HoweEnterprise.com
March 2, 2020
How to Pave the way to an early retirement Hey Taylor What’s the secret to retiring early? I hear people talk about saving all their money so Taylor they can stop Kovar working at 40, but that seems too good to be true. - Jake
need to live comfortably?
Hey Jake - There’s not just one secret to early retirement, but there are concrete steps you can take to make it happen. I promise it’s not too good to be true, you just need the right mindset and a can-do attitude.
Invest. I disagree with a lot of advisors who recommend using index funds for FIRE accounts, as those passively managed accounts can actually stifle growth. You take on risk whenever you invest in the stock market, and by investing in strong companies that offer dividends, you bring extra cash into your account while oftentimes outpacing the rest of the market. You don’t want to put every dime you’ve got into one business, but a collection of quality stocks will deliver better results than the average index fund.
The FIRE (financial independence, retire early) movement has really taken off, and you can get a more detailed run down at GoFarWithKovar.com. For now, here are the three main points of focus for early retirees.
If you have debt and no savings, it’ll take a while before you can consider early retirement. However, if you save now, invest wisely and calculate your retirement needs, you’ll be surprised at how realistic this whole FIRE thing is. Good luck!
Save. If a normal worker puts aside 20% of their earnings for retirement, that should be applauded. If you want to have enough savings to live off for 40 or 50 years, you need to stash away closer to 50% of what you’re making. While it depends on how much you earn and when you hope to retire, the fact remains that you have to cut your spending drastically in order to bank enough cash to live off.
Taylor was raised by good ol' blue-collar workers and following in their footsteps led him to take on massive debt at a very young age. It didn't take him long to realize having debt wasn't his cup of tea, and he worked his tail off so he could enjoy financial freedom and independence. As an entrepreneur and financial professional, his work has been quoted and published in a variety of different media on topics such as financial management, budgeting, saving, business, investing, and more. Read more about Taylor at GoFarWithKovar.com
Calculate. There are two schools of thought within the FIRE movement - fat and lean. On one side you have a more luxurious retirement (fat), and on the other you keep your expenses low so you can get by without having to go back to work (lean). This comes down to personal preference as much as it does the amount you’re able to save. Some people enjoy living frugally, traveling to inexpensive countries where the dollar goes further. Others need a retirement full of ski trips and lobster dinners, which will require a bigger investment upfront. A common rule used by early retirees is the 4% rule, with 4% being the amount you can withdraw from your investment account each year without touching the principal. If you start with $1 million, 4% yields $40,000 each year. So… how much do you
Legal Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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Living with children Q: We homeschooled our son through the sixth grade. This past fall, per his wishes, we sent him to a public school for John the seventh Rosemond grade. Last week, he was attacked by the class bully. This other child pushed our son to the ground, called him vile names, and threatened him with further bullying. The principal has decided that both boys were equally at fault and suspended our son, along with the bully, for three days. Everyone knows this other boy is a bully and has been since he started school. When we pointed this out to the principal, it was like he was unwilling to even consider that our son was the victim and should not be suspended. Our son is very upset and we are considering legal action. We’ve followed your advice for a long time and are hoping you have some for us concerning this situation. A: You obviously didn’t get the memo. In the new and glorious millennium, here are no bullies. Every altercation, despite facts to the contrary, involves two equally responsible kids. And so, as happened to your son, public schools punish both victims and bullies, and bullies live to be bullies again, and again, and again. According to this completely irrational (and yes, irrational and insane are synonyms) policy, Germany didn’t invade Poland to start World War II. As every public-school principal knows, Poland was equally culpable. A Pole made faces at a German from across the border or something. In any event, Poland learned its lesson. All sarcasm aside, you have learned, first-hand, that public school anti-bullying programs (and to be fair, the following comments apply to many if not most private schools as well) are a farce. A counselor talks to a class about healthy ways of resolving conflict and expressing anger as if bullies are only expressing anger inappropriately and any “conflict” is a two-way street. I was always the youngest kid in my class and usually the smallest of the boys. I was also a nerd and a geek rolled into one – a neek, or something along those lines. It was like wearing a bright red bullseye on my back and sure enough, the neighborhood bully
picked up on the signal. For several years, George (his real name) chased me home from school nearly every day. If he caught me, which was nearly always, he delighted in sitting on my chest and tickling me. Yes, tickling me. Forget waterboarding. I guarantee tickling works much more effectively and may even be legal to use on terrorists. My school could do nothing because the incidents always took place off school grounds. It would have been useless, furthermore, to talk to George’s parents. They believed that George – who was sent to juvenile prison at age sixteen – was never in the wrong about anything. Trust me on this: I was not equally responsible for George’s relentless attacks. I wasn’t traumatized for life, but I guarantee you, some victims are. As was the case with George’s parents, nearly every bully has parents who refuse to acknowledge that their kid is a sociopath. That, I suspect, is what drives public school “student conflict” policy. School administrators absolutely know that if they pin blame on the bully, his parents will rise to his defense and the school may end up with a lawsuit on their hands. As one public school principal told me, “My primary job, John, is to keep the lawyers at bay.” And so, when the bully does his thing, both he and his victim have a meaningless talk with the counselor and get suspended. Neutrality must be maintained, at whatever cost to the victim. This travesty of justice will continue until the parents of a victim file a high-profile lawsuit against a school system. I encourage you to do so. Make a lot of noise. Cause a scandal. There are plenty of lawyers out there who will take such as case on a fee-contingent basis. Just like employers, schools should be held accountable for creating unsafe environments. If you and your lawyer so desire, I will gladly testify. The Georges of this world need to be stopped, and public schools will not stop them. Family psychologist John Rosemond: johnrosemond.com, p arentguru.com. John Rosemond has worked with families, children, and parents since 1971 in the field of family psychology. In 1971, John earned his masters in psychology from Western Illinois University and was elected to the Phi Kappa Phi National Honor Society.
