Thanks for all the recent support about keeping Financial Samurai going! Your encouragement is greatly appreciated. One feedback I got was that readers would like to hear more from a woman’s perspective on reaching financial independence. I thought who better to share her thoughts than my wife, Sydney. Sydney is the CFO of Financial Samurai and also the co-CEO of our son. My goal is for her to regularly post once a month and join me for some coffee talk on our podcast.

Money was never my parents’ forte. It was a constant source of stress in their lives – like a sore wound that wouldn’t heal. Thus, it came as no surprise that money was a root cause of their divorce.

Growing up in a somewhat broken, working-class family gave me the gift of grit and perseverance. Despite the difficult times, I’m thankful that I managed to have plenty of happy childhood memories.

If you ever heard your parents fight about money when you were a child, you know how unsettling and scary it can feel. As a result, I used to worry a lot about money when I was young.

Every time my dad lost his job, I’d worry if my parents would be able to pay their bills. But, the positive side effect was that the older I got, the more I wanted to become a financially independent woman as soon as possible.

Every so often, the stock market will take a dive when you least expect it. When we sense danger, the natural tendency is to run the other way, preferably in a herd for survival. As a result, sell-offs often intensify as computer algorithms now join us humans in rushing out of positions.

As I’ve gotten older, despite much larger absolute dollar swings, I’ve become more sanguine in times of stock market volatility.

Here are some things you can do to reduce your fear and not sell or buy at inopportune times. 

Although making a high income is nice, having a high net worth is more important. High incomes come and go. They are also taxed aggressively. In contrast, a properly managed net worth could last forever.

One of the best incentives to get rich today is the record-high estate tax limit of $11.4 million per person. In other words, Americans can all pass down up to $11.4 million to our heirs tax-free.

We can create a generation of adult kids who end up having zero motivation or self-pride to make something of themselves! Whoo-hoo!

$11.4 million is an incredible amount to pass on tax-free given the estate tax exemption amount was only $1 million in 2003.

The holy grail of personal finance is to amass a large enough net worth which spits out enough income to fully fund your desired lifestyle. If you can’t generate enough passive income to do so, sorry, but you are not yet financially independent.

On your journey to the promised land, it’s a good idea to gauge how you compare to others. After all, everything is relative when it comes to money. If we all have a $5 million net worth, being a multi-millionaire wouldn’t improve the quality of our lives at all.

Surprisingly, I didn’t receive much pushback from my post, The Amount Of Money Needed To Retire Early And Live In Abject Poverty.

Almost everyone got the gist, which was to help you question whether the pursuit of early retirement is counterproductive if you have to live like a pauper. Instead, perhaps finding a job you actually enjoy doing would be a better use of your time.

Yes, a couple of readers jabbed at me using the words “coastal elite” as a pejorative term to say how out of touch I am that 200% of FPL is a near poverty wage. But come on, this isn’t politics. It wasn’t I who set the rules. If you find the FPL levels insulting, call your power-hungry Congressman or woman!

The government says that if you earn up to 400% of FPL, then you are considered poor enough to get healthcare subsidies versus paying extra to subsidize others. In general, it’s better to give than to receive. If we all become takers then our country is screwed.

I also acknowledge in the post that earning 300% to 400% of FPL seems totally fine in non-coastal cities.

In this post, I want to highlight some disconnects perhaps some of you who are thinking of living off 200% of FPL or less aren’t recognizing. Let me set the stage with one reader’s budget.

As more people look to retire early (<60), more people are looking for shortcuts in order to get to early retirement quicker.

It’s understandable that in this day and age of instant gratification, young folks nowadays aren’t willing to grind it out for decades like previous generations.

Instead of building a large enough passive income portfolio to cover a comfortable lifestyle, I’ve noticed more people are willing to retire early to live in or near poverty!

I can empathize.

When I was 25, the 9/11 terrorist attack happened. This terrible event ignited my quarter-life crisis. I seriously thought about retiring with ~$400,000 due to some lucky investments and moving to Hawaii to become a fruit farmer on my grandparents’ under-maintained farm.

In exchange for clearing brush, watering trees, and doing general upkeep on the house, I could live for free and make some extra income selling mangos, papayas, and pomelos down the street. The farm was only about eight acres in Waianae, a rougher part of town.

Then I slapped myself silly and told myself to buck up. Throwing away a perfectly good career in finance so young was incredibly stupid. So I gutted it out for another 10 years until my investments could generate about $80,000 a year and cover my desired living expenses in San Francisco.

