One of you maybe dream of living a comfortable life without worrying about cash. Though Lots of human see this as lofty dreaming about yachts and summer homes, more and more people are turning these thought into an achievable fact and gaining financial independence at a staggering rate.
Financial independence means that you’re capable to live comfortably within your means and have a sizable savings pool to draw from. The exact amount of cash you require varies based on the expenses but is commonly achievable within a reasonable amount of time if planned accordingly.
That doesn’t mean it’s necessarily simple. You’ll still have to work hard or smart on increasing the revenue, setting aside enough in a secure savings account, and controlling the expenses to keep them within the goals. But it is doable, and that’s the first hurdle to cross when making lifetime goals.
Whether you’re interested in early retirement, or you just want to be able to retire comfortably at 65 or 70, it’s necessary to know how much cash you’ll need. By calculating the amount you need to save for financial independence, you can make sure that you’re on track to retire when you desire.
So exactly how much money will you need? It’s a difficult question, and first, you need to establish a definition of financial independence.
Financial independence is when you have enough money in your savings and investment accounts that the average annual return is equal to or greater than the living expenses.
Once you’ve reached that goal, you can conceivably live on that cash indefinitely, because you’re not depleting the savings to cover the bills. For example, if you have $1 million saved and it’s earning a 5% return yearly, you could withdraw $50,000 a year and break even.
A survey conducted in the USA discover that $516,433 (R7.5 million) in savings is the magic amount required to feel financially secure.
A report by financial services company Personal Capital found that 20% of respondents would require more than $1,000,000 to feel financially healthy.
When it comes to defining financial health, the report discover that there is no one-size-fits-all definition, with Americans striving toward financial independence.
The main drivers of financial health include stability and security. Most Americans citizen aim to have enough cash to cover costs and avoid losing sleep over money worries.
According to the research, 49 is the average age at which respondents think people feel financially healthy, and 47 is the average age at which respondents trully feel financially healthy.
Most respondents said that net worth is a crucial number to track, and 73% said that their net worth is a top indicator of financial health — yet only 66% know what their net worth is.
The research, conducted by The Harris Poll, discover more than half (57%) of Americans connect financial health with their overall happiness.
When asked to define the term in their own words, the results indicates it’s less about money or retiring at a certain age, but instead around the concept of financial freedom and having the capability to choose how they want to spend their cash.
