Setting Up The Ultimate Retirement Hack to Living for FREE

A Retirement Crisis that is Slowly Getting Closer

Did you ever see the movie Titanic? That’s exactly what this is. It should scare you right into a library so you can read how to undo this retirement income disaster.

Table of Contents

“1 in 4 have no retirement savings.”

That’s the retirement iceberg!

There is no way that’s sustainable in the long run with fewer and fewer job prospects available. The retirement dream cruise is now a full-blown nightmare.

Personally, I’m not waiting to hit the very visible block of ice to prepare my raft and leave. Too many Millennials and Digitals (born after 1992ish) are infatuated with the Get Rick Quick schemes. Most would want to be the schemer so they can live the lifestyle as well. So I’m offering this as an SOS for your sensible (maybe even basic) family cruise.

Steer clear from not planning ahead. Retirement might seem far away, but I promise you that it is not.

S.O.S for Financial Safety

After spending over 5 years helping people, either through resume building, financial literacy tips, articles, or personal 1-on-1s, I ended up publishing $77,000+ is the Magic Number for Million Dollar Millennial on Linkedin back in 2018.

Then I came back and dropped the New magic number for automatic millennial millionaires. Tried and proven techniques to drive down your expenses, increase your income, decrease your debt, improve your investments and build generational wealth. It’s a mouthful because that’s all the steps you would need to take to pivot your life away from impending doom. Unless you want Leonardo DiCaprio to play your part in the story.

Spoiler alert you die freezing to death. It’s a terrible way to go.

Financial literacy Concepts Made Simple

While most Financial concepts are presented as complicated and beyond the average man, I differ. I think you do get this stuff on a fundamental level. You don’t want to be broke and you want to live carefreely. That’s the goal of financial literacy.

You will end up learning about 401ks, IRAs, ROTH vs Traditional, HSA vs FSAs, FAANGS, Dow Jones, ARKK Invest, compounding interest, etc. Like any new language, it will take you some time to acclimate. Don’t make it worst than what it is. Got a whole series on investments:

Remember the goal is simple.

As you learn, just follow the NETMAX Financial plan until it all clicks. Think of it like entering a new location on the GPS.

Start driving and the destination will be on the right. The final stop is Millennial Millionaire status because it’s possible in your lifetime. It’s a wild ride but it’s ultimately a hard choice that you have to make.

To the Main Event: Free Money for Retirement!

Like most of my crazy Willy Wonka theories, I have to work them in the now, the future, and then backward for them to make sense.

The Failing System

Here are the given retirement planning parameters. The old Retirement was framed as a three-legged stool: (1) pension, (2) social security/medicare, and (3) savings. Savings back then was a loose word for whatever you had hanging around that you didn’t spend on the kids or renovations yet.

Unfortunately, as 401ks started to take over for pensions; the new retirement system is now more of a two-legged stool of (1) Savings and (2) Social Security.

Basically, more people will have to depend on themselves and the work they put into their own social security to survive in retirement. They got rid of the pension since it was a costly proposition to take care of ex-employees until they die while longevity kept climbing. As morbid as it sounded, companies expected people to die within 5-7 years max. The nerve of retirees living for another 20+.

So now it’s all on you. Nothing worst than becoming the grandpa that siblings fight over because of shared long-term care expenses. Never mind, begging for your own kids to take care of you, or not abandon you in a toxic nursing home in NY during a pandemic… yep that’s worst. Eesh…

To avoid that, You got to get Rich

Most millennials can and should consider becoming Millionaires. Ultimately, this article is all about how. To prove it, my wife and I are breaking down our net worth every month.

Thinking about Retirement is not sexy in your 20s or 30s. But it’s important to note that retirees never complained about investing too much. Most Americans over 50 are worried that they don’t have enough to retire. Although we can’t plan when we are going to die, we can make a great guess as to how much we would need.

See Table Below

Rough Estimate: 25x Annual Expenses Long-Term Spending Need

Current Lifestyle	Current Annual Expenses	Multiply by 5% Inflation	Retirement Savings Need
Low to Moderate	$40,000	$42,000	$1,050,000
Average	$50,000	$52,500	$1,312,500
Urban Millennial	$58,000	$60,900	$1,522,500
Moderate to High	$75,000	$78,750	$1,968,750

According to the 2016 Bureau of Labor Statistics data, “older households”—defined as those run by someone 65 and older spend an average of $45,756 a year, or roughly $3,800 a month.

