No One Can Tell You How Much Money You Really Need to Retire

Contentment is natural wealth, luxury is artificial poverty. — Socrates

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Financial freedom promises many things. You’ll never have to work again. But when do you become financially free and how much money do you need?

What you need to understand:

• There is no financial freedom without passive income.

• It’s not possible to say exactly at what point financial independence is achieved.

• The goal of investing should be retirement planning, not financial freedom.

First of all, it’s important to know the difference between active and passive income.

Active income means that you only receive money if you have actively done something. So full-time work is an active cash flow. If you decide not to work from tomorrow, you won’t receive your salary. Nowadays this is called a hamster wheel: you go to work to buy nice things or do something. But you need money again and you have to go back to work. So you’re a hamster, stuck on the wheel of consumption and capitalism.

However, you can generate passive income through investments. Anyone who buys shares can receive dividends. Landlords can receive rental income. If you have a blog or online business, you can earn income through affiliate links. This means that you did something once and received regular money for it, without acting on it again.

Financial freedom can usually only be achieved through passive income. Unless you inherit a few million dollars.

Even with a well-paid job, it’s difficult to create a financial cushion simply by saving money, since the real value of money is decreasing due to inflation.

How much money do you need to be financially independent?

There are many examples of calculations that indicate how much money you need to have financial freedom. The problem is that no one can tell you how much money you really need.