A different way to look at "retirement" and how to get there

[Eddie Werner]

I wanted to look at this topic a little differently then previous posters.  It seems that everyone pushes the 401k save for your "old" self when you hit 62 mindset. This is assuming you want to "work" until you are 62. In my discussions with my financial adviser we worked out the number of needing 2.5 million when I retire to have a monthly income of $5,000. They are ballpark figures but I feel they are critical in this discussion.

If I am working until 62 to retire with 5k a month..........when each property I currently own generates a couple hundred a month in cash flow........isn't the goal then to hit 5k a month in income?  Forget the 401k, employer match, etc. The goal is consistent income each month to "retire". Why not get there early by breaking free of the over marketed and over pushed 401k? I think the key is STRICT money management.

I recently cut my 401k contribution in half so I could save the other 50% of my contribution to buy rentals. The price to rent ratio really favors investors in my market so $250/door cash flow is fairly easy to achieve if you know where/how to invest. I have enough in my 401k if I cashed it out that I could buy 2 properties in cash. Each one would yield $500/month cash flow with no debt service....I would be 20% of the way to my "retirement" monthly income goal. I work and save for 10-15 more years continually saving and investing in properties that by the time I am 40ish (27 now) I have exceed the 5k a month income and can "retire." I feel that active cash flow investing would get individuals to their monthly income goals much quicker then 401k type investing. Has anyone committed fully and done this?  Thoughts?

[Eddie Werner]

@Elizabeth Colegrove

My market averages a 30% return on rentals as well so I definitely see the upside to continuing my acquisitions and deploying more capital to ramp up.  My plan is more long term but not as long term as 401k inventors will be waiting to retire. 

Like you mentioned, the key is strict money management.  When I get my paycheck a certain percentage goes IMMEDIATELY into an account for buying my next rental.  If someone doesn't have the self control and financial understanding to do this then they probably should keep using their 401k (or other autopilot-type retirement plan) as a retirement method.  I think for those who understand the end goal is monthly cash flow you can get there a lot quicker and "retire" well before 62.  Thanks for your comment.