I can’t believe I’ve been writing about early retirement since 2009. The first three years of Financial Samurai was me mainly trying to figure out how to retire early. The subsequent years has been me touching upon various aspects of post-retirement life.

For the most part, early retirement has been everything I hoped for. Freedom is priceless. But I’ve also highlighted a lot of negatives that I could not have expected until living as an early retiree for several years.

We can pontificate all we want about what it’s like to do something or be in a particular scenario. But until you experience it for yourself, there’s no amount of planning that can prepare you for some of life’s big moments.

Now that I’m deep into early retirement, I’d like to share what I’d do differently if I could rewind time and go back to when I first left work in 2012.

A million bucks! What a dream. Once you have the cash you can promptly fly to Macau, bet it on black and turn it into $2 million! Or, you can lose it all and spend the rest of your remaining years wondering what were you thinking.

Getting to at least one million dollars in net worth is a nice milestone to achieve. I firmly believe the majority of people reading Financial Samurai and other personal finance sites which don’t constantly hawk credit cards will be able to achieve millionaire status.

If I were to guess the exact percentage of Financial Samurai readers who become millionaires in their lifetimes, I would say 65%. It doesn’t sound like a huge amount until you read the data below. For the remaining 35%, you’ll have more money than if you hadn’t started reading personal finance sites.

Since 2009 I’ve received dozens of e-mails from readers saying they’ve busted through the $1 million net worth figure thanks to aggressive saving and investing. Many have mentioned they wish they had discovered the personal finance world sooner. But better late than never I say!

So what about the rest of the 300+ million Americans who were fortunate enough to be born or gain citizenship to our great country? What are their chances of living the champagne dream and caviar lifestyle?

One of the reasons why I started the Financial Samurai Forum was to extend the number of wonderful discussions we have on this site. Instead of letting me dictate what we talk about on any particular day, the community gets to decide what it wants, whenever it wants.

The FSF is like reaching financial independence for your inquisitive mind!

For example, a Financial Samurai Forum member David is wondering whether it’s possible to have too much in his family’s 401(k) account. Here’s what he writes:

My wife and I are both around 50 years old. We want to be able to retire at 55. We max our 401(k) contributions each year and have a pretty good chunk in 401Ks – approximately $2.5M currently.

We are in the max tax bracket, so reducing our income with 401(k) contributions is appealing.

We have about $700K in after-tax accounts and $100K in Roth IRAs.

My current thoughts are to convert at least some of the 401(k)s to rollover IRAs, then to Roth IRAs over time after we retire and have lower income.

For now – are we better to continue to max the 401(k)s, or stop making 401(k) contributions and start making Roth 401(k) contributions (which will cost us 37% tax on $52,000 of extra taxable income), but may benefit us in the future?

The Financial Independence Retire Early (FIRE) movement is hot! With a bull market since 2009, many people in America and around the world have gotten wealthy by owning stocks, real estate, and other risk assets.

As a result of our massive increase in wealth during a relatively short period, many people are warming up to the FIRE movement where they retire in their 30s, 40s, or 50s to live the good life supported by their investments.

I define being financially independent as having enough investment income to cover your desired life’s living expenses.

Some people go the Lean FIRE route by living relatively frugally. While others strive to go the Fat FIRE route because of their desire to live it up. Only you can decide whether you’re truly comfortable with your finances.

For us, we’re still about $50,000 a year short in passive income to feel completely independent financially. That’s what happens when you have kids. Therefore, our FIRE journey continues.

Instead of glorifying financial independence and those who are financially independent, let’s have a more difficult conversation. I’m sure some of you find it nauseating to read about some FIRE folk’s fabulous lives.

Not all is sunshine and samurai swords in the land of FIRE. In fact, one could argue that most FIRE folks are maladjusted misfits who’ve never been able to fit in.

It hit me the other day that I’ve got to get my act together if I plan to retire a second time soon.

The first attempt at retirement lasted for just under a year until I started feeling too sheepish telling anyone I was retired at 34. Although my retirement portfolio was generating about $80,000 a year in passive income at the time, I started itching for more.

Seven years later, I’m running out of steam. I’ve already conducted multiple calls with boutique investment banks, private equity shops, and larger media companies on the potential sale of Financial Samurai after its 10-year anniversary mark in July 2019.

I’ve also tentatively convinced my wife to go back to work once our son turns two years and five months old this Fall. Spending 29 months as a stay at home parent should be long enough to feel like a parent did the best he or she could without feeling too guilty chasing money instead. But we shall see when the time comes.

