When I share my current income goal of achieving and maintaining a modest $3.5 million a year net, many people look at me like I've lost my mind. But let me explain why this makes sense for a secure future, retirement, and building wealth.
Fast-Tracking Retirement in Less Than 15 Years:
My aim is not just to reach financial independence and retire comfortably - but to do so as quickly as possible while providing for my family and living a good life. I am determined to fast-track my retirement and achieve financial independence in less than 15 years.
Following the common path of earning a common income and saving only 10% to 20% will not enable me to accomplish this goal.
After going through some pretty intense reflection, introspection, and numerous number crunching exercises, I’ve come to realize that while it may be true that basic living expenses can be supported on anywhere from $60k to $120k a year in income, it often does not factor in many other hidden and expensive costs that are usually required to live a good life.
For example:
- Surprise medical expenses
- Dental work
- Braces for kids
- Car insurance for kids when they reach driving age
- Family vacations
- Memberships, camps, coaching
- Education
- Living in a desirable area
- A down payment for a home
- Costs to maintain home or replace equipment, gear, vehicles, etc. every so many years or as needed
- Costs to hire good help and build or maintain a support networks
- Charities, gifts, helping others
- Margin to reduce worries about paying for all of above
- Remaining debt free
- Enough left over to invest enough to grow wealth to a point that will produce enough income to support all of above
So, in order to be able to afford most of the above and more, it clearly requires a higher income to not only earn hundreds of thousands of dollars to support a family, it requires many hundreds of thousands of dollars more to be able to aggressively invest and accumulate enough capital at work with a modest return, to generate a matching income. The common slow path advice for investing only works for young people and for those willing to accept a common and insignificant income. I believe that the common slow path is a lie. I believe that combining a high net income with an aggressive approach to saving and investing, is one of the only paths I can take where I will accumulate the necessary wealth to be financially independent while I'm still relatively young, while raising a family and enjoying a modest lifestyle.
Planning for a Retirement That Lasts:
With longer life expectancies, I want to ensure that my capital at work when I reach retirement age is enough to last for several decades, if not more. I also want to ensure that I reduce or eliminate any financial pressure on my wife, and our sons will not be burdened with our healthcare in old age. Setting a minimum $3.5 million annual income goal allows me to plan for a retirement that provides financial security, covers healthcare costs, and sustains a comfortable standard of living for my wife and I throughout our old age.
Safeguarding Against Inflation:
Taking into considering the impact of inflation is vital to protect the value of my income over time. So a minimum $3.5 million annual income factors in the potential effects of inflation.
By doing so, I can ensure that my income retains its purchasing power, safeguarding me against the erosion of wealth caused by rising prices.
Investing for Growth:
While saving is important, I recognize that smart investments are the key to achieving my financial goals. Allocating a large portion of my income into various investments such as stocks, real estate, and other capital assets will allow me to diversify my portfolio for long-term growth and wealth accumulation.
Living on 10% of Income:
To reach my financial goals, I am committed to living on only 10% of my $3.5 million annual income. This approach ensures that I still have enough to provide a very comfortable lifestyle for my family, but the majority of my income can be channeled into investments and wealth-building activities.
Living a good life is not cheap, but it doesn’t have to be excessive either. We don’t need a big house, fancy sports cars, or crazy expensive vacations - but we still want to live in a clean home in a desirable area, own dependable vehicles, and experience adventures as a family.
By identifying what it takes to support a good life and reach long-term financial security, it reveals the truth about what I need to accelerate and maximize the growth potential of my wealth on my own journey to reach financial independence.
Building Wealth Through Business Ventures:
I view investing in traditional avenues such as stocks and real estate as a slow and methodical way to grow and preserve wealth, but I am convinced and determined that the only way to build a substantial income that will enable me to create significant wealth is through entrepreneurial endeavors.
My aspiration is to start, invest in, grow, and eventually exit a software or ecommerce business. This strategy presents an opportunity to achieve a valuation of $100 million or beyond. By leveraging my business experience and investing in scalable ventures, I aim to create exponential wealth so that I am able to leave a lasting legacy.
Conclusion:
The pursuit of a modest $3.5 million a year minimum income goal is not only about securing a comfortable lifestyle, but also about fast-tracking to retirement and building wealth.
This requirement really becomes clear when we take the time to break down the real costs of living, what we really want in a lifestyle, and the limited amount of time we have until we want to retire with enough to last through old age.
Saving aggressively, investing wisely, and considering inflation, is the path to creating a solid foundation and a financially independent future. Living a good life and helping others while doing this can only happen with a significant amount of income.
Additionally, only by exploring entrepreneurial opportunities, could I expect to achieve a valuation of $100 million or more.
With desire, determination, and focus, I believe that this approach has an exponentially higher probability (than taking a common path) to leading me to a fulfilling and prosperous lifestyle, while also enabling me to make a meaningful impact on my future, my family’s future, and those around me.
Remember, this mindset is all about getting clarity with that target number so that we have something to work towards. It’s not about just hustling and grinding and throwing stuff against the wall and hoping it sticks.
