Adcock says the moment he felt financially secure came in 2016, at age 35, when he retired from his corporate job with about $900,000. Market gains quickly brought that total to more than $1 million.
Security, he said, came not from the amount of money he had saved, but from what it offered him: the freedom to live his life as he wanted without relying on a salary. When his wife retired the following year, the couple spent three years traveling the country in a Gulfstream RV.
“We certainly lived small. We spent a lot less than we do today,” says Adcock. “It was really the first time I felt financially secure, meaning we don’t have to work for the rest of our lives.”
Strengthening security through savings and investment
To be clear, a higher salary certainly helps achieve financial security — but it’s not the be-all and end-all, Adcock says.
“You can make $200,000 a year, but if you’re spending $180,000 a year, you’re not financially secure,” he says.
In 2014, when Adcock and his wife were earning a combined annual income of $220,000, Adcock says they saved about 70% of everything they brought in and invested aggressively in retirement accounts and brokerage.
“I would say our savings rate was borderline extreme,” he says. “But I hated what I had done. I wanted to get out of it as quickly as possible.”
If you hope to feel financially secure, you don’t need to aim for such a high savings rate. At the very least, start by building an emergency fund. A good portion of Americans — 44 percent, according to Bankrate — say they couldn’t cover a $1,000 emergency with their savings.
“It’s the opposite of being financially secure,” Adcock says.
Financial professionals generally recommend setting aside three to six months of living expenses in case of an emergency. Once you’ve built that up, see if you can increase the length of time you could live off your savings.
“Once you get to the years where you can live a year, then five years, then 10 years, that’s when the magic happens,” says Adcock.
Viewing financial security this way allows you to view money not just as an amount to accumulate, but also as a tool to fund the things you care about in your life. Someone with a year’s worth of expenses saved might take a sabbatical to pursue a passion project. Someone with 10 years of earnings could try to start the small business they’ve always dreamed of.
For those considering early retirement, the ultimate goal is to build an investment portfolio large enough to retire in perpetuity.
But even for someone like Adcock, who continues to earn income through projects such as her website, newsletter, and recent book, achieving the highest level of financial security often means having the flexibility to work when and how we want, rather than not working at all. .
“I would use the term retired loosely at this point. I wouldn’t say we’re necessarily traditionally retired, but we are absolutely financially independent. We are absolutely financially secure,” he says. “We don’t have to do any of these things. But it’s nice to be able to do things that look interesting and see how they work.”
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