For the longest time, I’ve wondered whether Social Security is a dependable source of income for traditional retirees. As someone still over 22 years away from being able to collect, it’s hard to believe in the system given it is already underfunded by ~22%.

Therefore, when the Social Security Administration announced the cost of living adjustment (COLA) for 2022, I was shocked! Due to rising inflation, there will be a COLA of a whopping 5.9%! The increase will translate to an addition of $92 to retirees’ average monthly benefit next year.

Earning $1,657 a month or $19,884 a year from Social Security until death is not bad. Further, the maximum Social Security benefit increases from $3,148 in 2021 to $3,345 in 2022.

The average person would need about $500,000 in capital returning 4% to generate $19,884 a year. In other words, we can make the assumption that the average American retiree is a half-millionaire.

As a result, I have no doubt the majority of Financial Samurai readers will be millionaires in retirement as well.

There’s a saying that goes something like this: To feel rich, take whatever you earn and triple it. Once you get there, triple it again. In other words, due to hedonic adaptation, it’s impossible to ever permanently feel rich!

We all know that making a top 1% income or top 0.1% income means you are technically rich. But I’ve noticed on my path to financial freedom there were several times when I felt incredibly rich and money wasn’t the dominant reason.

Let me share some of those times in this post. I’ll also share more classical ways I felt rich.

Maybe you can share some of the times you felt rich as well. The more we can show gratitude for how far we’ve come, the better we’ll feel.

The right asset-to-liability ratio is important if you want to retire comfortably or achieve financial independence. If your ratio is too low, you may stress too much about your finances because you have too much debt. If your ratio is too high, you might not be taking enough advantage of enough cheap debt to get richer.

As interest rates stay depressed, the propensity to take on more debt increases. Low interest rates also encourages more investment. This can be good for economic activity, but it can also create asset bubbles that end up destroying a lot of wealth. Be careful.

Stay On Top Of Your Debt Load

On the corporate finance side, companies are taking on more debt to fund operations, investments, and acquisitions. The hope is that the return from various corporate activities will surpass the cost of debt in order to bring even more wealth to shareholders.

On the government side, the Treasury Department is issuing more Treasury bonds to pay for more government spending. It is logical to conclude that tax hikes are on the horizon. Luckily for us, the U.S. government can also print an unlimited amount of money to in essence pay back the debt.

On the personal finance side, consumers are taking on more debt to live a better life today. Below is a chart of my favorite type of debt, mortgage debt. Mortgage debt is the least bad type of debt because it generally improves the quality of your life and can often help build wealth through an appreciating asset.

As mortgage interest rates drop to record-lows, millions of Americans smartly refinanced their existing mortgages to increase cash flow. Meanwhile, there’s a growing number of Americans buying new homes to live a better life.

But now, interest rates are ticking up as the economy recovers and the Fed tapers. Therefore, paying attention to your asset-to-liability ratio has become increasingly important.

Given our primary residence is likely one of our largest assets, buying responsibly is prudent. At the same time, living a better lifestyle by owning a nicer home as we get wealthier is also something many people desire.

Therefore, let’s try and figure out the target primary residence value as a percentage of net worth. I’ve got a certain percentage in mind that will help maximize lifestyle. The percentage will also provide enough investment exposure and minimize financial worry for being too house rich.

One great thing about a bull market is that the unnecessary big-ticket stuff we buy declines as a percentage of our net worth over time. If we can survive the initial liquidity crunch, things tend to turn out well.

For example, let’s say you have a $100,000 net worth that is all in your company’s stock. You inexplicably purchase a $50,000 BMW even though you only make $80,000 a year. That’s unwise because you just spent 50% of your net worth and 62% of your gross income on a car. Driving a beater or taking public transportation would have been more appropriate.

However, let’s say your company hits it big and your company stock grows to $5,000,000 in 10 years. If you still own your car, its original purchase price only ends up being less than 1% of your net worth. Meanwhile, you were able to enjoy a fun vehicle for 10 years. Therefore, purchasing a $50,000 BMW 10 years ago turned out to be a good gamble.

I want to do the same type of thought exercise with a house. How much should we really “gamble” to live a better lifestyle today?

Using net worth as a variable to determine how much home one should buy or continue to own is a useful exercise.

Related: Making More From Your House Than From Your Salary Makes Life Easier

Today’s guest post is from Jim at Route To Retire, an early retiree. His family of three decided to leverage international geoarbitrage to start a brand new life in Panama.

Jim is living a life that I eventually want to try once both our kids are old enough to remember their adventures (5+). If you’ve always wanted to learn how to move overseas to live a better life for less money, here’s how they did it.

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Becoming a millionaire was something I always dreamed of but, honestly, never really expected to become a reality. Through some intentionality in saving and investing though, that’s exactly what happened by 2017.

The goal I was working toward was to retire early so I’d have freedom with each day. I wanted to enjoy the present more and be able to concentrate on time with my wife and young daughter. Seems like a reasonable goal, right?

However, I think we all know that a million dollars ain’t what it used to be. And to make that last for possibly 45 years or more? That seemed like an impossibility.

So I started thinking that even though we lived in a pretty low cost-of-living area near Cleveland, Ohio, maybe there was somewhere else we could go that might be less expensive.

Then I realized that we weren’t really limited to just the U.S. if we were no longer going to be working. Maybe we could move to another country and get more of a bang for our buck as well.

And that was it. Without even realizing it, I had discovered the idea of international geoarbitrage without even knowing that was a thing. The idea of taking your money and making it worth more by moving to a lower cost-of-living area can be an effective financial tool.

In our case, we decided to move to Boquete, Panama after going on a single vacation to the country in 2017.

Imagine retiring by age 40. You may have to prepare for a 50-year retirement! Traditionally, the average American retires by age 65 and prepares for a 20-25-year retirement.

However, with the median life expectancy increasing and more people desiring to retire earlier, we must plan for even more unknowns. Further, return assumptions for stocks, bonds, and other investments are coming down. As a result, more capital or a lower withdrawal rate is required to retire and stay retired.

When I first started writing about early retirement in 2009, I was 32 years old. My original plan was to work until 40 and call it a career in finance. I didn’t know exactly what I wanted to do after finance. All I knew was that my interest in the industry was fading.

Instead of lasting until 40, I left a couple months before my 35th birthday because I negotiated a severance. The severance paid for five years of living expenses, which I translated into five years of time saved.

Leaving behind maximum earnings potential was a bummer for the first six months. But I got over it. The money you lose by retiring early will quickly be replaced with the joys of doing what you want to do.

The best way to achieve financial freedom is to make more money. You can only save so much on a capped income. And one of the best ways to make more money is to side hustle!

I’ve put together a list of the 20 best side hustle ideas below to help you fill up your money coffer. They’re organized by virtual gigs followed by in-person ones. There’s something for everyone.

I’m a big believer in side hustles. They got me through my quarter-life crisis, boosted my savings, and eventually helped me break free from a stressful job working 50-60 hours/week.

There’s nothing special about me either. I started out with a minimum wage part-time job when I graduated college. Then, thanks to networking, I landed a meager $30,000 full-time job shortly thereafter. Overtime, I worked my way up to a sustainable six-figure income.

How did I do that? Mostly by working long hours. I utilized my free time in my 20s and 30s to do a lot of side hustles. Even today, after everyone in the house is fast asleep, I often work into the wee hours of the morning on Financial Samurai and other household work.

If you want to achieve financial freedom sooner rather than later, I encourage you to take on a side hustle or two to boost your income. There are an endless number of things we can now do to make extra money.