The final thing I need to do is make sure our after-tax retirement portfolios are generating enough income to cover our desired lifestyle just in case Financial Samurai is sold and my wife can’t get a reasonable job in a field of interest.

I feel blessed to be able to do all the things I love since leaving full-time work in 2012 – coaching high school tennis for the past three years, writing almost daily on Financial Samurai, traveling around the world, and spending time being a stay at home dad since early 2017.

But all good things come to an end. We must frequently adjust in order to keep the good times going for longer.

The main reason why I’ve gotten more conservative with my investments is not because valuation for the S&P 500 is near an all-time high and earnings growth is decelerating.

Nor have I gotten more defensive because housing inventory has shot up across major parts of the country and prices are clearly declining.

No. The main reason why I’ve gotten more conservative with my investments is because I’m very close to retiring for a second time.

Let me recap my background and share some retirement preparation plans if you’re also planning on retiring soon.

One of my biggest concerns about early retirement was running out of money.

What if there was another massive correction in the stock market like we saw in 2008-2009 and 4Q2018? What if my rental properties went vacant for an extended period of time? What if Financial Samurai died? What if I accrued unexpected medical expenses? What if I underestimated how much I needed to be happy? Such worrisome thoughts can paralyze even the best of us.

Whether you decide to retire in your 60s or in your 30s, I’m here to say the fear of running out of money in retirement is overblown. The media, money managers, and government officials, most of whom are still working, have fear mongered the general population long enough!

As someone who left the working world in 2012 at the age of 34, let me explain why your retirement life will probably be just fine.

In 2009, I made myself two promises when I started Financial Samurai: 1) write 3X a week on average for 10 years and 2) never lose money again.

We had just gone through a financial beating where my net worth got slashed by 35% – 40% in just six months. The pain was too much to bear, so I decided to take up writing instead of drugs and alcohol.

I knew that worst case, if I stayed committed with Financial Samurai, in 10 years I’d have the option to escape full-time work. When you spend at least 10,000 hours on your craft, you will have opportunities.

Further, I knew that if I never lost money again, in 10 years by simply earning a conservative 5% rate of return plus annual savings, I’d surpass the net worth that I once had before the financial crisis by at least 2X.

Achieving financial independence takes discipline and patience. But once you get there, you’ll realize all your effort was well worth it.

In theory, the maximum possible Social Security benefit in 2019 for someone who retires at full retirement age is $2,861, up 2.6% YoY. However, in order to collect the maximum benefit, you would need to earn the maximum taxable amount for 35 total years.

Given the maximum taxable amount is $132,900 for 2019, this is no easy feat. According to the the U.S. Census Bureau, median household income is only about $62,000 a year and the average household income is about $11,000 higher.

Thus, instead of the max $2,861, the average Social Security benefit is roughly $1,461 a month. Receiving a total of $17,532 in Social Security benefits a year is not enough for a comfortable retirement.

According to the Bureau of Labor Statistics data, “older households” – defined as those run by someone 65 and older – spend an average of $45,756 a year, or roughly $3,800 a month.

I don’t know about you, but spending $45,756 after-tax a year in retirement sounds like a lot! Based on a 20% effective tax rate, $45,757 is equivalent to $57,195 a year in gross income.

To generate $57,195 a year in gross income requires an investment portfolio of $1,429,875 generating 4% a year. Could it be that the average 65+- year-old retiree is a millionaire?

Given we know the average 60-69-year-old American retiree has only about $198,000 in their 401(k) and only $63,000 if we look at the median 401(k) account balance, something seems off.

Or, we can take the positive view that everything seems to always turn out OK in the end. After all, if you are a current retiree over the age of 65, you likely have some pension income and are certainly eligible for Social Security, which averages roughly $1,422 a month.

Add on some financial help from respectful kids, and all is good for current retirees. Unfortunately, the same might not be true for future retirees.

The following is a guest post from a 25-year-old Financial Samurai reader who lives in Washington, DC, makes $55,000 a year and maxes out his 401(k).

After Sam published his article, Achieving Financial Freedom On A Modest Income In Manhattan, I was fascinated to observe some of the no-can-do responses he received from his readers.

Instead of focusing on Sam’s message of cutting down housing costs, distracting yourself from spending temptation by working more than the average American, and building extra side income while you are young, the naysayers could not accept that he saved 30% of his $40,000 salary even when he did.

