How I plan to retire at age 40
My journey to retirement isn't a straight line. It's filled with twists and turns, market fluctuations, and personal adjustments. But what has kept me on track is having a clear vision, a concrete goal, and a plan that I've reverse-engineered to fit my life.
I hear that word being tossed around all over the place, especially at the start of the calendar year, during new year’s resolutions and RRSP season. It’s a term we are introduced to the moment we start working, then we proceed to put several decades of life into our career, seemingly only muttering it aloud when we are frustrated with our job, manager, and coworkers. It resurfaces in our weekly vocabulary as we grow older, wiser and realize that we are closer to our own mortality. For a select few, that word does not go dormant during the 20’s, 30’s 40’s but instead is at the forefront of what they do and why they are doing it.
That word is retirement.
For me, it’s retirement in <2 years from me writing this very sentence, when I am 40 years old (my goal is to have the CHOICE to retire). For others that I have the pleasure of knowing, they made that CHOICE when they were 29, because of their focus on the Financial Independence, Retire Early (F.I.R.E) movement (more on that below). However, for the overwhelming majority, it is less of a CHOICE and more of an OBLIGATION in their sixth and seventh decade of life.
As healthcare professionals, we're hardwired to have a plan. We follow protocols, we track outcomes, and we set clear goals for our patients. But when it comes to our own lives, especially the grand plan for our future, we often get stuck on a vague and distant idea of "retirement."
For most of my career, I pictured retirement in the traditional sense: a specific age, say 65, where I'd finally stop working, put my feet up, and sip drinks on a beach. But in the years since I first wrote this article, my perspective has completely shifted. Retirement isn't a destination; it's a financial position.
Retirement is having the choice, not the need, to work.
It's the freedom to decide how you spend your time—whether that's continuing to work because you love it, starting a new passion project, or, yes, even sipping a drink on a beach. This is a crucial distinction, because it transforms a distant dream into a tangible, actionable goal
The Power of Having a Goal
Imagine you're treating a patient with a specific injury. You wouldn't just say, "Get better." You'd set a measurable goal: "You will be able to walk pain-free for 30 minutes in six weeks." Once you have that goal, you can reverse-engineer the treatment plan. You'd ask: "What exercises do we need to do today, this week, this month, to get there?"
Your financial plan should be no different. For many of us, our biggest financial goal is retirement, and it's time to treat it with the same rigor and intention. Instead of a vague idea, let's create a concrete goal and work backwards from there.
Retirement is a word with many meanings but few agreed-upon definitions. Similar to beauty or fine art, it is interpreted in the eye of the beholder. For some, it means absolutely doing nothing, sitting back, sipping mojitos on the beach while watching the world pass by. Truly relaxing. For others, it is taking a step back from a full-time career and spending more time with the family, while pursuing a hobby or an interest that was put on pause for several decades. For me, it is having the CHOICE between WANTING to work vs NEEDING to work. I love what I do, it brings a smile to my face, BUT I know I can’t physically, mentally, and spiritually do that work for the next 20 years. So in 4 short years, I’m working towards having the opportunity to make that choice when to work and when to pursue and explore other interests, when I am more physically and mentally capable. Outlined below will be a snapshot of my current passive income streams, their gross and net amounts, and the gap I need to fill in order to reach my goal of F.I.R.E.
The FIRE movement is a lifestyle and financial strategy that aims to achieve financial independence and retire at a relatively young age. The movement gained popularity in recent years, primarily through online communities and personal finance blogs (maybe even like this one)
The core principle of the FIRE movement is to save and invest a significant portion of your income, typically 50% or more (I am around 30-40%), with the goal of accumulating enough wealth to sustain your desired lifestyle without relying on traditional employment or a typical retirement age. The movement emphasizes frugality, mindful spending, and investing wisely to reach financial independence sooner rather than later.
Here are the key components of the FIRE movement:
Financial Independence: Achieving financial independence means having enough savings and investments to cover your living expenses without relying on a job. In other words, your passive income from investments (such as dividends, rental income, or interest) can sustain your lifestyle.
