The pandemic transformed American society in ways few anticipated when it first hit U.S. shores early last year. Nationwide lockdowns immediately impacted businesses, workplaces, and schools – isolating many from their families, co-workers, and classmates.
One of the biggest transformations occurred in the workplace as millions of employees began telecommuting. The Zoom app took off as video conferencing took the place of face-to-face meetings. The pandemic has not only spurred the proliferation of the remote workplace, but it has also sparked another interesting development among workers – a rush to early retirement.
According to a recent Bloomberg article:
“About 2.7 million Americans age 55 or older are contemplating retirement years earlier than they’d imagined because of the pandemic, government data show.”
The pandemic has had the effect of resetting workers’ expectations and causing them to reassess their life paths – bringing on a new “life is short” mentality.
The same Bloomberg article spotlighted Craig DiLorenzo, 58, who chose to bow out this last March. After a career at 3M Co. and growing frustrated over 6 a.m. teleconferences, his thoughts turned to spending more time pursuing his outside passions, including volunteering with the Salvation Army.
Five years ago, a scare with cancer made him reconsider his commitment to climbing the corporate ladder, and the last year stuck at home only reinforced those feelings, he said.
“It makes you think, ‘Does all this matter as much as you think it does?'” said DiLorenzo, who retired at the end of March.
Besides a desire to enjoy life while you can because it could all end any moment – from a pandemic or otherwise – the common thread among those workers like DiLorenzo who can take early exits is: They all have savings and investments that allow them to walk away from their jobs.
Can you walk away from your job right now?
How can you get to the point to be able to walk away on your own terms?
If you study the habits of the affluent who can retire early, you’ll find common habits among all of them. By incorporating these habits in your own life, you’ll improve your chances of cutting the cord early from your day jobs significantly:
Seek Alternative Streams Of Income.
The affluent who retire early don’t typically see a sudden loss of income when they stop working. That’s because from early on in their careers, they decided to invest in assets that would provide passive income streams that didn’t depend on the number of hours worked in a day. Those who retired early in 2020 or those who plan to do so in 2021 will continue to receive income because of their passive income streams.
Passive income streams have always been the key to walking away early. That makes complete sense since when your passive income streams cover all your living expenses, you no longer need to work to pay your bills.
Once you make the determination to pursue additional income streams though passive investment sources, everything else you do should go towards building those passive income streams.
Get Control Of Your Retirement Account (Self-Directed).
The sooner you can take control of your retirement accounts through self-directed IRAs or Solo 401(k) ‘s, the sooner you can allocate your portfolio towards alternative assets offering both passive income and growth. Typical retirement plans focus on mutual funds, which routinely underperform the market and only offer the promise of appreciation but no cash flow.
Instead, income-generating and appreciating alternative assets like cash-flowing businesses, and real commercial assets, are ideal for building and maintaining the type of wealth needed to retire early.
Contribute As Much As You Can Into Retirement Accounts.
While working, contribute as much as you can to your retirement accounts. Take full advantage of employer matching and take advantage of the tax benefits of investing pre-tax dollars.
Live modestly now, so you don’t have to later. Reduce expenses and put those savings in your investments.
Avoid Consumer Debt.
Consumer debt like credit cards only diminishes wealth. Interest expenses that can be avoided can be put to much better use in your passive income investments. The affluent only go into debt if leveraging their investments means the opportunity to multiply their returns. For example, real estate or business debt used to grow operations or returns is the only type of debt you should consider undertaking.
Partner With Experts.
Entrusting your investment capital with trusted investment partners is the only way you’ll be able to break away from your jobs. Doing everything yourself is only replacing one job for another—the wealthy leverage the expertise of others through careful screening to generate multiple passive income streams.
If you want to walk away early from your jobs like the millions of Americans who did it in 2020 and those contemplating it in 2021, follow their lead by saving and investing. But don’t invest in just anything.
Instead, invest in non-speculative assets that cash flow and appreciate over time – assets with performance history.
Only by creating multiple streams of passive income will you replace the income from your job.
Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.
Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.