This article was originally published on May 17, 2015 and updated on Jan. 15, 2016.
Warren Buffett is one of the richest people in the world, with a net worth pegged around $60 billion. At 85 years old, with that kind of cash to his name, Buffett could certainly retire and enjoy whatever lifestyle he wishes. Still, even though his net worth is far beyond what we mere mortals will ever likely reach, you have a very good chance of living much like Buffett does in retirement.
You see, despite his age and nest egg, Buffett is still working. For more than 50 years, he has served as CEO at the helm of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B). While it's clear he's working on a succession plan, he has also indicated that he has no plans to retire as long as he's physically and mentally able to work.
What you can learn from Buffett's plans
Of course, saying you want to work until you're physically or mentally incapable of doing so is different from actually living that way. Buffett is in the position to work as long as he remains capable because he has strong plans in place to enable him to do so.
By understanding those plans, you can put yourself in a position to replicate them as much as feasible within the context of your own particular situation. By putting plans like that in place for yourself, you can set yourself up to successfully keep working as long as your mind and body can keep up.
When it comes down to it, there are just four key factors you need to build into your plan for it to be successful.
Key Factor 1: Be an owner/operator. Buffett is the CEO of Berkshire Hathaway, and he also owns about one-third of the voting power in the company he leads. Because he's the CEO, he answers only to the Board of Directors and the shareholders, and given that he's a major shareholder himself, it'd take something pretty compelling (like mental incapacity) to unseat him.
You may not ever rise to the rank of CEO of a major public company. Still, you can easily become CEO of your own small business or a founder of your own not-for-profit entity, should you choose to go that route. Technically speaking, all it really takes is some paperwork and incidental filing fees to get started -- though, to keep it going, of course, you do need some start-up cash and an idea that will lead to either profits or sufficient philanthropic gifts to sustain the operation.
If you have some cash and drive but not a decently profitable idea, then you can also help launch your plan to become an owner/operator by buying an existing small business or a franchise. There are often substantial start-up costs, and you do lose some autonomy as a franchisee, but you'll also be buying into an already-tested business model.
Key Factor 2: Be in control of your money. You don't need Buffett's $60 billion to run your own business, but you do need to understand how money works, as well as the basics of cash flows and the risk/reward trade-offs associated with investing that money. Buffett considers his chief job at Berkshire Hathaway to be that of "capital allocator" -- the person who determines where Berkshire Hathaway's cash goes.
No matter what you put yourself in charge of -- your own household, a one-person business, or a franchise that employs hundreds -- capital allocation is an important skill to have. You need cash to get started. You need cash to run your operations. You need cash flow to sustain the entity. And of course, you need sufficient cash left over after your other costs to pay yourself a salary and/or a dividend, particularly if you'd like the operation to support your costs of living.
No, you don't need Buffett's level of skill or his bankroll to be successful at it, but you absolutely must master the basics of money management and capital allocation to make it possible.
Key Factor 3: Know your limitations as you age. Buffett's chosen role as a capital allocator doesn't require great physical strength, but it does require a sharp mind and, at the scale he operates on, access to a great support staff. It works for him because he's still with it mentally, and the work doesn't require great physical exertion.
Whatever role you'd like to see yourself in as you continue to work past a normal retirement age, be sure to design it around what you legitimately expect to be capable of doing at that point in your life. Once again, it helps to be an owner/operator -- which gives you flexibility in designing your job description -- and to be in control of your money, so you have the wherewithal to make it happen.
Key Factor 4: Enjoy your work. Buffett is 85 years old, with $60 billion to his name, yet he still goes to work and draws a paycheck. If you had that kind of money at that stage in your life, would you still be showing up to the office? If you would, then more power to you -- you must really enjoy what you're doing.
If you wouldn't still be showing up to work if you had his resources at his age, then either you're in the wrong line of work, or you simply have other life priorities you enjoy more. Either way, if you want to work into your 80s or beyond, that's way too much of your life to spend at a job you don't enjoy.
Get yourself ready to be a Buffett-style retiree
Buffett's retirement objective to work until he's no longer capable of doing so is a legitimate goal you may very well want to pursue. If that's the kind of retirement you're looking for, be sure to build your plans around these four key factors that enable Buffett to be successful at it. They provide a key foundation that lets Buffett keep doing what he loves, even as an 85-year-old multibillionaire, and they can provide the same foundation for you.
Chuck Saletta has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.