Retiring Early: The FIRE movement promotes the idea of retiring early, typically in your 30s, 40s, or 50s, rather than waiting until the traditional retirement age of 60 or 65. Early retirement provides the freedom to pursue other interests, hobbies, or projects that you are passionate about.
High Savings Rate: To accumulate wealth quickly, followers of the FIRE movement typically save and invest a significant portion of their income. This often means adopting a frugal lifestyle, cutting unnecessary expenses, and focusing on essential needs rather than material possessions.
Mindful Spending: FIRE advocates emphasize the importance of mindful spending. They encourage individuals to evaluate their purchases and prioritize spending on things that bring true value and happiness. The movement promotes avoiding excessive consumerism and finding fulfillment in experiences rather than material possessions.
Investing: Investing plays a crucial role in the FIRE movement. Followers typically invest their savings in various asset classes such as stocks, bonds, real estate, or index funds, aiming to grow their wealth over time. The compounding effect of investments helps accelerate the path to financial independence.
It's important to note that FIRE requires discipline, careful financial planning, and a high savings rate, which can be challenging for individuals with lower incomes or financial obligations. Additionally, unexpected life events and market fluctuations can impact financial plans, so flexibility and adaptability are essential.
While the FIRE movement has its critics and challenges, it has also inspired me to take control of my finances, prioritize my long-term goals, and find alternative paths to financial freedom and early retirement.
Let’s See This In Action
This is an oversimplified model to illustrate the principle, so please adjust the numbers for your own personal situation.
The Goal: Retire at age 45 with a retirement nest egg of $2 million.
The Assumptions:
Current Age: 38 (I'm a little less than 2 years away from my goal)
Years to Retirement: 7
Current Savings: $250,000
Expected Annual Return: 7% (a reasonable long-term average for a diversified portfolio)
Step 1: The Math To figure out how much you need to save, we'll use a Future Value formula. With your current savings of $250,000 compounding at 7% over 7 years, that money will grow to approximately $402,600.
Now, let's look at what's still missing.
Retirement Goal: $2,000,000
Current Savings' Future Value: $402,600
Gap to Close: $2,000,000 - $402,600 = $1,597,400
So, the new goal is to contribute enough over the next 7 years to accumulate almost $1.6 million. How much do we need to save each month? We can use a Future Value of an Annuity formula.
To reach $1,597,400 in 7 years with a 7% annual return, you'd need to save approximately $14,940 per month.
Yikes! That's a huge number, and for most of us, it's completely unrealistic.
Step 2: Reality Check & Course Correction
This is where the reverse-engineering becomes a powerful tool. The first goal was simply to identify the gap. Now we can adjust the variables to create a realistic, actionable plan.
Let's adjust some of the variables to see how they impact the outcome:
What if we extended the timeline?
New Goal: Retire at 55 (17 years away).
Current Savings' Future Value: $250,000 compounding at 7% over 17 years grows to approximately $785,000.
New Gap: $2,000,000 - $785,000 = $1,215,000
Monthly Savings Needed: To reach $1,215,000 in 17 years, you'd need to save approximately $3,600 per month.
Still a big number, but far more achievable than the first one.
What if we adjusted the retirement income and lifestyle?
New Goal: A more modest retirement nest egg of $1.5 million at age 55.
New Gap: $1,500,000 - $785,000 = $715,000
Monthly Savings Needed: To reach $715,000 in 17 years, you'd need to save approximately $2,100 per month.
This is a much more realistic and achievable number for many healthcare professionals. The point isn't to hit an arbitrary number; it's to find a number that aligns with your lifestyle and is achievable with a concrete plan.
As of the time of writing, the following are my current non-physiotherapy-related revenue streams. I have added the classification of Passive, Semi-Active and Active, the rough gross income and net (minus expenses, not including tax) income. Income estimates are from 2022 and not 2023.
My goal is to have $10 000/month net income through non-physiotherapy-related income, which will allow me to make that CHOICE to work. This number will also allow me to meet all my current and future lifestyle needs. This value does not include inflation rates of greater than 3%, so I will have to re-adjust if inflation remains elevated and sticky.