They said people making a similar income in today’s dollars would have no chance. Well I make a similar income in today’s dollars and I save an even higher percentage.

There’s a great saying: whether you think you can or you can’t, you’re right. It seems like no matter how much you demonstrate what’s possible, people don’t believe in themselves.

I used to be very salty against those who earned more than I did too. My parents didn’t pay for college, so I had to work ~15 hours a week during school and 30 hours a week each summer to afford my public school tuition. I also lived at home for the first two years of college as well to save money.

But when I graduated from George Mason University in December 2016, I didn’t have any debt. Tuition averaged only about $10,000 a year for my four years there so I handled it like a boss.

I studied accounting, the most boring major in the world. But I knew the chance of getting a decent paying job out of school was high.

I did not have the luxury of studying History or English like my rich private school friends who went to American, George Washington, or Georgetown.

According to Fidelity, as of September 2018, the average 401(k) account balance is $106,500. Fidelity holds 16.2 million 401(k) accounts, including my Solo 401(k). Fidelity is consistently ranked as one of the largest 401(k) providers in the country.

The median 401(k) account balance, on the other hand, is a paltry $24,800. It’s clear that despite an enormous bull run since the 2009 lows, not enough Americans are saving for retirement or don’t have pre-tax retirement plans like a 401(k). I’m sure it’s a combination of both.

What I’d like to do is compare the latest average 401(k) balance by age with my recommended average 401(k) balance by age for financial independence seekers. Let’s see how big the differences are so we can explain how important it is for everybody to focus on their finances.

The 401(k) account is one leg of the new three-legged stool for retirement. The other two legs are post-tax savings accounts and personal hustle. It’s important to never depend on the government or anyone for your financial future.

My dad is in his 70s and he mentioned he wish he’d started a Roth IRA when he was young. When you’re in your 70s, you must take required minimum distributions from your pre-tax retirement savings accounts and pay taxes. Given nobody likes to pay taxes, I empathized with his regret. It’s also a good idea to listen to your elders.

But I don’t have a problem paying taxes on income earned. It’s only when I have to pay a surprise tax where the liability wasn’t properly budgeted where I have a problem. This only happened to me once when the state of California passed a retroactive tax of 2.9% for the 2011 tax year.

I’ve been a long time opponent of contributing to the Roth IRA. However, now that I’m older and wiser, let me share some of my excuses and encourage you to contribute to a Roth IRA if you are eligible. 

If there’s a car in your blind spot and you swerve suddenly, there’s a good chance you’ll get into an accident. Your accident will not only cost time and money to fix, you might also suffer an injury or even die. If you have a financial blindspot, the consequences can be just as severe.

I can’t teach you how to be a better driver except to encourage you to slow down. But I can point out some financial blindspots to allow you to live a better life.

Here are five of the most common reoccurring misses that I’ve observed over and over again.

There are some people who think that only people with high incomes can achieve financial independence before the age of 65. They’ll go on and on about how it’s not fair that other people are able to escape the rat race early, while they’ve got to grind on because they’re earning less than six figures a year.

News flash! Nothing good comes easy! You’re either going to bitch and moan about why life is not fair or you’re going to do something to better your situation. In a world where you can only depend on yourself for retirement, having a weak money mindset is devastating for your financial future.

Let me share with you a story about some dude who was able to save for retirement while earning $40,000 a year in Manhattan, New York, the most expensive place in America. It can be done folks, and I’ve got the budget to prove it.

The old three-legged stool for retirement consisted of:

1) Pension (Company)

2) Social Security (Government)

3) Personal Savings (You)

Given less than 15% of Americans have pensions or will receive pensions, no longer is having a pension part of most Americans retirement plan. Therefore, we can throw pensions out the window for future generations. For those of you with a pension, bless you. Your pension is perhaps more valuable than you realize.

Given our Social Security system is underfunded by ~32%, the government will either cut the average Social Security benefit by ~32% or raise the minimum age eligible for collecting Social Security by at least several years. As a result, relying on a government that has perpetually mismanaged our finances is not a wise retirement strategy. Besides, the average monthly Social Security benefit for 62 – 70 year olds is only $1,000 – $1,300 according to the Social Security Administration.

Personal Savings (You) is the only leg of the old three-legged stool that’s able to provide support. Everybody who has the opportunity to contribute to a 401(k) plan should. According to the Bureau of Labor Statistics, only about 55% of the American workforce has access to a 401(k) and only about 38% of the total workforce participates.

