Financial Independence

[Blade Runner]

Notice that I'm not posting or asking about "retirement early" although you could add that if you would like. You should always have something to "retire to" or goals, new things to try, learn, or entertain as hobbies/sports. That said, what do you think the average person in the developed world "needs" in order to have financial independence and basically have time to do whatever he wants in ways that aren't achievable with more consistent (9-5) work?

Do you think that more and more younger people are trying to do this because housing is out of reach for most and the American Dream has turned into making money, whatever you can, there (or in any other developed country), and then leaving?

I'll be interested to hear what some of the younger, older, or middle age types have to say about this, and pulling the trigger. Remember, "one more year" is common for most people, and certainly those that overestimate their years, or healthy years. Recall I also posted on that topic of the "healthy life expectancy" (WHO has an acronym for this metric), so go there for some interesting thoughts as well.

 

[It_Is_My_Time]

I struggle with this question a lot and I realize it comes down to two big questions.

#1) Do you want children? If so, the amount needed is probably 5 times more, due to the cost of raising children in the USA v. not. Well, unless you want to raise them in some welfare ghetto.

#2) What kind of woman you want in your life? If she is not on the same page, there will never be enough. You will be her slave until you are too old to work. This is a big conversation that you must have when selecting for a potential wife.

If you want to stay single and just be a passport bro/marry a frugal woman and not have kids... Probably $1,000,000.

Frugal wife with kids? Probably $5,000,000

Idiot wife who thinks life is about material possessions? Never enough.

 

[Blade Runner]

If so, the amount needed is probably 5 times more,

Wow. Bold. Doubt it, but hey, I asked, you answered.

If you want to stay single and just be a passport bro/marry a frugal woman and not have kids... Probably $1,000,000.

Hmm.

 

[It_Is_My_Time]

Wow. Bold. Doubt it, but hey, I asked, you answered.

Hmm.

At my company, if you don’t have kids your insurance is about $50 a month out of pocket.

If you do have kids it is $1,400 a month out of pocket,

And this isn’t good insurance.

I have talked to others and this is pretty much the standard in most US companies.

 

[Australia Sucks]

Wow. Bold. Doubt it, but hey, I asked, you answered.

I can see a scenario where what is saying can be true if you take the mindset that many ethnic parents do of providing a high level of financial support to your kids into adulthood. For example if you have 3 kids and you buy a 5 bedroom house in a major city and growing up they are taking piano lessons and various sports lessons and getting private tutors and you are taking annual overseas vacations, and then you pay for them all to attend Ivy league universities (mostly for networking purposes) and then put down a 20% house deposit for all of your kids when they graduate college so they can all buy houses in first tier cities etc. With this type of scenario I see how you can get to the $5 million dollar figure.

But this same lifestyle in the paragraph above could be had for half the price with a net worth of $2.5 million dollars for a family of 5 (parents and 3 kids) in a cheaper country.

 

[Thomas More]

An income producing portfolio of $1,000,000 at 8% is only $80,000 a year, which you can barely live on in some parts of the country, although this would be hard with kids even in a cheap part of the country. It would be easier if you own your home, but that's another big chunk of net worth on top of the $1m portfolio. That's also assuming you get 8% which is pretty high to rely on. It's also spending all your gain on the $1m, meaning it is not growing any larger. That $80k will cover less and less over time.

To cover a middle class lifestyle with kids, assume a reliable lower income expectation of 4%, and only spend half the gain so your portfolio can continue growing over time, you'd need $5m.

The cheaper alternative is to pay off a house, live in a very low cost area, and continue to work at an enjoyable but lower income job that makes ends meet, and allows at least some ongoing growth in savings.

 

[Australia Sucks]

An income producing portfolio of $1,000,000 at 8% is only $80,000 a year, which you can barely live on in some parts of the country, although this would be hard with kids even in a cheap part of the country. It would be easier if you own your home, but that's another big chunk of net worth on top of the $1m portfolio. That's also assuming you get 8% which is pretty high to rely on. It's also spending all your gain on the $1m, meaning it is not growing any larger. That $80k will cover less and less over time.

To cover a middle class lifestyle with kids, assume a reliable lower income expectation of 4%, and only spend half the gain so your portfolio can continue growing over time, you'd need $5m.

