A Dad’s Retirement Advice To His Daughters

Retirement advice for adult children

While looking through my personal documents, I found a letter that I sent to my daughters. It is a Dad’s retirement advice. Candid, but written with love. I wrote it long ago, but the advice remains valid.



Here is the path to save and retire on your own terms, in seven steps:

Step 1

Pay off your debts as fast as you possibly can, starting with the one attracting the highest interest rate. If this means living in a crappy, small apartment and eating rice every day for a couple of years, do it. If you want to buy a car, get a reliable, small, used one.

Step 2

Once you are out of debt, stay out of debt. The only exception to this rule is a house and maybe a vehicle. If you want to get a better car, buy used and at a price which can be paid off in a year or two. Get this car paid off before considering buying a house.

Step 3

Retirement advice - Buy a houseIf you are going to stay in the same spot for at least five years, buy a house. Preferably one with at least a little bit of usable land.  The bigger, the better.

Calculate 75% of the amount that you qualify to borrow – that is how much you should spend on a house. Don’t do it until you have at least a 10% deposit plus cash for transfer fees.

If you are going to move in less than five years, forget about buying a house and rent instead. Now that you have your own house, make extra payments every month. Remember, pay off your debts as fast as you possibly can.

And why the large land size? Learn to grow your own vegetables. It’s fun, and you will thank me later.

Step 4

Develop multiple revenue streams.

Do contract work. Start a business on the side. Invest in a business as a silent partner. Raise chickens, breed dogs, grow veggies or flowers. Build websites. Buy and sell antiques. Acquire rental property. Sell something that generates residual income. Learn to play the currency markets or trade stocks. Don’t waste your time in front of the television. Do whatever you can to generate income from multiple sources.

Step 5

Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income. Then, and only then, you can quit working for a boss and give 100% of your time and attention to your own affairs.

Step 6

Save as much as you can


Make as much as you can. Live simply and save as much as you can. Give away as much as you can.


Step 7

Retire! The sooner, the better. Live some. However, be sure you understand that retirement does not mean you stop working. It just means having the freedom to do what you want to do, where you want to do it.

Yes, there is a disclaimer: Do not be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change and valuations fluctuate. Instead, measure your wealth by the amount of cash flow your assets consistently generate.

What is enough?

Now that you have read this a few times, you are about to ask, “How much do I need? What is enough?”

How much do you need?

A very basic rule is that you can use 1/35 or 2,86% of your total investment per year.

For example, if your total investment is one million dollar, you can use $1 000 000 ÷ 35 = $28 571 per year, or $2 380 per month.

You can do the same calculation in reverse, in order to calculate how much you need to save. So, if you want to draw $5 000 per month from your investment, that is $60 000 per year, you need $60 000 x 35 = $2 100 000.

Now, please remember the following two things:

  • When I talk about investments, I mean money invested in assets that will generate income (dividends, interest, rent, etc.). Your house is probably a good investment but does not generate cash, so at or after retirement you will probably sell your house, move to a smaller one and invest the difference. Your car and furniture do not earn anything!
  • The calculations above do not include tax … make provision in your calculations to keep the taxman happy.
Last thoughts

There are many other tips, tricks and warnings about financial security, too many to mention here. There is, however, one potential risk I want to mention, and that is life assurance. Be careful with long-term assurance sales representatives. Do your homework and ensure you understand exactly what that policy entails, if you even need it. A bad assurance policy decision can seriously jeopardise your effort to save and retire.

Lastly, you will inevitably come across lucrative investment opportunities (read get-rich-quicker-than-other-folk). Don’t do it! If it is too good to be true, then it is. Just walk away and do the normal stuff.

With love, Dad.

“He who laughs last at the boss’s jokes probably isn’t far from retirement” – Unknown

I would love to have your thoughts. What retirement advice did you give your children?

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Sold everything, became minimalist. Retired early, in Hispanic America. Helping others do the same. This free guide will help you plan your relocation. Do you have a question?



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