#327 - The Hack To Retire at 55

The average Australian retires at 67 with $400,000 in super. That's barely enough to last 10 years, let alone fund the life you actually want. But there's a small group of Australians who do retire at 55, not just comfortably, but with income-reducing assets that continue to pay them every single month. My name is Lloyd J. Ross, seven-figure investor and entrepreneur, and I've helped thousands

of everyday Aussies get out of debt and build real wealth. And in this video, I'm going to show you exactly what those assets are, how to build them, and the one thing you need to do right now to retire 12 years before everybody else. Before we do that, let's look at the problem with superannuation. I'll be blunt. Superannuation definitely is the most tax-advantaged wealth-building vehicle

most Australians will have access to, for sure, right? The contributions are taxed at 15%, meaning you get a tax deduction when you add money to it to a certain amount, roughly about 25k a year. And then the actual investment earnings are taxed at a lower amount. In fact, half of the typical amount, any income. And then for tax, the capital gains are tax-free, right? So the government's handed everyone a compounding machine with a massive

tax discount. That's effectively what superannuation is. If you want to learn more about super, go back and watch one of the episodes I did specifically on superannuation. But here's the problem. Super is not a retirement vehicle for a person who wants to retire at 55 because the preservation age for anyone born after July 1964 is 60 which means you cannot touch it before then without severe penalties

and There's hardship conditions. You're gonna meet etc. So super is slow and it's locked up and controlled by government rules. So if your entire strategy is built around your

super balance, you're going to mathematically guarantee that you'll be working until after 60. So if you want to retire before 55, you need a completely different strategy. So here are the three assets that you need to build to be able to retire at 55, okay? Now if you're younger and you're watching this, kudos, that's amazing. You have a huge advantage of time, all right? But bear with me as I go through these strategies because it does apply to everyone and

anyone. And then I'm gonna explain to you an example and then go to give you a bit of an indication of how I treat retirement. So three assets you need to build. So to execute this strategy, you need to focus on three specific types of assets outside the super. When you retire and you get, say, $400,000 in super, or whatever it might be, that's great. And you may be more than that. And that's a lump sum of asset that

needs to be invested accordingly as well. So is part of it. But to execute this strategy, you do want to focus outside super as well. And what you'd want to be doing is, you want to be building a share portfolio in a taxable account. In some sort of index fund, or you can buy individual shares, you have to know what you're doing. But you want to buy it in some sort of index fund. And you want to start as early as you can. And even if you started at mid-30s,

for 20 years, you can compound up to a million bucks. You can, especially if you're starting with a reasonable lump sum instead of buying other things. It's totally possible to do. But most people just don't take the step because they wait too long. So for example, they'll, at 35 or whatever it might be, they go, oh, I've got ages. I'll wait till I'm 50 to start worrying about my retirement. And that's the real problem. You can't wait till you're 55. to

want to retire at 55. But I do see a lot, like, I'm 55, I want to retire now, what do I do? I'm like, that was a conversation you should have with yourself at 35. The simplest thing to do is in your 30s, or like, it just doesn't, just do it. It doesn't matter what age, it just means go and start, is to build a

share portfolio in a taxable account, outside super. So you've got kind of two running together, right? The next one, this is a very important one to amplify your ability to make income and I would say that almost all of the people I know who have retired at 55 in some form or another have had a business, right? A business with real cash flow. Not just a little side hustle where you're selling macaroons at the local market. It's like something

that can really generate cash flow, yeah? Whether it's a traditional type of business or whether it's an online business, a well-run business can return 20, 30 or 40% on invested capital, right? It can produce substantial returns but most importantly, it gives you a lot of flexibility. Flexibility to amplify your income, flexibility to step out of jobs you don't like, flexibility to skill up, flexibility to add income streams and to deploy that cash how you feel fit,

right? And potentially work from home, drop some costs like what I do. So a business is a wealth building machine in the sense that it really amplifies your income. And if you look at the wealthiest people in the world and those that did retire at 55 and have, it's business that generates that without a doubt. Like it's such an integral part of the wealth building process. And I think when I

say business, people get a bit scared because we have, we have been conditioned. by whoever, banks to limit exposure and risk, whatever it is, to think that all business purely is risky. Because, you know, someone like Tony Robbins goes, well, you know that 80% of businesses fell in the first five years. It's not that they failed. For most businesses, if