The cheaper alternative is to pay off a house, live in a very low cost area, and continue to work at an enjoyable but lower income job that makes ends meet, and allows at least some ongoing growth in savings.

The real question is if you have $2 million why even live in the USA, Australia, England, etc? You could be living well in cheaper countries with that money instead of wasting more years of your life working to get to $5 million dollars.

 

[It_Is_My_Time]

The real question is if you have $2 million why even live in the USA, Australia, England, etc? You could be living well in cheaper countries with that money instead of wasting more years of your life working to get to $5 million dollars.

Where can you go that you think will be safe in 30 years, until your children are old enough to be independent and make their own decisions as to where they want to live? Can you realistically leave your entire family behind (parents, siblings, friends)? It would be tough for me to do so, leaving my aging mother and other family behind to suffer on their own.

It is a weird thing to watch your own parents age. The roles reverse and you start to really care and think about their well-being a lot more than when they are 60.

 

[It_Is_My_Time]

An income producing portfolio of $1,000,000 at 8% is only $80,000 a year, which you can barely live on in some parts of the country, although this would be hard with kids even in a cheap part of the country. It would be easier if you own your home, but that's another big chunk of net worth on top of the $1m portfolio. That's also assuming you get 8% which is pretty high to rely on. It's also spending all your gain on the $1m, meaning it is not growing any larger. That $80k will cover less and less over time.

To cover a middle class lifestyle with kids, assume a reliable lower income expectation of 4%, and only spend half the gain so your portfolio can continue growing over time, you'd need $5m.

The cheaper alternative is to pay off a house, live in a very low cost area, and continue to work at an enjoyable but lower income job that makes ends meet, and allows at least some ongoing growth in savings.

Great post. The issue with living in a cheaper area, and by cheaper area I am thinking rural/small town, is that your children then start further behind the curve, in that they have less inheritance and opportunities available for them as they go from this comfortable nest into the real world.

But yes, this is a good breakdown of the cost to be financially free.

 

[Australia Sucks]

Where can you go that you think will be safe in 30 years, until your children are old enough to be independent and make their own decisions as to where they want to live? Can you realistically leave your entire family behind (parents, siblings, friends)? It would be tough for me to do so, leaving my aging mother and other family behind to suffer on their own.

It is a weird thing to watch your own parents age. The roles reverse and you start to really care and think about their well-being a lot more than when they are 60.

There is a long list of countries likely to be safe for the next 30 years (or at least as safe as any western country). Here are just a few examples:
-Malaysia
-El Salvador
-Thailand
-Vietnam
-Most of the Balkans
-Panama

Possibly you could bring your parents with you but yes you would be leaving your friends and siblings behind. There are always trade offs.

 

[GoodShepherd]

Its hard for me to tell what financial independance would look like, Im also not sure how guaranteed it would be in this very unstable world as anything can happen, an accident, sickness, another lockdown that destroys your income, a war etc.

Usually if you can generate enough passive income that surpasses all your living expenses thats usually a bench mark of some kind of financial freedom, in this day and age I would say it has to be something not based on a single location and from multiple streams of income.

If a person lives a moderate life, a home with a wife and kids and your passive income can cover all your daily living expenses, morgage, car, groceries etc and maybe you still have an extra 10% left over for savings and further investment I would consider that financial freedom, but its not guaranteed that it will last for the rest of your life.

 

[tikkasakko]

Is health insurance as bad as they say in the US? Do you pay a lot if you need medical care? Do employers have health plans?

 

[It_Is_My_Time]

Is health insurance as bad as they say in the US? Do you pay a lot if you need medical care? Do employers have health plans?

It wasn't all that bad until Obamacare wrecked the system.

At my job, and I hear this is very standard now, if you have kids health insurance is...

$1,400 a month, the company kicks in around $1,000 to help, so nearly $2,500 a month.

It is only 80/20, meaning expenses are only cover 80% and you cover the other 20%.

$7,000 deductible, meaning you get $0 until you have spent at least $7,000 in that calendar year.

It is an absolute mess, but someone has to pay for the third world invasion.

 

[GoodShepherd]

It wasn't all that bad until Obamacare wrecked the system.

