Yes, it is possible to retire a millionaire, however there is action you must take now.
I won’t sugarcoat it. The odds of you being able to retire a millionaire are slim. After reading a few more sentences many people will stop reading this article. Why? Because facing up to the truth is hard. We don’t have enough money to retire on. We’ve made good money during the previous decades, but spent more than we made. We enjoyed the good life and now at the time we want to retire, we face the hard fact that we don’t have enough savings to retire. I encourage you to read the rest of the article to learn how you can retire a millionaire.
Own up to your Current Situation
Take full responsibility for your current situation. Earlier in my life I spent more than I made, enjoying the good life. When I was laid off, it all came crashing down. It was such a hard lesson to learn, that I had to learn it twice. So I understand the fear and pain you are going through, but ignoring it wont fix it.
Confusion over Rich vs. Wealthy
In thinking like a millionaire its important to separate rich from wealth. We all know someone that makes a good income, whether they are a doctor, a lawyer, or an executive. And they are like many “rich” people in that they spend as much as they make and more. Rich people make a lot of money, but virtually no money in investments. Wealthy people have a lot of money invested.
Start Thinking like a Millionaire
Chris Hogan, author of Everyday Millionaires, provides many examples in his book of working-class people that have spent less than they made and by saving the difference, over a period of decades they have become millionaires. Compound interest has worked for them. Investing $2000 a year, starting at age 20 with an average return of 7% would grow to $704,540.19 at age 67. But if you’re reading this, like me, you didn’t put away money for retirement in your 20s. For those of us who didn’t save in our 20s and 30s it is too late to take advantage of compound interest.
While we can’t take advanate of compound interest, we can take on the mindset that got teachers and officer works to be millionaires.
The mindset to take on is:
- “I will set up a budget to spend less that I make.”
- “I will invest the difference.”
- “I will make my money work for me.”
And an added item to overcome the lack of retirement funds.
- I will create an ongoing stream of income.
Start Thinking like a Millionaire – Part 2
You won’t find wealthy people driving an expensive new car or living in an expensive house. They take their money and put it to use so that their money makes more money. They make a conscious decision on how every dollar will be spent.
They aren’t lavish in their personal spending, nor in their business spending. In Serve No Master, Johnathan Green discusses how he determines exactly how any business tool (e.g. software package) would benefit his business. He plans exactly how he would it and doesn’t buy the product until he has planned out how it will much money it will make for his business.
Millionaires think about how they can put their money to work. The focus is generating cash and investing the cash not spending it. They examine a purchase, whether it is buying a house, a car or a nice dinner and determine if they price they are paying is worth the cost. And the cost isn’t just the initial monetary outlay. Luxury cars are nice, but in addition to them being more expensive, the cost of maintenance, repairs and insurance are more than an ordinary Toyota. Remember our current line of thinking of saving too little and spending too much is what created our current circumstances. Only a dramatic change in thinking will save us.
Create a Sense of Urgency
Due to the lack of funds for our retirement years we can’t sit back and coast through the rest of our lives. While all of us would like to coast into our retirement years, we can’t do it. Our past actions (not saving), has gotten us to our current financial predicament. We have a much shorter window in which to right out financial ship.
To further spur taking action now, Social Security will deplete it’s cash in the years to come, 2035 to be exact. Someone born in 1960 or early retirement age to receive full benefits is 67. For example, a 50 year old in 2019 would retire in 2036, a year after Social Security runs out of money. The message being, none of us can bank on Social Security being there when we retire.
How to Generate Money-Making Ideas
It has been said that you are the average of the five people you spend the most time with. That influence has shown up in your bank account. It is time to find some new friends. To think like a millionaire it is important to get around millionaires. You want to meet and talk with millionaires, to get understand how they created their success. This process of meeting with millionaires will create money-making ideas for you. While you can take the Forbes list of the 400 most-wealthy people and make some calls, this won’t likely produce any conversations with millionaires and billionaires. So start on a smaller scale. Here is how to meet millionaires.
Linked In
First, take a look at your Linked In and search for entrepreneurs. As you identify a likely candidate, see who you know that is connected to them. You can reach out to your friend and ask them how they know that entrepreneur. Ask for an introduction to the entrepreneur.
If you don’t have a large list of connections in Linked In, the time to create a large list is now. Start connecting on Linked In by reaching out to past colleagues and current friends. The goal is to have a list of entrepreneurs you would like to meet.
It will take time to generate an entrepreneur list via Linked In, and organize coffees/dinners so you want to have a second parallel strategy to create a sizeable entrepreneur list.
Lynda.com
Go to Lynda.com (which is now part of LinkedIn Learning). Your library probably subscribes to it. Search there for entrepreneur topics. Many independent business people create videos on business topics and provide their contact information. While you won’t have the benefit of a Linked In contact to make an introduction for you, many independent business people are open to making contact and helping others. Create a list of people on Lynda.com that you would like to meet.
YouTube
The third way for creating a list is via YouTube. Ted Talks are speeches and presentations given by entrepreneurs and world leaders. Look at Ted Talks, find videos on business topics that are of interest to you and reach out to the presenter. If they are local, set up a time to have dinner.
What to say to a Millionaire?
Say as little as possible. 90% of the time you should be in listening mode, soaking up what they have to say. Find out how they created their wealth.
Find out how they make sure their money works for them (e.g. investing in their business (active income), investing (passive income) and if they have multiple streams of income.
After the Millionaire Dinner
Write down everything they said, especially any tips they provided. There are pearls of wisdom in what they said. Reflecting on what they said will get you mind working. Come up with 3 actions that you can take. Put those 3 actions on your calendar so you keep yourself accountable to take action. And one of those actions need to be taken immediately. By taking immediate action, it starts the momentum for success.
Take inventory of your Skills
While you are taking in this wisdom from millionaires, its important to look at your skillset and accomplishments and decide with skills are valuable in the market place. Determine how that skill set can be enhanced to create even more value for the marketplace. Focus on what you do really well. Leveraging your skill set can be the basis of a new business. In other words, match up your skills with what the marketplace wants.
Create an On-going Stream of Income
At some point you will want to retire so its important to create a business that will keep paying you even after you retire. Authors and musicians are collecting royalties on past work. You want to create a business that will do the same.
Create Multiple Streams of Income
When our only source of income is from the company we work for, a 100% of our income comes from that one source. If you retire or get laid off, 100% of your income disappears. By the same token, having your own business, focusing on one area can be disaster if that one source of revenue goes away. Entrepreneur Lou Costabile started out with one business (karate studio) but today has 4 distinct businesses and expects his new businesses to generate the bulk of his income in the next few years.
Create active and passive income streams. Active income is one where you take action to create it, such as consulting with clients. Passive is one where it generates income without any or very little action. This can be dividends from stocks or royalties from a book. When creating a business think from the standpoint of how to make the income passive. The reason being, at some point, no matter how healthy you are, you will need to stop active work and the passive income will be what sustains your lifestyle.
Start Now
The clock is ticking. There is no doubt you will need multiple sources of income with the majority of it passive. The key is taking action today.
Actions:
- Examine your skills and determine which ones can be leveraged for income with the focus on passive income.
- Determine how you can start the business part-time.
- Determine the costs of the business with the goal of making a profit from Day 1.
- Determine how much money you need to sustain your lifestyle.
- Create a short-term plan to get yourself started. Don’t spend time planning out the next ten years of the business but a plan for the next 90 days.
- Identify one action you can take in the next 24 hours.