you really work hard on them, you're not going to fail on them. Like, you'd be shocked and surprised to how many flipping half kind of like, semi-retarded people make money in businesses. You can do it. It's not overly risky, it just carries a bit more risk. But so does employment, by the way. Who's to say you can't get chopped at your work? Like, that's risky, but they never talk about that risk, do they? Because it doesn't serve the narrative. If I

think about my grandparents, give you an example here. Now, they didn't retire at 55, but I do believe they retired at early 60s. And so it's not too far off the mark. But here's an example. didn't come from any money, poor, you know, gone into bankruptcy a couple of times, or once, certainly, but they, in their 40s, they bought their first country pub, okay? And the person they wanted to buy it off said they didn't have the capacity to run it and blah, blah, blah. But my grandfather

said, I'm going to do it anyway. And so they ended up buying a pub. And actually, the first six months of my life, I spent in this pub. And it's actually in a place called Atunga, New South Wales, the Atunga Pub. I lived for the first six months of my life in there, because my dad was building another house, and

we just stayed there. And then they bought another one and another one. Anyway, they went back into some farming that had some challenging seasons, sheep farming, and they sold that sheep farm and they went back and thought, you know what, let's stick to our knitting and we'll go back into a pub. Now, in their 50s, just to give you the indication, my grandmother, she's 91. She told me this story the other day when I was visiting her. She said you know when

we're in our early 50s. We took a $400,000 loan this isn't like 1991 or 1990 think about that a $400,000 loan in 1990 that's like equivalent to probably like one and a half million or two million like it's a lot and in their early fifties and they bought a country pub in Baraboo, New South Wales for that price and they did it up and they ran it and they built up the equity and it generated income that paid off the debt and

they ended up selling that and buying two additional pubs with free cash flow that funded their retirement and both of them retired in their sixties until what? God, my grandmother's now is 91. What's that, 30 years or certainly 20, good 25 years and So they swung at a business, like you can see, like even

though they did it with debt, it's the business that can generate income, right? So of course, you're going to have super, of course, you're going to have some shares in a taxable account, definitely, but don't turn your nose up at a business, okay? Just quickly, if you're ready to take control of your finances but feel stuck on where to start, I

have a solution. My book, Money Bias Happiness, simplifies investing and wealth building with practical steps to help you achieve financial peace. Get your copy via the link in the show notes and let's get your money working for you. Now, back to the episode. And the third one

is, of course, and people have done it a lot, is of course a property investment. Yeah, particularly over the last, God, 20 and 30 years, we've had the greatest bull running property ever in Australia and many other Western markets, right? Because it produces cash flow. So long as you don't form the trap of accumulating so many of them that you're not carrying any equity, you're carrying just debt. So when you turn 55, you're like, oh, I've got 10 properties, but

you're not producing any cash flow because all the money's going to debt repayment. And you've got maybe, I don't know, 25% of that is equity. Then you've got to sell them all. but do it within reason. The ones that I've seen that effectively over time paid off a mortgage because they bought in the 80s and 90s when it was three times annual income, they stayed in it. They then used some equity and paid off a property at a time. But they did it in a way that generated free

cash flow. And I think if you look at property investing of yonder year, it was better when it was free cash flow. And Sharon Lecter, who's the co-author of Rich Dad, Poor Dad, the greatest personal finance book in history, Her and Robert Kiyosaki wrote that

book in the early 90s, and she came on the podcast. I go back and listen to the show with myself and Sharon, and she told me that Robert Kiyosaki built the cash flow board game because he found out a way in the late 80s, early 90s to buy enough property to generate 100 grand a year in free cash flow and income. That's why he built the game cash flow. That's why it's heavily into property. They wrote the book, Rich Dad, Poor Dad, as a brochure to sell the

board game, if you didn't know. And what's interesting about that is that worked back then because you could enter very, very cash flowing property, but you can't do that now. You can do it in some respects, but not as easy because it's like three times more expensive against incomes. So this type of strategy must change. And that's why, you know, it's probably more astute to go business and shares than it is property. because it is cumbersome on capital to acquire property right now.

So I think of these three options, the first two are the most effective to retire at 55. Here's the reality. People

want to retire at 55, and they have this vision in their mind that, oh, I can see myself at 55, I'm sitting on a beach. I'm at a beach somewhere. Fine. Not working, because you don't want to really be in that shitty job you don't like. You don't want to be there. I totally get that. So you have this vision, I want to retire. But here's what happens. They haven't done any of the groundwork. educate themselves in shares. They haven't put

money away. They haven't even started a business. They have no courage to start a business. They haven't bothered to delve into it. They don't like work. There's just been no groundwork for that. So it's where the expectations are here, but the reality of what you're doing to meet that expectation is down here. So there's this huge gap. And I really do think people are moving towards a mirage.

