The cost of financial independence


How much would you have to save to have complete financial freedom?

There’s a whole community who want “financial independence, retire early”, also known as FIRE, so they can quit their 9-5 job, but want to have enough money set aside, first.

Some believe you need as much as $75,000 set aside, others think $40,000 will do.

Financial advisor and tax attorney Rebecca Walser said you should be able to maintain the same dollar amount you had pre-retirement, in post-retirement.

“If you’re used to a lifestyle of spending $125,000 a year, I would say our lowest budgeted for that kind of lifestyle, you always want to make sure you’re making 75 percent of your working retirement lifestyle. That’s success to me,” said Walser.

Don’t forget to include grocery, transportation, unexpected emergencies or health care costs. 

Over a 20-year time period, medical costs are projected to cost a couple more than $300,000.

Walser said you'll have to budget for all the healthcare costs that will be transitioned to people because of America's Medicare situation.

“As long as you can maintain 75 percent of your pre-retirement lifestyle, I think you’ll feel pretty comfortable,” said Walser.

She said if you think you can retire in your 30s, be sure to take into consideration market volatility.

Gen X, Millennials and Gen Z will have to worry about the stability of Social Security once the Baby Boomers move through it. She says if she was in this age group, she wouldn't retire while she could still contribute money to Social Security...benefits will be next to nothing.

By the way, if you’re using the four percent rule (which hasn't been valid since 2015), she said you don’t understand financial retirement.

 


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