Retirement Planning for Minimalists

In an ideal world, we would have perfect information and would know exactly how much to save for retirement, how many years we have to work, which investments to purchase, and how long we would live.

We don't have these things, so the best we can do is make estimates. However, if a man wants to limit the time that he has to work, I would recommend the following suggestion.

Retirement planning would go something like this.

1. Accumulate a large amount of capital as soon as possible.
2. Put the money into safe investments (fixed income) first and maybe riskier investments later
3. When you have more money than you need for the remainder of your life, start depleting your wealth.

In further detail:

1. You want to accumulate a large amount of money relatively fast if life because you want to have as much money producing more money (interest, dividends, etc). To accumulate a lot of money, you have to do at least one of two things. Either make a lot of income, spend as little money as possible, or preferably both. Make sure to pay off all debts though.

2. Ideally, you want to get to a point where you have a great amount of capital that your money can produce money by itself. Ideally, you would be making money by doing absolutely nothing. Safer returns provide much less rate of return but I would want to have a good safety net first before throwing money into riskier investments. If you can make your annual living expenses with just interest or divided income, you are in a great spot.

3. This part is advice for minimalists but more so for people who intend not to marry or have children. Without anyone to pass on your money to, you have no reason to accumulate anymore wealth than you need for a lifetime. If you get to a point in your life where you estimate that you have enough money to live for the rest of your life, you can start depleting your wealth to the point where you don't earn anymore interest or dividend income. You can deplete all the principal savings as well. The tricky part about this is that you don't know when you will die. If you deplete your wealth to soon, you may run out of resources to protect yourself. If you wait too long to deplete your wealth, you could end up dying before getting to enjoy your wealth. Most likely, we will all die with something to pass on to someone else or the state.

We can't know for sure how the future will play out but I encourage everyone to plan for it. This is a basic way to plan for it.