Yahoo Finance I’m a Self-Made Millionaire: Here’s How I’ll Know When I Can Safely Retire
Becoming a millionaire and retiring is a dream for many Americans, and many of the self-made ones often achieve this feat thanks to hard work, persistence, patience and discipline, and thanks to successful business ideas.
Find Out: Retirement Planning: How Much the Average Person Under 70 Spends Monthly
Read More: The Surprising Way You Can Get Guaranteed Retirement Income for Life
Yet, knowing when to retire can hinge on several factors.
Here is what some self-made millionaires had to say about when to know when to safely retire.
Wealthy people know the best money secrets. Learn how to copy them.
Being Financially Independent and Having Fulfilled Career Goals
Gene Caballero, co-founder, GreenPal, said he retired from his company in 2021 at the age of 41. For him, knowing when to retire comfortably hinged on a few essential indicators.
“The most crucial one was achieving financial independence, where your passive income is at least twice your monthly expenses. This buffer ensures you can maintain your lifestyle without depleting savings, even if unexpected costs arise.”
Another key factor, he said, is fulfilling your bucket list of career and personal goals, which provides a sense of completion.
“For self-made individuals like myself, knowing that GreenPal can operate smoothly without my daily involvement was also vital in assessing my readiness to retire,” Caballero said. “Additionally, having shifted away from the mindset of acquiring expensive toys and luxury items further indicates financial maturity and readiness for retirement.”
Be Aware: 8 Things Boomers Should Sell Right Before Retiring
Not Relying on a Gut Feeling, but Crunching the Numbers
As a self-made millionaire, Dutch Mendenhall, founder and CEO of RADD Companies, said that when he assesses his readiness for retirement, he doesn’t rely on gut feelings or guesswork.
“I crunch the numbers and make strategic moves,” he said.
According to him, he knows he’ll be OK to retire when he achieves “total capital mastery.” In other words, when his total capital, a combination of hard-earned income and investment returns, comfortably surpasses his living costs, he added.
Another factor: freedom of income.
“The sweet sound of cash flowing in from investments trumps my monthly expenses,” he said. “That’s what it means to have financial freedom.”
Finally, he noted that mastering the “investment game” is also part of his criteria.
“With a diversified portfolio and a hunger for knowledge, I’m constantly honing my skills to become a great investor,” he said.
Deriving Sufficient Passive Income
Richard Lambert, a resume writer who has made more than $1 million as a Fiverr freelancer, said that for him, the retirement equation is simple: It’s all about passive income.
“Most younger people get trapped in a tug-of-war between earning and burning, and some of that is necessary — you’re establishing yourself, raising a family, paying off debt, signaling status, etc.,” Lambert said. “But a lesson can be learned from looking into the future and seeing what older folks do: they save more, they spend less, and they invest in assets.”
According to him, when those assets can outpace the cost of a lifestyle that you’re comfortable with — whatever that means to you — that’s when you’re free to step off the hamster wheel and own your time.
“In my case, at almost 40 years old, the majority of my assets are in real estate with the runner-up being retirement savings plans (SEP, Roth), and minimal debt,” he said.
His advice to younger individuals is to start saving and investing as soon as possible simply because they have time on their sides.
“And compound interest is going to be your best friend on the road to a nice, secure retirement.”
Don’t Retire
All that said, self-made millionaire Brenda Christensen, CEO at Stellar Public Relations, said that she retired at age 35 and it lasted exactly two weeks.
“I got bored and restless,” she said. “So, my only tip is don’t ever retire. It’s bad for your health, mental health and well, just about everything. We’ve seen time and again, many who retire, expire. Even if it’s volunteering, it’s important to stay mentally stimulated and socialize with others for happiness, health, and longevity.”
Yet, Christensen said that for those looking for specific indicators to know when you can retire safely, there are a couple of ways self-made millionaires often gauge their readiness.
First, ensure you have enough in savings, investments and other income streams to maintain your desired lifestyle without the need to work.
And of course, personal fulfillment.
“Consider what will keep you engaged and fulfilled post-retirement,” she said. “Many successful individuals find that having a clear plan for their time, whether through hobbies, new ventures, or volunteer work, is crucial for their mental well-being.”
More From GOBankingRates
These 10 Used Cars Will Last Longer Than an Average New Vehicle
6 Things to Try This Week if You're Behind on Your Savings Goals
4 Reasons Retired Women Need More Money Than Men -- And What To Do About it
This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: Here’s How I’ll Know When I Can Safely Retire