The Inverted TNFG Math

“Just remember how your story started is not necessarily how it will end.” So How do you earn a million dollars in savings? Simple, we work the math backward this time. We have to figure out 1. how much we spend, 2. what we need to save/invest, 3. how much we need to make and that’s it.

Don’t freak out. We would need to:

Use the Average Retirement Amount Needed (calculated above). Let’s call it the AVG-R
Divide the AVG-R by the Div Yield (in this case 3%). Round up to the nearest $250k as margin of safety to get the Investment Amount Needed or INVST-N
Solve for the Present Contributions based on time, aka PRS-C
Add back in the current Average Household Expenses = Total After tax Need
And, finally divided by (1-tax rate) for the Annual Income Needed.

Don’t worry bout the nomenclature, I’m just a random guy that likes to keep it simple.

More People Should Build Wealth. It's Easier than You Think. Most Millennials Can and Should Consider this Retirement Dividend Investment Hack — Shook: Space Jam 2 Pic

1. $52,500 is How Much We Need to Spend

The average annual expenses for a US Household totaled $48,000. So the AVG-R is $52,050. Turns out, the average household spending in America is $5,005 per month. This is $60,060 per year. But I think I have the closer number.

2. Divided by 3% for the Total Investments Needed

Without fail, this is how the rich got richer, they let their money do the hard work. The AVG-R divided by 3% is equal to $1,666,666.67 but rounded to the nearest $250,000 that’s a grand total of $1,750,000. <— you would have to accumulate that much for the INVST-N.

3. To get there, Solve for the PRS-C at 8%

Years	Monthly Contributions (approximation)	Total Accumulated Interest Gained at Historical Avg. 8%
15	$5,125	$821,275.47
20	$3,000	$1,020,835.06
30	$1,250	$1,301,069.00

*The point is that you won’t have to do the entire $1,750,000 heavy lifting. See the example below.

4. Multiply the PRS-C by 12 for the Annual and Add Back the Avg Household Expenses of $45,000

Monthly Investment Contributions	Annual Contributions	Total After-Tax Needed i.e. +$45,000
$5,125	$61,500	$106,500
$3,000	$36,000	$81,000
$1,250	$15,000	$60,000

5. Solve for the Before Tax Salary Amount

Simply dividing by (1- tax rate)
Let’s say the rate is 15%
Divide by .85

After-Tax Amount	Divided by 85%
$106,500	$125,300
$81,000	$95,300
$60,000	$70,500

*See that wasn’t so hard.

Summary of the Retirement Strategy for the Ages!

There you have it, how much you should invest to have your dividends, generated from your investments, based on your own contributions/efforts, pay for your retirement.

It’s all about investing in yourself for the long term.

You are welcome.

The wealth equation is simple. Wealth = Contributions x Time x Rate of Return. If you don’t have a ton of money, give it time. Conversely, if you have a lot of time to invest, you don’t need that much money. Or fill in something profound because I’m telling you it’s POSSIBLE!

This massive number is made easier for couples if they manage their lifestyle expectations. Check out the NetMax Financial Plan for couples.

Here’s something to consider turns out the annual growth at even 5% for $1.75 Million is an additional $87,500! Yep, this is a dope hack, side note dividend tax on $52,500 is not that much. Doing the research and it’s looking promising. I will likely drop that tax article in the future.

Bonus: Here’s what my household is working toward.

Closing out the year stronger.

Working on investing in the after-tax portfolio to hit the total of $25,000 in M1 Finance Brokerage focused on Dividend Income that generates at least $1,000 in passive Income for starters in 2022. Check out the portfolio in real time. If you like the platform and want to start investing, I have the $20 for $20 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
Boosting back the EF savings with an additional $3,000. Keep tabs on your savings, cash flow, net worth, investments, retirement, and more for absolutely FREE with Personal Capital! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
Getting back to shape – HIIT Mornings. Running, and biking just pushing out effort. I say it all the time but it’s still good. We did start HIIT workouts off of YouTube.