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Diane Kennedy's Blog

Stay Retired

Written by Diane Kennedy, CPA on January 2, 2022

The Great Resignation. The Big Quit. Whatever you call it, there is something happening in the US today. People are cutting back on their work, quitting their jobs, joining the gig economy…. Basically taking charge of their own life.

One large group that has made the changes is the demographic that is 45+ years old. Some have decided to cash in on stock market and real estate gains. Others are downsizing. Still more are trying their hand at new businesses or freelance work so they work and live wherever they want.

Typically, you don’t think of people at age 45 retiring, but these aren’t typical times. 

The second part of the Great Resignation is about to hit for these people. Just like it hits anyone who retires while they still have energy and passion to do new things in their lifetime.

It starts to sink in. 

What now? 

A lot of people spend the first year or two traveling. Visiting all the places they wanted to see before when they worked too much to take the time. But after a while, that wears off.

Then what?

Or maybe they’ve come to realize that there is a difference between having a pile of money and having consistent, sustainable cash flow. You’ll have to spend down that pile of money for living expenses and/or regularly liquidate your assets for emergencies, if you don’t have cash flow. 

You just have cash.

Whether it’s boredom and a desire for something different or a financial need, at some point, many of the newly retired are going to be looking for the next new thing.

Does this sound familiar? Is there something different that you want to do with the next phase of your life?

Let’s talk about that. 

Financial Shortfalls

I often run into prospective clients who were very good at their job and/or business. They made a good salary, bought a house and built up a retirement fund. The money came from their skillset and hard work, so that’s where they emphasized their time and energy.

The downside of all of that is that you’ll get tired. Tired of working that hard. Tired of bosses, customers, vendors, just the day-to-day grind. And getting just plain tired.

Or maybe you’re getting squeezed out of your job. You had everything planned to retire at 60 or 65, but your job disappeared 10 years early. You’re not quite ready. 

Whatever the reason, you are looking at a financial shortfall.

You may have a pile of cash, but not sure how to turn it into sustainable cash flow. Or maybe you don’t have the pile of cash, but still are looking for a way to create cash flow. 

You have more options, obviously if you have the pile of cash, but it can also lull you into a sense of complacency. Sometimes you need the feeling of the wolves at your heels to realize you need to act. But sooner or later, unless you know how to turn that cash into cash flow, you’re going to need some new skills. 

If you have cash, you can invest in real estate to create cash flow. You could buy dividend producing stocks (provided you have enough cash to start with). You could buy an existing online business that produces cash flow.

The secret here is cash flow. You want money that comes in every month without you needing to the principal or sell off  the assets.

If you’re short on cash, you’re going to need to be a little more creative. You may turn your time and skills into cash flow. Maybe you buy real estate to rehab and fix n flip or fix and hold as rentals. Or you buy a struggling business that you can improve to sell or hold for the cash flow. Or you start a business to do the same. Some of my friends have hit it big by writing books. Others create digital content to sell.

You could get a job, if you’re lucky. But the older you get, the harder that’s going to be. 

Spend Less Than You Make

Maybe all you need to do is cut your living expenses to make sure your cash flow will cover your monthly expenses. Geo-arbitrage is the term of the hour these days. It means you live where your cost of living is a lot less. You still earn income in USD but spend in baht (Thailand) or pesos (Latin America).  

If you are making money online, with real estate, a business or with investments, you can live anywhere. Plan right and your money can go a lot further. 

Act Before It’s Too Late

There are a lot of options and one big pitfall. The old saying is that the best answer is the right decision. The second-best answer is the wrong decision. The worst answer, by a long shot, is no decision.

If you spend too long analyzing the possibilities or just wondering whether you really need to do something, the clock keeps ticking. And you keep spending down the pile of cash or running up debt.

Take the first step. Find advisors who have walked this path before and understand the unique advantage you have right now. Plan your path. And take that step. 

Join us for Wednesday Coaching to learn how to create cash flow with less taxes.

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