At my job, and I hear this is very standard now, if you have kids health insurance is...

$1,400 a month, the company kicks in around $1,000 to help, so nearly $2,500 a month.

It is only 80/20, meaning expenses are only cover 80% and you cover the other 20%.

$7,000 deductible, meaning you get $0 until you have spent at least $7,000 in that calendar year.

It is an absolute mess, but someone has to pay for the third world invasion.

Iv met people here in the US who are paying $40 a month for a hospital plan, why you paying so much compared to that?

 

[It_Is_My_Time]

Iv met people here in the US who are paying $40 a month for a hospital plan, why you paying so much compared to that?

I don't know what a hospital plan is. There are tons of legal and then illegal immigrants, who get free healthcare via Medicaid, but you have to be qualified to get it (low income). I personally only pay $50 a month, my company covers the rest of it, I never use it, so it is just in case of an emergency.

 

[Blade Runner]

The idea and thread (FI) is more, if we are honest, about having time to go and do things around the world, mainly scoping out places where there actually are women that you would truly entertain to be a wife. I can see the allure for a couple, LTR or married, to due the whole FIRE thing to a certain extent, but it just seems like they are getting too selfish and fancy free. For example, if I were married to a woman in American in a random but trustworthy location/city/town, would I be talking about early retirement or FU money? No.

 

[GoodShepherd]

I don't know what a hospital plan is. There are tons of legal and then illegal immigrants, who get free healthcare via Medicaid, but you have to be qualified to get it (low income). I personally only pay $50 a month, my company covers the rest of it, I never use it, so it is just in case of an emergency.

Sorry Im still using non American terms, this person can get medical treatment at hospitals and all they pay is $40 a month and they covered, not sure how they got this plan but worth investigating, I know two othet people besides this one who also pay around that price, its totally crazy to be paying so much for health insurance, Im glad you only paying $50 thats a good deal for you

 

[It_Is_My_Time]

Sorry Im still using non American terms, this person can get medical treatment at hospitals and all they pay is $40 a month and they covered, not sure how they got this plan but worth investigating, I know two othet people besides this one who also pay around that price, its totally crazy to be paying so much for health insurance, Im glad you only paying $50 thats a good deal for you

The expense isn't as an individual, it is when you have kids. If they are paying $40 for individual coverage, that is really good. If they are paying $40 for an entire family, either they are getting major govt. assistance or they are likely making it up. I have never heard of anyone paying that little for family health insurance in the last 10 years, without heavy govt. assistance.

 

[GoodShepherd]

The expense isn't as an individual, it is when you have kids. If they are paying $40 for individual coverage, that is really good. If they are paying $40 for an entire family, either they are getting major govt. assistance or they are likely making it up. I have never heard of anyone paying that little for family health insurance in the last 10 years, without heavy govt. assistance.

No just for an individual. I have no idea how much it costs to have kids on a plan lile that but as you pointed out seems expensive, I would expect kids to cost a little less as old people are the ones who usually develop these terminal diseases on conditions and rake up the bill?

Is there an option to only have health insurance only for emergencies, like an accident, break or fall? No treatment for sickness and disease. I would opt for something like that.

 

[It_Is_My_Time]

No just for an individual. I have no idea how much it costs to have kids on a plan lile that but as you pointed out seems expensive, I would expect kids to cost a little less as old people are the ones who usually develop these terminal diseases on conditions and rake up the bill?

Is there an option to only have health insurance only for emergencies, like an accident, break or fall? No treatment for sickness and disease. I would opt for something like that.

I have not heard of such a plan. There are plans like mine, 80/20, with like $10,000 deductibles. I don't know if there is anything cheaper than this or not, and such a plan is certainly not cheap at all. The insurance companies have to rake in money to cover the costs associated with third world immigration...

Third worlders driving cars like maniacs, causing wrecks, and fleeing the scene or even country. They often drive uninsured, so the innocent person who is hurt/hit by the third worlder then has to make their own insurance company pay for damages.

Third worlders committing insurance fraud to the tune of billions.

Third worlders flooding hospital emergency rooms, then never paying a penny, causing healthcare costs to explode.

All insurance is nearly unaffordable for many and eats up a large percent of their after-tax income.