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 high income 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.

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?” 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 much 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 figuring out how much money you’ll need 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.

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. You’ll also need to save a very large portion of your income, sometimes 50 to 9o percent, 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 pick up a part time job, you might not need quite as much money. Still, the large amount of money you’ll need up front will 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 a lower 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.

  4. Amanda Gillam says:

    Retirement issues are even more important now as it starts to become apparent to our government that not enough people have enough put by for retirement. We are all living longer, healthier lives so what might once have been considered a reasonable percentage to save may no longer be.
    Personally I will work for as long as I can – not just to save more for retirement but to keep my brain active. I’ve seen too many early retirees lose their zest for life.

  5. I’m actually not sure how to answer your question.

    I’d love to retire earlier, so I could still be able to enjoy the things I love most. I think with age, health problems start to hit hard and you never know what might happen that might prevent you from enjoying the things you planned to enjoy.

    On the other hand, I don’t think I could ever really stop working. I found myself unemployed a few times, and even during college when I didn’t have a job yet I swear, I felt useless. I think I’ll need something to focus my energy on. If it’s not a job, it will surely be a profitable hobby or something I’d treat as a side hustle.

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