Dividend Stocks and ETF, Bonds and Fixed Income Instruments (PASSIVE)- I hold this as part of my traditional asset portfolio in blue chip and tech-based companies. They provide readily reliable dividends that I use either to re-invest (called a DRIP,- which I discuss more in my intermediate course, or to pay brokerage fees.
Gross: $1796. 38/year, Net: $1796.38/year
Long-Term Rental Properties (SEMI-ACTIVE)- Traditional long-term tenanted rental properties provide me with a certain monthly income that I use to offset the expenses of owning a home. Gross: $50 789year Net: $19 898/year
Short Term Rental Properties (Airbnb ) (ACTIVE): Short-term rental, that provides me with irregular income (seasonally dependent), and a lot more day-to-day involvement than Long term rentals
Gross: $7354/year, Net: $3235/year
Affiliate Marketing (PASSIVE)- Through this platform, I have been able to receive monetary compensation for referrals to certain products/services (only companies I have a relationship with). These funds are used to offset the online costs of running this business (i.e. hosting/domain fees) with the remainder being donated to charity at year’s end.
Gross and Net: $ 250/year
Online Business (ACTIVE) Financially Fulfilled Physio. This very business. Whether it be offering recorded courses, through Embodia, or live in-person courses and strategy calls, this avenue allows me an active revenue stream outside of the clinic.
Gross: $5800, Net $2030/year
Stock Options Trading (ACTIVE)- through ThetaTrading Co, this active revenue stream allows me to earn a modest, variable income irrespective of my location.
Gross: $1000/year, Net $600/year
Private/Peer-to-Peer Lending (PASSIVE). Another concept I discuss in the intermediate course. Acting like the bank, I lend out capital and earn a monthly rate of return on that
Gross: $61 200/year, Net: $25 500/year
Total Gross Monthly Income: $10 682.44
Total Net Monthly Income: $4442.44
The deficit from Goal: $5557. 55/month
Once you have your realistic goal and your required monthly savings, it's time to build the plan. This involves:
Automating Your Contributions: Set up automatic, bi-weekly transfers to your investment accounts. This removes the emotional element and ensures you stay on track.
Maximizing Tax-Advantaged Accounts: Use your TFSA, RRSP, 401(k), and other accounts to ensure your money is growing tax-efficiently.
Diversifying Your Investments: Make sure your portfolio is diversified across different asset classes, industries, and geographies to mitigate risk.
Reviewing and Adjusting: Your plan isn't set in stone. Review your progress at least once a year and adjust as needed.
How do I plan to reach my goal and reduce my deficit?
Pay down debt. Currently, my loans range between 4-7%. In the short term, I am more comfortable paying down that debt than seeking a higher return on a less certain investment
Refinance when the conditions warrant it. If rates return to~ 3%, that will allow me to garner a higher cash flow on a few of my investments.
Purchase another rental property, more than likely a vacation property. This short term rental property will allow a higher monthly cash flow than a traditional long term rental.
Build out and grow the clinical business acquired a few months ago. It is not sexy but can provide stable cashflow.
Grow and Scale Financially Fulfilled Physio. I am confident that in the pursuit of educating my colleagues on this subject matter, this business will also provide a semi-consistent revenue stream.
Now I know some of you may comment “It must be nice Robin”, or “You make it sound so easy” and “That’s unrealistic”
What isn’t portrayed in those values is what I have had to put on pause or in some cases completely give up for this pursuit. I am divorced, fortunately, I found Katie, who has lifted my spirits and instilled a further purpose in my life. What is the point of having freedom of time if I don’t have anyone to spend it with? Furthermore, my circle of friends dwindles each year as my focus narrows. I come home to an empty house and often feel alone. As Alain de Botton once said, “Loneliness is a tax you have to pay for a certain uniqueness of mind." Time will tell if this unique atypical goal of early retirement will be worth the loneliness. I believe it will. And if it doesn’t, then I can rest on the self-assurance that I took a bet on myself and failed. To me, that feeling is a lot easier to stomach than the feeling of regret and not trying.
That would crush my future self.
