Denver, CO – Achieving financial independence is a goal for many Americans, but the definition of what that entails can vary widely. For some, it means having enough money to retire early, while for others, it simply means not relying on others for financial support.
According to a recent survey by Empower, a majority of Americans view financial independence as the most important marker of overall life success. Interestingly, the survey found that it doesn’t necessarily require an exorbitant salary to achieve this goal, with Americans estimating that they would need to earn an average of $94,000 a year to feel financially independent.
The survey also revealed that there are multiple ways people may consider themselves financially independent. This includes young adults moving out of their parents’ homes, as well as adherents to the FIRE movement, who aim to achieve financial independence and retire early by living off passive income.
Empower’s survey found that the most popular definition of financial independence, chosen by 47% of respondents, is “no longer needing to receive money from family and friends.” Other popular definitions included “reaching a certain net worth” and “starting to contribute to a 401(k).”
Keith Jones, a senior financial professional with Empower, emphasized the importance of establishing clear financial goals to work towards a more secure and satisfying financial future. He noted that financial independence starts with clarity, and having a clear understanding of what it looks like for each individual.
For those looking to achieve financial independence, it may be helpful to adopt a FIRE mindset, aiming for a certain net worth known as their “FIRE number,” which represents the amount of money needed to be saved and invested to be work-optional.
The levels of financial independence can vary, with some identifying five levels of financial freedom, ranging from being debt-free to having enough savings to completely replace their income.
Overall, regardless of the specific definition, achieving financial independence is a common goal for many Americans, and it starts with setting clear financial goals and working towards a more secure and satisfying financial future.