What’s Your Financial Independence Number?

The great thing about personal finance is that it is just that – personal. We all have different lifestyles, income sources, spending habits, goals, and financial responsibilities. Thus, the amount we each need to reach financial independence is unique. What's your financial independence number?

If one can accumulate $3 million in cash, that should be enough to lead a comfortable life. After all, to be a real millionaire, $3 million is the new $1 million due to inflation. Would you agree?

Your answer likely depends on variables like where you live, how old you are, your debt level, and if you have dependents.

Financial independence number

Let's talk further about a $3 million financial independence number. With $3 million, you could earn $120,000 a year in interest income at a 4% yield doing squadoosh. Not only would you be receiving $120,000 a year, you'd STILL HAVE your $3 million bucks in the bank!

I don't think I need more than $80,000/yr to live a comfortable life in one of the 5 most populated cities in America as a single buy. $80,000/yr would be especially enough if my mortgage was paid off, another goal of mine before “retirement.”

But now that I'm a father of two kids, I'd feel stretched on $80,000/yr. Your financial independence number will likely change over time as well.

Readers, before I delve deeper into the number, I'd love to hear your thoughts on what the ideal and realistic financial independence number is for retirement, and how much is the minimum amount of income you would be happy to live on.

Financial Independence Number Resources

Here are some additional resources I’ve put together. The more you learn about personal finance, the better your chances of achieving your financial independence number and beyond.

Knowledge, goal setting, and determination can help you earn more, save more, and hopefully double or triple your income!

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8 thoughts on “What’s Your Financial Independence Number?”

  1. RB @ RichBy30RetireBy40

    Hey Anon 1:48pm – I hear ya, that's why I mention $1.8 million in 10 years cash is pretty good, but I'd still gun for $3million cash excluding all other investments etc. at $3mil, you can get $140-160,000 interest income risk free.

    My effective tax rate is probably around 28-30%, but my marginal tax rate is 46%. I would just save like mad for the next 10 years, and then move out of the expensive, and high tax NYC area. You could retire in Florida with no state tax, or any of the other 7 no state tax states. Just saying, I think you can do it, if you had to, esp if you move out of NYC.



  2. There are a couple problems with your assumptions. 1)I can't live on $100k gross supporting my wife and two children – in reality, it is at least $150k – $170k. FYI – I pay $4k per month to rent a small 2br apt. 2)My taxes must be higher than yours…including Fed, NY and NYC taxes, I paid approximately 40% last year. 3) All of my saving can't go solely towards my retirement. I need to save for my kid's education. So, this puts me saving $45 – $60k per year for retirement ($16.5k in my 401k and the rest in a taxable account). I am trying my best, but I will still be working for quite some time:)

  3. RB @ RichBy30RetireBy40

    Anon 11am – If you save 200K gross/yr or 140K net after taxes for 10 years, that's $1.4 million if you never earned more or had interest. Add in higher future earnings and a 4% return, you'd likely get close to $1.8-$2 mil cash alone, excluding 401K, home equity, 529 etc no?

    I think that's pretty good to me!



  4. There is no way that I can build $7.5 by the time I am 40-45 (I am 32), unless I get lucky. I make about 300k per year now and hopefully more the next few years, but since everything is so expensive around here, I don't think it is going to happen. I do max my 401k, put about $10k each for the kids college in 509 plans and still save another $30-$50k or so we will be fine, but retirement will be a long way away.

  5. RB @ RichBy30RetireBy40

    Wow, $7.5 mil in the bank would be sweeeeet. NYC seems to be a different animal. Do you think you can get there by 40-45? That would be $300,000 in interest income/yr no problem.

    Non 7:52am, what city are you from? I guess I'm somewhere in between the both of you guys.



  6. $7.5MM in the bank minimum. I live in NYC and have a wife and two kids to support. I could decrease this number a little bit if I had a mortgage paid off, but that is at least another $1.5MM.

  7. I think between $60K and $70K, with the mortgage paid off. And about $500K to $1 million in the bank.

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