It's just not real. You can say that all you want to retire at 55, but the truth of the matter is, you're taking no steps to get there. So it's just like a mental masturbation. It's a fantasy. And I see it a lot. There's so many people who are coming into this age, their super's not going to save them, and they're just like, oh, now can I retire? You know, the numbers are to retire, I would say comfortably and do things you want to do. You probably want to be making at least 150K a year income,

but let's call it 200 because inflation. So say 200, really to have a really good one, right? Now, again, you may argue against that, but if it's 200 divided by 0.05, it's $10 million at a 5% dividend rate or interest rate on that to give you passive income that doesn't affect the capital. $10,000,000. Do you have $10,000,000? Do you have half a million? Do

you have a million? There's a disconnect. There's a disconnect. And you might be thinking, flip neck Lloyd, like I'm watching this and I'm 50 and you're telling me I can retire at 55. And yes, I can see the disconnect now. Thank you very much. Like that sucks. What do I do? Here's the answer. Here's the answer. Forget about retiring. Retirement is this narrative that banks create to sell mortgages and

old people's homes. It's almost like a senior rite of passage to retire. I don't know if it's a good thing. And I think when people say they want to retire, what they're really saying is, I don't like my job. I don't like the people I work with. I don't like the commute. So they're running away from the pain. I get that. But that doesn't mean you've got to retire because I have also seen people do that, leave those things with enough money, by the way, to do it, and

then die a few years later because they have no purpose. They have no structure. What's interesting about this too, my mom's retired. She has a house paid off. She has about 1.5 mil shares. She does okay. It's the type of retirement you want to create for yourself, okay? So, I would say the gauge rod between someone who just wants to retire and never work would be the minimum would be house paid off and one to two million dollars in a portfolio that produces passive

income and keep your costs low, right? So, it's not like European cruises every five minutes. That's a real scenario. That is achievable for most people if you lay the groundwork. But if you're kind of aging, you have not laid the groundwork, then I think this part is really important for you to understand. If you can delete

that word retirement from your vocabulary, I think you'll just live a better life because you'll go, okay, well, if I can't retire, what can I do for the next 20 years of my life where I will work, but I can do it in a way to work in an area I want to work with, work with people I admire and want to work with, and in a way that doesn't burn me out in my health. Generally speaking, you'll find a business that enables you to do that because not all

businesses are about doing 60-hour weeks. Some businesses can just let you find rhythm and work with yourself. You can, but you're not going to do it if you've got this notion in your head you must retire at 55 or 65. You're better off to say, if I was not going to retire today, What would I have to do to be able to work for the next 20 years with some joy? And that's a better question

to ask and a better conversation. And while you're doing that, one of the other things that will happen to you is you may meet, if you're someone who's single, you may meet a partner who can join that mission. And all of a sudden, you know, two forces are greater than one and you can come together, right? But I think you're doing yourself a disservice if you haven't laid the groundwork for retiring at 55 or 60, right? Expecting to and then putting in your own mind that you must. That's

just, it's just going to wreck you mentally. So I would say cancel the word retirement from your vocab and find a way you can continue to work and build wealth sensibly over time to do that. And by the time you get to 75, then you will probably be in a position where you can. And so I would say don't delay. Start doing what you do now if you had to work for the rest of your life. You won't want to retire. I don't think my dad will ever retire. I don't think I'll retire. And

do what? What am I gonna do? Go on a cruise for two weeks, sit on the beaches, you'll find that's not the answer either, right? So, each to one's own, but I hope you understand now that there's a foundation must be laid for 55, and then the options on the table, and there must be then a solution created in your mind as to what you're going to do if you haven't laid the foundations. Both work. You

choose which one you're going to adopt. And I'd love to know in the comments, what did you take away the most from this episode? hit the subscribe button, send this to a friend or someone who needs to hear it. There are two options to go with here. You choose yours, but we have to cast them in reality. And that's what I'm all about, is the reality of financial education and realness when it comes to numbers and what's going to be real and achievable for you. See you

in the next episode. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe to us on YouTube so you never miss an episode. And if you're serious about building wealth, make sure to check out the links in the show notes and follow me on all social media platforms at