You have saved more than you have ever imagined and envision a new life that gives you more control over your time. But your spouse thinks this is not the number. Tuesday night, she is relaxing on the couch going through her Instagram feed showing you the house her favorite Instagram influencer just purchased. “If you had a little more,” she says, not directed at you, but reminding you we still don’t have the number. You gaze at the giant double island that can entertain the whole village and feel nothing.
This isn’t about people who have not saved money early in their careers or those who are just getting started. This is for people who have worked hard, invested and have arrived at a number that can afford them a much happier life, but they keep grinding.
A happier life could mean having a bigger kitchen to entertain a bigger group of friends, or working in your flip-flops, sitting in a bungalow in Tulum while your old colleagues are braving work on a cold, rainy day, but ultimately it comes down to having control over your time and spending it in a way that leaves lasting memories. It is rarely about how many hours you work, and almost entirely about whether you work on what you love or out of necessity.
You can put a price on what your freedom costs. Back in 1994, William Bengen, a renowned financial planner, worked out the math, and every iteration since then marginally modified that formula up or down a little. You are free when your investments are at about 25x what you need to spend in a year, and the math assumes your spending will grow with inflation. That is when work becomes optional. At a 4% withdrawal rate, $1.65M is about $66,000 a year to live on, close to what a middle-income American household spends. Another way to think about it is to imagine what your happy life looks like and see what the number is that gets you there.
Depending on your potential income from Social Security or a pension, and the tax treatment of your investment, your freedom number could be quite a bit lower. Another factor that can drastically change your number is deciding where you want to spend your dollars. I have encountered countless people who decided to retire in Thailand, living a life that would be considered lavish by US standards with under $1,500 a month. That one decision transformed their average lifestyle into a much more comfortable living in Bangkok or the beach town of Phuket while reducing the number they needed by more than a million dollars. Accumulating more wealth after you achieve your number does not provide you with materially more freedom. Extra money can buy you other stuff, a bigger house, status, more brand name clothes, but it cannot buy you more freedom.
Early in your career, money is a scarce resource. You are trying to save money for the wedding, paying off student loans, or paying off the high interest credit card debt you have accumulated from the trip you took last year. But even a little money can make a big difference in how much you can enjoy life.
As you get older and start building a better financial foundation, your calendar starts filling up fast. If you have young kids, you barely have time to even go on a short vacation. By the time kids start growing up or you manage to pay off some debt and build a nest egg, you find yourself in your 40s and 50s.
That is the time you have managed to achieve a degree of financial stability, and you still have some energy to explore new experiences and take that safari in Africa you always wanted.
This is the period where your earning potential is also peaking and any podcast you listen to advises you to work as hard as you can and save as much as you can for your retirement.
On the Afford Anything podcast with Paula Pant, Suze Orman says "Two million is nothing. It's nothing. It's pennies in today's world, to tell you the truth." And in the same interview, Orman said you'd need "$20 [million], $30 [million], $50 [million] or $100 million dollars" to retire early. Kevin O'Leary was a little more lenient, saying $5 million is the number you need to "survive the rest of your life."
Looking at your finances, you might feel you will need to grind for the rest of your life and you still might not get close to any of these multi-million-dollar numbers sprayed on personal finance blogs by well-meaning, highly successful gurus.
This is the point that stuck with me in Die With Zero by Bill Perkins. For many people, your wealth keeps climbing, or at least does not decline much, until the day you die. But your ability to use it peaks far earlier and then it slides. Combining the two forces, you can create a curve showing money's true purchasing power that grows with age, slowing in your 40s and peaking in your 50s, and then declining in your 60s despite your net worth growing into your 60s and even 70s.
We are redefining what golden years are, in terms of when the money you have can create the best experience and that happens sooner than you think. I have seen many hardworking professionals miscalculate this and spend their 40s and 50s on endless Zoom calls, adding more money to their pile they might barely spend when they are older and more tired. You might think you are following responsible and sound financial advice building for your golden years while the real golden years are slipping through your fingers.
There are several forces encouraging you to let your true golden years pass you by without fully taking advantage of the wealth you have worked so hard to build. There is always a reason to keep climbing. And the reason most of the time is reasonable and defensible on the surface.
Saving for a bigger house with the giant island to better entertain family and friends seems a logical plan, as you scroll your Instagram feed comparing your home to countless “influencers” that are just like you. The challenge is comparison has no finish line while draining the life out of you.
