Your Path to Retiring in 12 Years: A Simple Guide

Your Path to Retiring in 12 Years: A Simple Guide

Let's talk about how you can retire in 12 years using two main tools: a Solo 401(k) and mutual funds. I'll break this down into simple, actionable steps that anyone can follow.

First Things First: Figure Out Your Numbers

Before we dive into investing, you need to know your target. Ask yourself, "How much money will I need each year in retirement?" 

Here's a real example: If you think you need $60,000 per year now, you'll actually need about $85,000 per year when you retire (because of inflation). Planning to live about 25 years in retirement? Then your total target would be around $2.125 million.

The Big Picture: Your Savings Goal

Financial experts use something called the "4% rule" it" means you can safely withdraw 4% of your savings each year in retirement without running out of money. To get $85,000 a year, you'll need that $2.125 million we mentioned.

Breaking Down Your Annual Savings

To reach $2.125 million in 12 years, assuming your investments grow by 7% each year, you'll need to save about $108,000 per year.

Don't panic! If you already have some savings, you won't need to save this much.

Your Two Main Tools

1. Solo 401(k):
   This is your secret weapon if you're self-employed
In 2024, you can put away up to $66,000 per year
   If you do this consistently, you could have about $1.2 million in 12 years

2. Mutual Fund:
   - This is where you put any extra money after maxing out your Solo 401(k)
   In our example, you'd put $42,000 here ($108,000 - $66,000)
   This could grow to about $750,000 in 12 years

A Common Mistake to Avoid

Many people keep too much money in cash, thinking it's "playing it safe." But here's the truth: cash sitting in a savings account won't grow enough to help you retire. Most of your money should be invested in things that can grow, like stocks and bonds through your Solo 401(k) and mutual funds.

Making Your Money Work Harder

Think of your investments like a garden; you want different types of plants. This means putting your money in different types of investments:
Some in stocks for growth
Some in bonds for stability
Maybe some in other investments to spread out your risk

Don't Forget About Taxes

Solo 401(k): You don't pay taxes on this money until you take it out in retirement
Mutual Funds: Look for "tax-efficient" funds that won't hit you with big tax bills each year

Making Adjustments

If saving $108,000 a year seems impossible, you have options:
Work a few years longer
Cut back on what you plan to spend in retirement
Look for ways to earn more now
Start with what you can and increase your savings over time

A Real-World Example

Let's say you follow this plan:
Put $66,000 a year in your Solo 401(k)
Add $42,000 a year to mutual funds
After 12 years, you could have your $2 million

The Bottom Line

Retiring in 12 years is like building a house; it takes planning, the right tools, and consistent work. The key is to:
1. Start now, even if you can't save the full amount
2. Use both your Solo 401(k) and mutual funds
3. Keep your money invested, not sitting in cash
4. Stay consistent with your savings
5. Check your progress every few months and adjust if needed

Remember: Every journey starts with a single step. Even if you can't save the full amount right away, starting with what you can and increasing it over time will get you closer to your retirement dreams.

Making Your Money Last: Healthcare and International Options

If you're like me, you may plan to retire overseas or split your time between the U.S. and destinations like Africa, Asia, or beyond, living in your villa or enjoying various pied-à-terre around the globe.

Let's Talk About Healthcare Costs
The numbers we discussed might seem huge, but here's a reality check: The average 65-year-old couple in the USA needs about $315,000 just for medical expenses in retirement. This covers things like:
Joint replacements ($50,000+ per knee)
Dental work ($20,000+ for full dental implants)
Regular medications ($5,000-$10,000 per year)
Insurance premiums and copays

But there's good news! You have options to make your money go much further.

The International Advantage

Many retirees are discovering they can live better for less in other countries. Here's what you should know:

Mexico:
Healthcare costs are 50-70% lower than the USA
High-quality private hospitals in major cities
Retirement visa requires about $2,000 monthly income
Popular expat communities in places like San Miguel de Allende and Puerto Vallarta
Close enough for regular visits back home

South Africa:
Medical care in private hospitals is excellent and affordable
Retirement visa available with proof of monthly income
Beautiful climate and landscapes
The Cost of living is 40–60% lower than in the USA
Strong English-speaking communities

Other Popular Options:
Portugal: Great healthcare, easy residency process
Malaysia: Modern medical facilities, low cost of living
Costa Rica: Established expat communities, good healthcare
Thailand: Excellent medical tourism infrastructure

Building Your Global Safety Net

Having friends and family around the world isn't just about socializing; it's a practical retirement strategy.
Local knowledge about healthcare and housing
Help navigating systems in different countries
Emergency support network
Shared experiences and resources
House-sitting opportunities to try different locations
Cultural insights that save you money

Smart Strategy: Start Building Connections Now
Join international retirement forums
Connect with expat groups online
Visit potential retirement locations
Make friends with people who've already retired abroad
Learn about different healthcare systems
Consider teaching English online to build international connections

The Real Cost Comparison

Let's put this in perspective. Your monthly expenses might look like this:
USA: $5,000-7,000
Housing: $2,000
Healthcare: $1,500
Food: $800
Utilities: $400
Other: $1,300

Mexico or Portugal: $2,000-3,000
Housing: $800
Healthcare: $400
Food: $400
Utilities: $200
Other: $700

This means your retirement savings could last 2-3 times longer in some countries, while potentially giving you a better quality of life!

Final Thoughts

While saving for retirement in the USA is important, remember you have options. Building international connections and understanding global opportunities isn't just about saving money; it's about creating a richer, more secure retirement. Start exploring these possibilities now, even if you think you'll stay in the USA. Having options is never a bad thing, especially when it comes to your golden years.

Remember: The world is getting smaller, healthcare is getting more expensive, and being open to international options could be the key to a comfortable retirement, even if you don't reach your full savings goal. If you need help we are here to help you now at Colemanprfirm.com don't wait till its too late.