Financial Freedom Plan and our Net Worth Goal
I recently laid out our rough plan for how we plan to generate income once we become financially free. This plan suggests we'd be able to generate between $40k-$76k+ per year which should cover our annual expenses. Next I want to start to lay out a rough plan for what our balance sheet might look like to support that plan. Thats not to say our balance sheet would need to match this, but merely be a guidepost for what we would want it to look like, all things being equal. Certainly real or perceived opportunities to earn higher rates of return with lower risk would likely trump any balancing of assets among these areas.
Assets Needed for Our Financial Freedom Plan
|Projected Income Range||Est Assets Needed|
|Stocks||$5,000-$6,000||$170,000 - $250,000|
|Interest||$10,000-$20,000+||$200,000 - $400,000|
|Retirement Assets||$0-$10,000||$400,000 - $530,000|
|Primary Home||$ 302,000.00|
|Est Net Worth Needed||$1,583,225 - $2,033,225|
Note: Retirement assets would likely be additional stocks/bonds or other investments inside our 401ks, IRAs, or other retirement accounts.
What About Our Liabilities?
The assets listed above assume no debt/leverage on our balance sheet. Any debt or leverage we carried once we were financially free would need to be offset by additional assets on our balance sheet.
We currently have $470k of property mortgages on our monthly net worth statement. Assuming we don't eliminate all this debt by the time we become financially free, we a would need to increase the assets listed above to cover this debt. For example if we plan to carry $250k in mortgage debt once we become financially free then I would plan to have at least an additional $250k in assets to offset this debt.
Is this Inline with our Current Net Worth Goal?
These estimates of needed assets turns out to be a little on the low side of our current net worth goal of $2 million + the value of our primary residence, but within the same order of magnitude. Give this is just rough estimating, I think our current financials goals are well inline to support this financial freedom plan.
Related in Financial Goals:
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