So you listened to the State Of The Union and heard President Obama muff the pronunciation of MyRA. Was that “My IRA?” Or was that “Myra,” like a woman’s name? I’m going with the latter.

There’s an excellent 2,100 word piece entitled, “Will MyRA Solve The Retirement Crisis?” on Daily Capital you may want to check out. In the post you’ll find several shocking statistics about retirement:

• 48%, or 44.5 million workers,  worked for employers who did not offer a retirement plan as of 2011 (NIRS).
• Approximately 45% of households, or 38 million households, have no retirement account assets (401k or otherwise).
• The median value of retirement account balances is $3,000 for all working-age households and slightly higher ($12,000) for those near retirement age.
• Less than 1 out of 10 eligible working age individuals voluntarily contribute to an IRA.

Even if these statistics are half true, we’ve got a big retirement problem on our hands! Social Security is not going to be nearly enough, especially since it’s underfunded in its current state.  (See: How Much Savings Should I Have By Age)

Active income is much more enjoyable than passive income due to the positive feeling of purpose. We want to know our actions make a difference no matter how small the scale. So for those of you who fear retirement expediting your demise, don’t worry. Every able bodied retiree will naturally gravitate towards doing something useful to keep themselves healthy.

When my total income was dominated by active income I was thrilled but felt there was NO WAY OUT. The only way to flourish was to work hard and constantly stress about being the best to continue getting paid and promoted. I’m already quite disciplined, so to add high expectations from managers only compounded the one more year syndrome. It wasn’t until passive income hit about $3,000 a month in 2008 when I began to see the stars.

$3,000 a month wasn’t enough to live comfortably in my current house in San Francisco, but it felt good knowing I could survive on my own if absolutely necessary. Worst case scenario I’d sell my properties and rent a studio for $1,400 a month. With $700 a month left in disposable income after taxes, I’d wait it out until an opportunity came along.

Progress begets progress. Once I started thinking about the worst case scenario I became hooked on creating better worst case scenarios. I won’t be able to easily send more than one kid to private school in SF if need be, but my current worst case scenario is OK. Besides, I was told there is need-based scholarships for families who make less than $100,000 a year per child so that’s good! Fingers crossed for a studious and smart kid.

I’d like to quantify a framework of happiness between passive income and active income as a percent of total income. The goal is to provide motivational goals for those seeking financial independence. I’ll share with you some of my thoughts along the way so you get a sense of how the journey feels.

Polar Vortex Coming For You

Given day job income is the number one source of income for the majority of the population, it behooves us all to go where there’s robust employment. But wouldn’t it be ideal to not only find a lucrative job, but also live in a great environment at the same time?

After reading one too many “best places to live, retire, work” articles that left me scratching my head in disbelief, I decided to create my own list based on the following criteria:

* Experience. There’s no voodoo journalism where the author writes about places he’s never been to. I’ve lived in all of these places for years except for one.

* Wealth. Wealthy people can live anywhere in the world. So it’s logical to follow their money to see where they reside.

* Weather. “Go West young man!” said one of our first settlers. No rational person would choose living in freezing cold weather for half the year when they could live in temperate or warm weather all year around. Polar Vortex be damned!

* Diversity. The world is global. Life is much better when you speak a second language, experience different cultures, and eat all sorts of food. If you only speak one language, have never traveled internationally, and eat chicken every day, this list is not for you.

* Employment. All five cities on my list have unemployment levels below the nation’s unemployment level of ~6.7%. Go where the jobs are.

Methodically growing your overall net worth is what wealth creation is all about. Your net worth is the culmination of savings, investing, real assets, and liabilities. I’m much more concerned about growing my net worth than only growing my stock portfolio because my stock portfolio is just a portion of my net worth.

Think of your net worth like a battleship during a time of war. As the intrepid captain, you are navigating your net worth to glory through sea mines of temptation and unknown icebergs of economic downturns. The greater you build your net worth, the more careful you steer.

It’s always important to think about your net worth in a risk adjusted manner. Putting 100% of your net worth into the stock market isn’t so bad when you’re a single 28 years old with $150,000 to your name. But if you’re 50 years old with a couple kids entering college, you’re likely not allocating your entire $1 million in assets into the stock market.

When I was in my 20s, I didn’t really track my net worth because I didn’t know better. I was focused on my career and saving as much as possible. My idea of net worth diversification was investing as much as I could away from the stock market given my pay and career were already dependent on the stock market. Every year 20%-30% of my compensation was paid in the form of company stock so there was no escape.

For 10 years this strategy worked pretty well because the stock market really didn’t go anywhere from 2000 – 2010 and real estate caught fire until 2007. Now everything is on fire! Let’s just hope the battle ship doesn’t burn down with so much unbridled mania.

I’ve been much more surgical in managing my net worth in my 30s given it has grown to a point where it throws off an important passive income stream. Not having a day job anymore makes it that much more important to protect my financial nut. If I can grow my net worth by 10% per annum, I’m usually satisfied. To put 10% in context, Bernie Madoff was able to amass $50 billion dollars under management because he delivered fake 10% annual returns!

In this article I’d like to provide several net worth growth targets to consider as well as a net worth growth framework by age. I think if I was able to read this article four years ago, I would have allocated more of my net worth into equities and would have a 10% higher net worth as a result. Hopefully this framework will help many of you build wealth.