There’s nothing better than being financially free. In this crazy time of COVID-19 and mass unemployment, if you are financially free you are not stressing nearly as much.

In “Are You Too Proud To Be Rich?” my goal was to challenge people’s beliefs that going to college, and getting a job as a cubicle dweller is the only way to make a good living. It’s not by any means.

My intent was to provide motivation. Perhaps I could also provide hope to those without rich parents, fancy private school degrees, lucrative jobs, or connections that you can also do financially well through other avenues thanks to the internet’s democratization of all things.

I saw with my own eyes how first generation immigrants used their ingenuity to make a lot more money than the median household income while at Uber. Now I’m seeing how immigrants are leveraging the internet to work from home and make money by running their own websites.

Now imagine if English was your first language. You went to private school. You have rich parents and are currently working at a well-paying job. You’ve got all the advantages in the world to break free if you don’t like what you are doing. But you can’t, or you won’t, because you’ve been conditioned into thinking that a salary job is the only way to go.

Understandably, if you see someone with less of a pedigree than you making more and going after their dreams, you get pissed off. How can this be?! Instead of nitpicking at every single detail to prove there’s no way others can live a better life when they are, why not open your mind and learn from them?

Let’s say you met someone with $2 million dollars in liabilities. You might think that person is doomed to work forever. But having a lot of liabilities is only one part of the equation. What also matters is the person’s asset level.

In this example, a friend of mine has $2 million in debt, but over $10 million in assets. His assets generate over $200,000 a year, easily covering the $50,000 a year in liability costs. In other words, this person is fiscally fine. His assets would have to decline by 80% before he can no longer liquidate his assets to cover his liabilities.

Let’s go through a mental exercise and discuss what is an appropriate asset-to-liability ratio for various age groups. This exercise should help you review your net worth and come up with a plan to get to the ideal ratio.

Knowing the historical 401k contribution limits is important for understanding how much you can really save in your 401k each year.

When most of us think about how much we can contribute to our 401k, we only think about how much we can contribute as an employee. That limit is $19,500 for 2020, and will likely go up by $500 every two years based on history. I really hope everyone maxes out this year and every year for the rest of their working careers.

Yes, some of us get paltry company 401k matches up to a certain percent of income or up to a particular absolute dollar limit. But for the most part, we’re left fighting for our own retirement well-being since the pension system is going the way of the dinosaur.

The reality is an employer can contribute a heck of a lot more than 3% of your salary or whatever their company match may be. They just need to have the profits and the desire to do so!

After about the fifth year at the firm I retired from, I started receiving “profit sharing.” This was on top of my $5,000 401k company match. I always maxed out my 401k while I was there from 2001 – 2012. During good times, such profit sharing bumped up my overall company 401k match to $25,000 during some years. Ah, those were the good old days.

For those of you who are employed, I suggest familiarizing yourself with your company’s pre-tax retirement savings programs ASAP. You might be leaving free money on the table.

For those of you looking to join a new firm, inquire about their retirement savings program. It could be worth a fortune over time. Let’s look at the historical 401k contribution limits over time.

I believe the ideal withdrawal rate for retirement does not touch principal. You want to live off your retirement principal income for the rest of your life so you won’t have to stress about running out of money. The ideal withdrawal rate for retirement also allows you to pass on your wealth or better care for your loved ones.

Your goal, if you choose to accept, is to create a large enough estate that will provide incredible passive income for your loved ones long after you are gone. This is what endowments do.

Why not consider doing the same if you are a magnanimous and financially savvy individual? For 2020, individuals can accumulate $11.58 million before having to pay an estate tax upon death.

I always scratch my head when I hear advisors talk about the “4% withdrawal rule” or any withdrawal rate that’s greater than a risk free rate of return for that matter. Times have changed folks. Interest rates are close to zero, the stock market isn’t a slam dunk with all that’s going on in th world, and we are living much longer now.

There are so many variables that it is impossible to calculate a bullet proof withdrawal rate rule unless that rate is 0%. Sure, there’s a 99% chance you will die before 110 and a 99.9% chance you’ll die before 150, but who really knows? We might be one with machines by the year 2030 and live forever!

Instead of thinking about how much you can withdraw to bleed your retirement funds down to $0 by the time you die, I highly encourage everyone to think about leaving a financial legacy for your loved ones that is so great you’ll never run out of money.

Even if we fail to come up with a perpetual giving machine to leave for others, the end result will be much better than if we only focused on ourselves.