Shoot to retire by a certain age, not by a certain financial figure. Time is finite. Money is not. You can always make more money, but you can never make more time.

Live until 60 and then say good-bye. This has been my mindset ever since I moved to San Francisco in 2001. I know expecting to die by 60 sounds a little depressing, but it’s a rational framework to help prepare for your financial future.

By expecting to die 20 years before the median American male life expectancy, I’ve forced myself to accumulate wealth faster in order to enjoy life sooner. Some of you might be thinking, “why not make money and enjoy life fully at the same time?” I agree, it can be done.

But I’m talking about doing the extremes, like going to business school for three years while working 60 hours a week, instead of taking a two year vacation from work.

Or saving 50-75% of your after tax income every year. Or starting a side hustle that takes an extra 20 hours a week that might one day grow large enough to tell your micromanagers to screw off!

It’s much better to shoot to retire by a certain age so you can increase your chances of living the life you want after retirement.

How big of an investment portfolio should I have to be financially free or start feeling free? This is one of the most common questions people starting on their financial independence journey ask.

Sometimes telling them they should accumulate at least 25X their annual expenses or 20X their annual gross income may seem too daunting. As a result, they may get discouraged and not even start.

Therefore, to boost motivation and momentum, I’ve come up with the minimum investment portfolio amount for financial freedom seekers to shoot for. That amount is $300,000. Once you have accumulated $300,000, you will start to feel financially free.

Let me explain by sharing some key investment portfolio levels based on our personal accounts. Never let a financial review go to waste.

Are you confusing your good fortune due to your own skill rather than due to luck? I’m here to argue that your outsized wealth is mostly due to luck. Therefore, stop deluding yourself into thinking you’re so great!

As President Obama said in a July 13, 2012 campaign election speech, “If you’ve got a business, you didn’t build that.“

When I first heard Obama say this sentence, I was taken aback. From 2009-2012, I had been working on Financial Samurai for three years from about 5 am – 7 am and from 10 pm – 12 pm after working 12-hour days in finance. If I wasn’t building Financial Samurai, who was?!

I had also recently left my finance job because I wanted to be free. All I really desired to do was write while traveling around the world, so that’s what I did.

But as I’ve gotten older, I’ve come to understand more of what President Obama was talking about. Just like it takes a village to raise a child, it takes a lot of help along the way to achieve your goals. Besides, Obama was referring to not building the roads and bridges that helped your business prosper along the way.

I firmly believe that it was mostly luck (~70%) that helped me achieve a basic level of financial independence at age 34. Of course, effort is also required to get ahead, but it’s not the main reason. There are plenty of people who work much harder than you or I, yet will not achieve what we have.

The more we can recognize our luck and not take our luck for granted, the more prosperous we’ll become. I encourage you to list as many fortuitous events that have happened in your life. This way, you’ll appreciate more of what you have and fight harder to achieve your goals and freely help others.

In the good old days pre-pandemic, several friends and I liked having beers after each softball game. We got to discussing what is the one ingredient necessary for achieving financial independence at a relatively early age.

Here were some of their responses:

• Saving aggressively
• Investing in stocks
• Investing in real estate
• Earning side income
• Taking bigger risks in our careers
• Leveraging the internet
• Working ungodly long hours
• Relocating to areas with huge job growth despite the higher cost of living
• Starting a business

Many of these ingredients are great for helping all of us achieve financial independence.

However, the #1 ingredient that drove me, which nobody mentioned, was FEAR. More specifically, the fear of failure. The more you fear something bad happening to you, the more you take action to make sure it doesn’t come true.

Let me share some examples to explain what I mean. Then perhaps you can share your own in the comments section below. 

The maximum 401k contribution limit for 2022 increases to $20,500 from $19,500 in 2021. Your 401k is one of the three legs of the new retirement stool: you, you, and you.

I’m surprised the maximum 401k contribution limit is jumping by $1,000. Historically, the limit usually increases by only $500 every two to three years.

Inflationary pressures are likely the main reasons for such a high contribution limit increase. For example, the Social Security Administration raised its cost-of-living-adjustment in 2022 by an impressive 5.9% to account for inflation.

If you are 50 or older, you can add up to $6,500 extra per year from $5,500. This is the government’s way of allowing older workers with typically higher incomes to catch up.

Further, the maximum 401k contribution your employer can contribute for 2022 is $40,500. This brings the total maximum 401k contribution between employee and employer to an impressive $61,000.

Always Take Advantage Of The Maximum 401k Contribution Limit

I always recommend maxing out your 401k as fast as you can. Once you get into a max habit, you’ll rack up some big bucks in no time.

Maxing out your 401k is a learned habit that gets easier over time. Given the contributions are pre-tax, you won’t feel as much pain compared to saving with after-tax dollars. In other words, at a 25% effective tax rate, contributing $20,500 will feel more like you’re contributing $15,375.

So many people don’t even bother to try maxing out their 401k because they don’t feel like it’s possible. But once they try, they kick themselves for wondering why they didn’t max out their 401k sooner.

Below is a simple chart to see how much you can accumulate in your 401k by age or years worked if you contribute $19,000 a year starting today.

The chart is obviously more helpful for younger folks, given older folks had lower maximum contribution limits in the past. For example, when I first started maxing out my 401k in 2000, the historical 401(k) contribution limit was only $10,500.

I’ve also included my high-end 401k target amount by age. It is based off continued maximum contributions plus a constant 4-8% annual return. My high-end 401k savings target can also be considered your overall total savings target. It can include after tax savings as well.

The numbers are for “ideal” conditions. We all know that life, recessions, and buying things we don’t need gets in the way of savings and returns all the time.