Meanwhile, for those who do participate, the average 401(k) contribution was only about 6.5% of salary when employers didn’t contribute and 11% of salary when employers contribute. Only 18% of 401(k) participants save more than 10 percent of their salary for retirement.

When toddlers close their eyes, they think others can’t see them. But I wouldn’t expect grown adults to think the same.

Despite half the United States population living in expensive coastal cities and other high-cost areas of the country, there is somehow disbelief and even outrage a family might need multiple millions, let alone $5 million dollars, in order to retire early comfortably.

I recognize the attractiveness of lower cost areas, hence why I’ve aggressively invested in the heartland of America. Migration to the heartland is a multi-decade trend I want to be a part of. But I hope more folks can also recognize some of the reasons why people live in higher cost areas as well: higher pay, more job opportunities, greater diversity, sometimes better weather, amazing food selection, and family to name a few. 

If you want to retire early, you must maximize the value of your after-tax investments. Pre-tax retirement accounts such as your standard IRA or 401(k) are nice, but they won’t get the job done unless you think retiring after the age of 59.5 is considered early.

There is an exception to that rule, however, which allows an employee who retires, quits or is fired at age 55 to withdraw without a 10% penalty from their 401k called the “rule of 55.” You can also utilize Rule 72(t) for early withdrawal. The distributions must be “substantially equal” payments based upon your life expectancy. Once the distributions begin, they must continue for a period of five years or until you reach age 59½, whichever is longer.

But these rules are crutches for those who’ve bungled their early retirement plans. A successful early retiree waits until at least 60 to access their pre-tax retirement accounts because they have an abundant amount in their after-tax investment accounts.

Let’s first review how much you should have in your pre-tax retirement accounts by age as our foundation. 

Over the years, many readers have asked, “What does it take to become a Financial Samurai? Do you have a set of core principles to follow?”

I resisted putting anything formal together because to do so felt a little bit arrogant and presumptuous. But after almost 10 years of running Financial Samurai and having over 1,000 people ask me the same thing, it would now be wrong not to.

Now that I’m a father, I regularly think about how to ensure taking care of my son and wife if I were to die prematurely. In addition to creating a will, buying life insurance, and setting up a revocable living trust, it’s a good idea to expand Financial Samurai so that somebody can take over or contribute to the platform regularly once I’m gone.

Financial Samurai is not just me. Financial Samurai is a way of life. To be a Financial Samurai is to be someone who follows these five principles.

According to the Federal Reserve’s Survey of Consumer Finances, the average US household net worth is a whopping $692,100! And that’s based on data from 2016, when the S&P 500 was ~30% lower. Further, real estate prices in many major cities have also increased substantially since 2016. Surely, the average US household net worth will be even higher when the next survey comes out in 2019.

What’s also interesting from the chart below is that the average net worth for a college educated person is $1,511,000 compared to a net worth of only $249,600 for someone with just a high school diploma.

Further, the average net worth for a homeowner is $1,034,200 versus only $91,100 for a renter. A 11X difference is massive! For all of you who still think it’s wiser to short the real estate market by renting over the long-term, the data does not support your belief.

Source: Federal Reserve Consumer Finance Survey 2016

It’s been six years and three months since they took my paycheck away. I sometimes stay up all night and sleep all day. At least I can do whatever I want and see professionally whomever I choose.

Gourmet sushi at fancy restaurants tastes so good. But sitting alone mixing wasabi can’t take away those occasional blues. Because nothing compares, nothing compares to the camaraderie of you dear ex-colleagues!

For all the glamour of living an early retirement lifestyle, there are plenty of negatives I’ve come to discover since I permanently left my job in 2012. I know why we revert back to our baseline state of happiness, no matter how much freedom and money you have.

Let’s go through some of the negatives of retiring early now that I’m a grizzled veteran.

When I first started Financial Samurai in 2009, I was proud of finally creating something. For too long, I had just followed orders. Yet, I couldn’t tell anybody about my hobby because I was still employed. I was afraid if my employer found out, they’d tell me to shut it down or at the very least, dock my bonus for being unfocused. After all, the site was started in the middle of the financial crisis and they were always looking for reasons to cut costs.

When I finally engineered my layoff three years later in 2012, I still felt it was unwise to tell anybody about my site even though I was internally beaming with pride about the site’s growth. I felt like a new parent who wanted to annoy the crap out of all his friends by cooing about every milestone their child hit.

But because I had five years of deferred compensation on the line, even if there was just a 1% chance my old employer would withhold payment, I didn’t want to risk losing years of living expenses. And so, I kept my mouth largely shut until I had a decision to make on 4/21/2017, when my last severance-related after-tax payment hit my bank account.

