3 Levels of Financial Independence


#1

Financial Samurai breaks FI into 3 levels. Read the whole article. It’s pretty decent.

Level 1: Budget Financial Independence

If your household income is less than ~$40,000 a year, you are considered lower middle class. If you are happy with living a lower middle class lifestyle, then you would need between $800,000 – $1,600,000 in investable assets returning 2.5% – 5% a year to replicate the $40,000 in gross annual income.

Level 2: Baseline Financial Independence

The median household income in the United States is roughly $60,000. $60,000 is therefore considered a comfortable middle class income for most Americans. Based on a conservative 2.5% – 5% annual return, a household would need investments of between $1,200,000 – $2,400,000 to be considered financially independent.

Level 3: Blockbuster Financial Independence

Individual income of ~$200,000 – $250,000 and a household income of ~$300,000 was the ideal income for maximum happiness. With such income, you can live a comfortable life raising a family of up to four anywhere in the world.

Using the same 2.5% – 5% return figures, one would therefore need $5,000,000 – $10,000,000 per individual and $6,000,000 – $12,000,000 per couple in investable assets to reach Blockbuster Financial Independence. In addition, it is preferable if your home is also paid off.


Hmm, What Is Apple Doing?
#2

See? My 5M per person budget is right on target. :smile:


#3

5M is the nationwide level. Bay Area level should be 10M per person…


#4

Sam was saying $5-10M per adult. Kids are not counted.


#5

We should change the fortune list for wuqijun, 15M


#6

Sam is also a new parent. He doesn’t know yet how costly kids can be. I will give him a couple years to come around.


#7

If you retire, kids will be not as expensive. If you spend more time rather than more money on kids, they will be happier and also cost less


#8

Why not? Whatever tickles your fancy… :rofl:


#9

You should thank me for your bump. I was wondering why you are so undervalued in the list


#10

I like being undervalued… so I am condemning you instead of being thankful… :rofl:


#11

I know people who are financially independent but they are dependent of the fear of losing that financial freedom. They are OK, they just can’t let go.

A vicious circle unless you step to the front and call it quits and go living La Vida Loca.


#12

So you have confirmed the 15M number. Congratulations!


#13

:weary: I feel old and poor :crying_cat_face:


#14

How so? I didn’t confirm anything… :laughing:


#15

Well, money isn’t everything. At least you have your husband and your favorite nephews sticking around… :rofl:


#16

You have confirmed that 6M is too low. You did not deny 15M at all.


#17

6 m is plenty
Leave the BA and you can live anywhere in the US with $1m plus the cost of a house… Say $300k in the fly over states .
At 65 you have SS Medicare a house and $1m at a 4% draw
Figure 30k SS 40k draw … $70k.per year and a house owned. Plenty anywhere but big coastal cities
If you live in the BA and want to get out of the rat race you can anytime if you have $1m in assets besides your house


#18

Um… I’m sure I didn’t do that… :rofl:


#19

I already got out of the rat race even though I still live in the Bay Area. I can’t move anywhere else because I don’t feel like hiring a property manager to manage my rentals. Why give the fun away to somebody else? :rofl:


#20

Indeed and this group of entertainers!