordingly
Set the date
Our Work Optional Lifestyle Financial Plan™ collates all of your financial information so that you know when you can afford to stop working and still maintain a desirable lifestyle. As financial planners we’ll look at the lifestyle you have now and the lifestyle you want to have. We also take into consideration the fact that you will have more free time to spend on holidays and hobbies which cost money.
We need to answer one simple question: could you live the rest of your life the way that you want to without fear of running out of money? When the answer to that question is yes, work is optional.
When you know that work is an option and not a necessity, stressful situations don’t matter so much. If the stress becomes unmanageable you can sell the business or leave your job. Knowing that work is optional instantly removes stress from your life.
Stopping work is closer than you think
It’s easy to look at a payslip, see a pension and national insurance contribution (and any other work benefits that you have to pay), and think you have a lot of outgoings. The reality is that you will not have to pay most of those when you stop working.
If you have a mortgage and we can find a way for you to clear it sooner, then those mortgage payments also stop. Suddenly the lifestyle that you are living at the moment no longer requires your current salary.
When you first retire or work less you’ll hopefully enjoy active holidays, walking holidays, going abroad, driving a nice car, but as you get older those things become less important.
When you are 80 years old, for example, you probably won’t need as much money. You’re less likely to be changing your car every three to four years. You might not go out quite so much; the second stage of your retirement costs considerably less.
In financial terms this means that we no longer need to create 50k a year income for the rest of your life, we only need to create it for the next 20 years or so (if you’re 60 now). After that your state pension and well-planned finances will do everything you need them to do.
If you are between 50 and 60 years old now, the likelihood is you will receive a full state pension (8-9k per year). If you are still married then between you and your wife or husband you will have 16-20k worth of income for the rest of your life which will cover most of the basics.
Once you know when work becomes optional for you it’s time to make a decision. You might look at finishing work in two years time and find that doing so would give you an extra five years of retirement. None of us know how long we’ve got; an extra five years of retirement could be massive!
Many of us carry on working without knowing our cut off date. Wouldn’t it be nice to know if you’re already there, or if it’s only two to three years away rather than another ten?
Put plans in place
When you have enough assets to have the retirement that you want you don’t need to draw any more income. You could restructure and use the income that you’re paying yourself to bring in a manager to run your business.
If you pay yourself 100k a year you could teach someone else how to run the business day to day and pay them 50k a year instead.
Most business owners only need to be in the office one day a week. If you need to be there five to seven days per week then you’ve missed the point of starting your own business in the first place! Nobody enjoys working such long hours unless they are happy to sacrifice time with their friends and family — something I do not recommend doing.
You can have all the money in the world but if you’ve got no time left there’s no point. Next year I am taking four months off work, and even if that doesn’t sound plausible for you right now, you’ll be surprised what’s possible when you know your finances.
If you would love for me and my team to help you get clear on how soon work can become optional for you email me at firstname.lastname@example.org. Alternatively, you can access a free copy of my Work Optional Lifestyle Financial Planning™ guide on my website.