Is there a “magic” number?What is the number that represents the size of your nest egg large enough for you to retire? research found American adults now believe they need $1.46 million to retire comfortably.
But you might want to think about retirement differently, argued self-made millionaire early retiree Steve Adcock in a recent interview with CNBC.
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Adcock retired from his IT job in 2016 at the age of 35 with about $900,000 in savings, which quickly grew to more than $1 million through investment gains. But it wasn’t the actual numbers that made him feel financially secure. This meant he had the freedom to live without a regular job.
Rethinking financial security
“Financial security is not about the amount of income you earn,” Adcock said. CNBC. For him, financial security is “amount of time.” He knew that once he could live the life he wanted without relying on a regular paycheck, he would be ready to retire.
Adcock and his wife began their retirement by spending three years traveling around the country in their RV. “We certainly lived small. We were spending a lot less than we do now,” he said. “It was the first time I felt financially secure, that I didn’t have to work for the rest of my life.”
For Adcock, the “magic” happens when you realize you can live off your investment portfolio for years.
The couple reached their current position by actively saving and investing. I saved about 70% of my income and invested that money in retirement and brokerage accounts. “I think our savings rate was on the extreme end,” he says. “But I hated what I had done. I wanted out as soon as possible.”
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Start by building an emergency fund
It is likely that you are currently far from financially stable. And you are not alone.
according to 2023 LendingTree SurveyAlmost half (49%) of U.S. adults admit that they can’t cover a $1,000 emergency with cash or bank accounts alone.
According to the Bureau of Economic Analysis, the U.S. personal savings rate (the percentage of income that remains after paying taxes and spending money) was just 3.2% in March.
But it’s possible to become financially secure without taking the Adcocks’ extreme savings approach. First, build up an emergency fund that’s about 3 to 6 months worth of living expenses.
If you find this difficult, aim for $1,000. Even this small amount can provide a cushion against unexpected expenses and help you stay on the path to financial stability. To find that extra $1,000, consider creating a budget to find where you can save, like cutting back on small everyday expenses like subscriptions, eating out, and bottled water.
Viewing retirement from the perspective of “amount of time”
Once you save your first $1,000, you’ll already feel financially secure. From there, save up 3 months’ worth of living expenses, 6 months’ worth of living expenses, start investing, and start building an investment portfolio that will allow you to quit your job one day.
The more financial security you have, the more freedom you have to live your life the way you want. You’re not just focused on numbers, you’re focused on a better life journey. Once you are no longer tied to a salary, you can start thinking about retirement. Or you could consider taking a sabbatical, changing jobs, or starting your dream business. reduce time spent at work.
Today, Adcock and his wife remain semi-retired. They still bring in some extra cash from their website, newsletters, and new books. But rather than relying on a regular paycheck, they have the flexibility to work whenever they want.
You’ll sleep better at night knowing that even if you’re happy with your current situation, you could face unexpected financial hardship. That “magic” number you’re aiming for may be smaller than you think, and it may arrive sooner than you expect.
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This article is for information only and should not be construed as advice. PROVIDED WITHOUT WARRANTY OF ANY KIND.
