By Brandon Hill
Special to FindependenceDay.com
Does the notion of grinding it out day in and day out for the next 40 years to experience the freedom of retirement scare you? Wouldn’t you rather strive to enjoy the journey along the way?
The good news is that the traditional concept of retirement is slowly dying.
With the elimination of most employer pension plans and the fact that humans are living longer than ever, we are forced to come up with a different take on how our parents/grandparents view retirement.
Today I’ll show you two different concepts that rethink our traditional retirement model and are gaining popularity amongst the next generation of workers.
What’s Findependence? It’s a term coined by Jon Chevreau: author, former editor-in-chief of MoneySense Magazine and founder of the Findependence Hub, an online platform and community for curated content focusing on achieving Financial Independence. “Findependence” is simply a contraction of the phrase “Financial Independence.”
Financial Independence is the point at which you work because you want to, not because you have to. It’s the tipping point where you have the right level of savings and investments working for you to provide the income you need to live your ideal life.
Think about that. It sounds very similar to our definition of retirement and at the same time totally reframes the perception of what retirement should entail. Rather than focusing on when you can stop work forever, you now shift your mindset to creating enough passive income through investing so that you can pursue anything you want.
Charitable intentions, golfing every day, or continuing to work knowing you’re doing it because you love it. In my mind, this is true financial freedom, as it allows you to make decisions based on your interests, not your financial obligations. This is living A Life of Wealth.
Financial Independence is unique to everyone’s situation. Does $35,000 of annual passive income allow you to follow your dreams of travelling the world and starting that passion product you’ve always had on your to-do list?
If so, maybe you don’t have to work until you’re 65.
So how much do you need to reach Findependence? A great rule of thumb is The Rule of 25.
The Rule of 25 is simple. Based on historical stock market data, your money will never run out if you have 25x your required annual income invested.
Need $35,000 for your idea of Findependence? You will need $875,000 saved up.
Want $60,000 a year for the rest of your life? You will then need $1,500,000.
Note: This simplified model does not include social security, pensions, inflation or taxes. Also, by working part time doing something you love in your Findependence years, you reduce the strain on your portfolio and need much less saved. Read more