In a way, the five-year time period when I was collecting my deferred compensation was like a mental jail. Like Andy Dufresne in The Shawshank Redemption reaching for the stars as rain spatters his face, full emancipation only came years after leaving Corporate America.

With nothing holding me back in 2017, it would seem like finally, I could brag to everyone that I had created a website large enough to support a family in San Francisco. With some publicity would come growth. But alas, I felt it was much better to keep a low profile.

For those of you who are thirsty for attention, let me share some thoughts about being a nobody for so long and why it may be in your best interest to do the same. 

Ever wonder how net worth compositions change the wealthier you get? Look no further as I stumbled across this great chart from VisualCapitalist.com that highlights how much each asset is as a percentage of net worth from the Federal Reserve of Consumer Finances. If you want to get rich, it’s good to study how the rich allocate their money.

Notice how red (primary residence) quickly shrinks the wealthier you get while blue (business interests) quickly grows. The key to creating great wealth is to therefore build a business or acquire a significant share of equity in a business.

When I was 30, my goal was to retire in 2017 at the age of 40. I figured, after spending my 20s learning, I should spend my entire 30s earning.

Now that I’m almost 41, I’m glad I didn’t wait until 40 to leave the workplace for good. Life doesn’t end once you retire. It simply morphs.

Although I no longer consider myself retired with all the work that goes into running this site and being a stay at home dad, here are some things that have happened since 2012:

1) Written a book called, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.

2) Traveled to 30+ new countries in Europe and Asia with my wife. Angkor Wat, Cambodia was truly amazing.

3) Gotten my USTA tennis ranking up from 4.5 to 5.0. This would have not been possible without all the newly found time to practice.

4) Consulted for several financial technology startups ranging from seed stage to series C.

5) Built this site into over a million organic pageviews a month with no forum.

6) Grew passive income by 2.5X.

7) Bought and remodeled a fixer.

8) Became a foster child mentor.

9) Became a high school tennis coach.

10) Became a father.

I’m excited what the future will bring!

Thanks to the unrelenting rise in the stock market since 2009, there’s now a trend on social media to share your 401(k) balance, especially if it’s over a million bucks. Despite the distastefulness of bragging, just the fact that more people are talking about saving for retirement via their 401(k) is a good thing.

Make no doubt about it, being a 401(k) millionaire is very impressive given the maximum contribution limit has never been higher than 2018’s contribution limit of $18,500. When I was first able to contribute to a 401(k) in 1999, the maximum contribution limit was only $10,000. Check out the chart below for details.

Congratulations for being retired or having enough money to never work again! Don’t listen to the naysayers who tell you retirement life is boring. Be assured that only boring people get bored. One question you should consider thinking about, however, is exactly how much investment risk should you be taking.

In 2012, I retired from the salt mines because I thought I had enough to provide a humble life for a family of up to four in San Francisco. But once I stopped receiving a bi-weekly paycheck, reality hit home that maybe my passive income and side hustle income wouldn’t be enough. The fact that I tried to sell my primary residence in 2012 to live in an apartment 65% smaller and cheaper shows that I had reservations about whether it was wise to leave a healthy paycheck at 34. But I was determined to provide a free life for my wife and I both before the age of 35.

In early retirement, I concluded that I needed to take the least amount of risk necessary to maximize my chances of never having to go back to work full-time again. At the same time, I was still pretty young and it looked like the economy was recovering so I ended up constructing a 60%-70% stock and 30% – 40% bond portfolio with the hopes of achieving a 4% – 6% rate of return each year. Doubling my investments by the age of 50 seemed like a good enough goal to have.

But thanks to a bull market in stocks and bonds, my public investment portfolio returned more. And thanks to a strong recovery in San Francisco real estate, everything has turned out fine so far. I wasn’t smart, I just stuck to an investment framework that fit my risk profile.

Everybody should have a net worth target to shoot for by age, work experience, and income. Targets will help you stick to your financial plan and motivate you to do more if you’re falling behind.

Too many people wake up 10 years later and wonder where all their money went. If only they could have a net worth guide they could print out and stick on their refrigerator to keep them on track.

Below is my net worth target guide to shoot for. The targets are based on a multiple of gross income, regardless of your savings rate. Obviously, the more you save, the more conservative the target net worth multiples will be. But it’s always better to end up with too much money, than too little since there is no rewind button in life.