10 Years Retirement Plan Is Possible

Most of my friends feel ridiculous when I told them I want to retire in 10 years. They even laugh at me and they think it is impossible. Is it really true? Let’s me prove it.

My monthly income is $5,000 and yearly will be $5,000 X 12 = $60,000. My monthly expense is $3,000 and $36,000 in a year.

Let’s do a simple math here how much I will spend in 10 years with the 4.5 % inflation rate.

Current Expenses = Last Year Expense + (Last Year Expense X 4.5%)

1. $36,000 + $36,000 X 4.5% = $37,620
2. $37,620 + $37,620 X 4.5%= $39,313
3. $39,313 + $39,313 X 4.5% = $41,082
4. $41,082 + $41,082 X 4.5% = $42,931
5. $42,931 + $42,931 X 4.5% = $44,862
6. $44,862 + $44,862 X 4.5%= $46,881
7. $46,881 + $46,881 X 4.5%= $48,991
8. $48,991 + $48,991 X 4.5% = $51,195
9. $51,195 + $51,195 X 4.5%= $53,499
10. $53,499 + $53,499 X 4.5%= $55,906

In 10 years, my monthly expenses now become $55,906 which is $4,659 monthly. It is 155% increase from $3000, Wow! No wonder the compound interest is so powerful.

To be financially independent (assuming the investment return is 8%), I need to have total of $55,906 / 8% = $698,836 investment. Wow! So much! That means in 10 years time if I want to be financial freedom, I must have at least $698,836 in cash for investment. Is that possible? Let’s do another simple math again. Now, I want to calculate how much cash I have in 10 years.

Total Current Cash =
Last Year Cash Balance + Current Year Income
– Current Year Expenses + Current Year Investment Return

Total Current Cash =
Last Year Cash Balance + (Last Year Income + Last Year Income X 7%)
– Current Year Expenses + (Last Year Cash Balance X 8%)

I have $120,000 cash now. This is how much I have in 10 years time:

1. $120,000 + ($60,000 + $60,000 X 7% = $64,200)
– $37,620 + $120,000 X 8% = $156,180
2. $156,180 + ($64,200 + $64,200 X 7 % = $68,694)
– $39,313 + $156,180 X 8% = $198,056
…
…
[I lazy to write here, actually you can use the MS Excel to calculate all these. I skip to the last year]
…

10. $719,278 + ($110,308 + $110,308 X 7 % = $118,030)
– $55,907 + $719,278 X 8% = $838,942

Wow! I will have $838,942 in 10 years. Assuming still 8% return, I will have $67,115 income without working anymore. Minus out my expenses $55,906, I still have extra $11,209 which means $934 monthly. This is what we all call FINANCIAL FREEDOM!

To achieve financial freedom in 10 years, please note the following conditions must hold true:

1. Inflation rate is less or equal to 4.5%
2. My Income continue to grow with at least 7%
3. My Investments return have at least 8%
4. No major unplanned expenses (E.g. Medical fees for parents)

To make it simple, I don’t include the car and housing loan into this calculation. My spouse will cover the car and housing loan within these 5 years anyway. The income excludes my spouse income as well. Also, I almost forgot the education fees for my children. Let’s omit that first for simplicity and assuming my spouse will settle that as well. Yes, she can settle that in fact.

One more last very important thing is the medical fees for parents. This is the most worry thing that I may fail to retire in 10 years time. I haven’t really got a chance to attack this yet. Anyway, 10 years retirement plan is my stretch goal. 15 years retirement plan is my measure of success. I still have 5 years tolerance for anything that out my plan. Having said that, even though after I become financially independent, I’m sure I will still continue working and generate extra income but of course in a more relax way.

So, 10 years retirement plan is possible for me. Please don’t laugh at me, this is no kidding. You can't do it doesn't mean I can't too. What about you? Have you ever thought about it? Do you know you can actually retire in 10 years as well?

p/s: Btw, this is just my rough estimation only. Detail exact and supporting data it is all in my excel spreadsheet.

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Hate Your Job but Quitting Is Not an Option

Do you hate your job? If you hate your job, but can't quit for financial or career-related reasons, here are some ways what you can do:

Identify What You Like and Don’t Like About Your Job
First thing what you can do is to list out all of the things that you like and don't like about your job. Write it down in a paper and most importantly is to be specific. If your boss is making you unhappy, you need to figure out exactly what it is that borders you about him or her.

“I hate my boss because he doesn’t coach me and expect me to finish the job by my own”

If a particular task in your job makes you happy, write it down on the paper.

“I love my job especially giving training to others and coaching others, I love coaching!”

Change What You Can To Fix It

After identifying what don’t’ like about your job, the second thing to look into is to identify what you can change to fix it.

For example if you're expecting your boss to coach you, try to see things from his or her perspective why he doesn’t want to coach you. Set 1-on-1 with him to figure out a solution for this. If he is busy, can he assign someone more senior people to coach you? There could be a lot of solutions to this, what important you need to focus is:

“change what you can change to fix it.” Focus the circle of influence in 7 habits.

Become Expert In The Task That You Like

If there are certain activities you really enjoy doing, try to become the resident expert so that you can specialize and do more of them. This is no kidding. If quit is not really an option for you, you have to find a task that really can motivate you which is the task that you enjoy most. The more energy you’re putting into this area, the more motivated you are. If the tasks that you like are probably 10% out of your total tasks, you need to figure out how to expand the 10% to 50%. Even to 50% is considered to be very good since you hate your job now. The ultimate goal that you want to achieve is:

“I’m paid to do what I love” Sounds great, huh?

You Need Strategy to Change to Your Dream Job

If you hate your job now, it is probably the job what you have now is not your dream job unless you no longer hate your job after you expand the 10% to 80%.Talk with people who are in the jobs to which you aspire. Find out what skills, training and experience you will need to make your next move. Then, use your time to fill in the gaps. You may also need to take classes and build network in your desired profession. Decorate your resume and when the opportunity arises, you’re ready for it.

“Opportunity is always given to the people who have done enough preparation.”

Hope this is something useful for those can't quit their current job for various of reasons.

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