Another rationale I hear often from people who have hit their number years ago and still cannot put the job down is that they say they love what they do. I do not doubt their sincerity, and many mean it. I have talked to many people that have made every dollar they will ever spend a long time ago and for many, the true underlying reason for gripping to doing what they have been doing all their life is fear.
Fear is the quiet motivation behind many decisions. A colleague worth ten million who has achieved his number long ago was telling me his wife thinks he should work until 65 just to be safe, but he could not articulate safe from what. Another executive at a top technology company worth about 25 million was running different scenarios to make sure he would not run out of money. There is no number that makes the fear go away. Fear was never really about the number.
Notice that not one of these sounds reckless on the surface. That is exactly why the window closes on the most sensible people you know.
It would be dishonest to pretend $1M is not the same as $5M. Money does make a difference and matters most, at the bottom. The richest Americans live ten to fifteen years longer than the poorest. No amount of mindfulness closes that gap.
The argument is narrower, and one that applies to each person differently. The goal is not to advocate for a specific number. Past your freedom number, which only you can define, money stops buying freedom. It mostly buys isolation dressed as exclusivity. A bigger gate, a better way to avoid lines so you never have to be around a stranger. And you pay for your isolation with one thing you are running out of. You pay with your time spent accumulating more wealth.
The only math that should matter to you is your freedom number. This is the one that makes work optional and enables you to have experiences that matter to you. This is not your rich number you dream about when you buy a lottery ticket, and many people confuse the two.
Below your number, go hard. Earn as much as you can, save, and invest it and let compounding do the heavy lifting. But the day you cross the line, something changes that you might not notice. Saving more money does not buy you more freedom anymore. And what it buys, you pay for with days you spend grinding that you do not get back. The moment you can afford it, you have to flip the switch and start optimizing for life first. If you keep climbing the ladder accumulating wealth past your freedom number without reflecting on what you want from life, you have lost even if the scoreboard says you won.
Next time you are scrolling over a house bigger than the one you have, think about what matters to you most and what your freedom number really is.
Most people keep climbing past their number, because that is what they have done all their lives, and they never notice the day their time can become their own.
You might be closer to freedom than you imagined. Make sure it does not pass you by while you are not looking.
Sources
- The four percent rule and the freedom number, about 25 times annual spending: William Bengen, "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning, 1994. https://www.financialplanningassociation.org/sites/default/files/2021-04/MAR04%20Determining%20Withdrawal%20Rates%20Using%20Historical%20Data.pdf
- The $1.65M that funds a median US household's lifestyle: 25 times roughly $66,000 a year of spending. Per the U.S. Bureau of Labor Statistics, 2023 average annual expenditures across all households were $77,280, but that mean is lifted by high spenders; a middle, or median, household spends closer to $66,000, in line with a 2023 median household income of $80,610 before tax. U.S. Bureau of Labor Statistics, Consumer Expenditures in 2023. https://www.bls.gov/opub/reports/consumer-expenditures/2023/ ; U.S. Census Bureau, Income in the United States: 2023 (P60-282). https://www.census.gov/library/publications/2024/demo/p60-282.html
- Cost of living in Thailand, where a comfortable expat life runs roughly $1,000 to $2,000 a month depending on the city (lower in Chiang Mai, higher in Phuket): International Living, Cost of Living in Thailand. https://internationalliving.com/countries/thailand/cost-of-living-in-thailand/ ; ExpatDen, Cost of Living in Thailand. https://www.expatden.com/thailand/cost-of-living-in-thailand/
- Suze Orman calling two million "pennies" and naming $20, $30, $50 or $100 million to retire early: Afford Anything podcast with Paula Pant, "Why I Hate the FIRE Movement" (Episode 153). https://affordanything.com/153-hate-fire-movement-suze-orman/
- Kevin O'Leary saying $5 million is what you need to "survive the rest of your life": Emily Rella, "Kevin O'Leary Says to Survive the Rest of Your Life You'll Need This Hefty Amount in Your Bank Account," Entrepreneur, December 6, 2023. https://www.entrepreneur.com/business-news/kevin-oleary-says-you-need-5m-in-the-bank-to-survive/466462
- The curve where net worth keeps climbing while the ability to use it peaks earlier and then declines: Bill Perkins, Die With Zero (2020).
- The richest Americans live ten to fifteen years longer than the poorest (10.1 years for women, 14.6 years for men): Raj Chetty et al., "The Association Between Income and Life Expectancy in the United States, 2001-2014," JAMA, 2016. https://jamanetwork.com/journals/jama/fullarticle/2513561 ; summary at MIT News. https://news.mit.edu/2016/study-rich-poor-huge-mortality-gap-us-0411
