The Two Main Paths To Retirement Couldn’t Be More Different

We can all take one of many different paths to reach our retirement. The question is, which path is the right path for you?

Some advocate for the short and direct path to retirement by earning a ton of money and living off a very small portion of it. Others want us to save a little bit over a long career and eventually retire when we hit the traditional retirement age. Then there are the people that claim they’ll never retire. Which way to retirement is the right way?

The First Two Decisions Dictate Your Retirement Strategy

The first two decisions you must make when considering your retirement strategy¬†are “What type of retirement do you want to live? (how much money will that take?) and “How do you want to get there?”. Let’s examine these one at a time.

What Type Of Retirement Do You Want To Live

Deciding what type of retirement you want to live can be a very tricky question. People have a hard time imagining what they will want to do once they no longer have to work a 9-5 job, yet it is essential question you must answer to figure out which retirement path you want to take.

Some people would just be happy staying in their local community and taking advantage of what it has to offer while others will want to travel the world and live a luxurious life. Obviously, living in luxury will cost a ton more money than just hanging out around your local town in a modest home.

Once you have an idea of the life you want to live in retirement¬†you can begin figuring out a rough estimate of how much it will cost to live that lifestyle. Then the last step you’ll need to take is to figure out how much money you’ll have to have in your nest egg to provide enough income to match your future expenses. Of course, how long you’ll be retired will play a large factor in your nest egg size, so let’s look into that factor next.

How Do You Want To Get To That Type Of Retirement

Now that you have an idea of what type of retirement you want to live, you need to figure out how to get there. Want to retire young? You’ll need a high paying job and you better be saving a very large portion of your income (50%-90%) if you want to have your money last throughout your entire retirement. Of course, if you’re willing to work in retirement here and there or in a part time manner, you might not need quite as much money. Still, the large amount of money you’ll need up front will still be daunting.

Don’t want to retire as soon as humanly possible? You have a lot more options available to you. You can focus on putting away a reasonable chunk of your income, around 20% or more depending on your age, and still reach retirement in the traditional sense. In fact, you probably don’t have to worry quite as much about getting a super high paying job if you diligently invest a decent chunk of your income consistently.

Instead you can find a job you enjoy that might pay a bit less if you can still live a comfortable life on less income. You have more time to invest for retirement than the super early retirees, but the earliest years still give you the most value due to the magic of compounding.

We’ve covered the basics of the two main paths to retirement and how you can get there. In the next couple of weeks we’ll examine these two different paths in more detail to see which is right for you.

Which type of retirement are you leaning toward? Is the big up front sacrifice and small income in retirement worth retiring earlier? Or are you planning on working for the long haul in a career you might enjoy more so you can live a more well rounded life financially?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Lance, I wonder how many of us have the choice of the super high paying job? The choice is really more about how you want to live in retirement.

    • I think anyone has the choice that wants to do it. If you study petroleum engineering in college I think that’s a pretty high paying field overall. However, I do agree a lot has to do with how you want to live in retirement as well. Good points!

  2. I just started saving up for my retirement, we have a three bedroom house and trying to live frugally. We all want a high paying job, but the main important is how much you can save every pay day.

  3. Bryce @ Save and Conquer says:

    I think I’ve already mentioned it here, but we are planning a retirement with expenses at about the level they are while working. Of course our expense categories will shift around, like we won’t need to save for retirement, but we will probably have to pay more for health care than the $243 we are paying for a family plan through work. It will be a bonus if our expenses drop, as they do for many in retirement, but we are not counting on it. How much to save? We are not planning to use the 4% rule. We are using a 2.5% safe withdrawal rate adjusted for inflation. That should see us through, along with a good inheritance for our son and a few nieces and nephews.

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