How To Retire Early (The 3 Numbers You Need To Know)

There are three numbers that determine whether you retire early or work until you're 65 years old. Most people don't know any of them. Not because they're complicated, but because nobody ever taught them what these numbers are. And here's the interesting part. Your income isn't one of these boxes. There are people making $200,000 a year who are completely broke on paper, and there are people making $50,000 who are on track to never need a paycheck again. They are literally multi-millionaires. And that difference isn't the salary. It's these three numbers that I'm going to teach you in this video. That's why I'm calling this video how to become a millionaire by tracking these three numbers. This may be the most important video you'll ever watch in your life. Stay tuned. Okay. Number one is your net worth. I know some of you are thinking, Hey, Marco, net worth, bro, I have credit card debt. I have student loan debt. You know, I'm not making that much money. Like why would I even track this? You have to track it because it's your financial report card. Okay. Did anybody else from a Slavic upbringing get their ass beat if you didn't bring home straight A's? Well, guess what? You have to treat this the same way. Okay. Maybe I'll come over in the back, you know, behind you in the table and hit you in the back of the head for bringing home a B plus. Okay. Oh, what? You got hit as a child. Yeah. Yeah. I got my beat sometimes. Okay. How about you? So anyway, this financial report card, it's, it's not your salary. Okay. It's not your credit score. The reason that net worth is so important because it's your full picture of everything. Okay. Every dollar you own minus every dollar you owe assets weighed against liabilities. So most people avoid looking at it is because they're scared of what it's going to say. Okay. It's the same reason you're scared of stepping on the scale. You've been eating crumble cookies. You've been drinking pop or soda or whatever you call it, whatever region of the country you're from. And you step on the scale and you go, wow, this number keeps getting bigger. I wonder why. Okay. You know why? Because, but what you manage, you don't measure it. You're not measuring the calories. You're not measuring the money going out. So let's talk about what actually makes up most people's net worth. According to the federal reserve survey of consumer finances, the average American's assets break down roughly like this. About a third is sitting in retirement accounts. 28 and a half percent is home equity and only 12% is actually in stocks. The rest is a mix of vehicles, business assets, rental property, and bonds. Now compared that to what my own breakdown is, which I'll share because I think it's obviously relative to this video, roughly 45% of my net worth is in my stocks equities. 33% is in real estate. Another 13 is an alternative investments and the last 9% is cash. So it's not a perfect split. It's just where things landed based on where the market is expanding right now. And your mix is going to look completely different and that's fine. The point is don't copy my allocation. The point is to know yours. Okay. You need to think of your net worth as a pie and each slice is a different asset class. So once you've added everything up on the asset side, subtract your liabilities. The most common ones are student loans, credit cards, medical debt, auto loans, whatever's left over is your net worth. Basically it's anything that has value minus what is a liability. So your next question is probably going to be, well, Marco, is my number good? Well, that depends on your age. Fidelity's research says to aim for one times your salary by 30, two times by 35, three times by 40, four times by 45, and then it accelerates from there. Six times by 50, eight times by 60, and then finally seven times by 67 when you're ready to retire. So I know what some of you are thinking. Oh, I'm behind. These are terrible metrics. I get all that. They're just benchmarks, but you need to start tracking and you need to give yourself an honest score or an honest grade on your financial report card. Okay. Number two is your savings rate. It doesn't matter how much money you make. You can be a billionaire. You can be a millionaire. You can be making $35,000 a year. Your savings rate is important. I said that last part tongue in cheek. You need to make at least 75 grand a year, period. You need to get to that. Inflation is going to eat you alive if you're below that because you won't be able to afford to invest. So listen to me. Here's the number that actually determines how long you have to work. Yes, it is your income, but importantly, it's the savings rate from that income. And I want to say that again, because it matters. It doesn't matter how much you make after, let's call it 75 grand at the time of this recording. It matters how much you save. So someone making a million dollars a year and spending a million dollars a year, they have a savings rate of zero. And a savings rate of zero means that they're never going to retire. Their lifestyle keeps tracking with their increase of income. So that same math applies at every income level above 75 grand. So here's how you calculate yours. Take your monthly income, subtract your monthly expenses, divide that by your income, multiply it by 100. That gives you your percentage. So here's a quick example. You make $5,000 a month. Your expenses are 4,000. That leaves you with 1,000 left over. 1,000 divided by 5,000 is 0.2, aka 20%. If you multiply that by 100, you're at a 20% savings rate. A 20% savings rate means you'll need to work for roughly 37 years before you can retire. For some people, that's completely fine. For others, 37 years feels like a life sentence, because it is. It's indentured servitude with a 401k. So where the average American sits right now is somewhere between, I put them at 5%, but it's actually between 3% and 4%, if you can believe that, depending on the month. So I'll link the Federal Reserve's live study down below. Okay. So what I can tell you, whether it's 3%, 4%, or 5%, is that it's nowhere near where it should be. Okay. Now, what should you be aiming for, Marco? Oh, I'm glad you asked. So at minimum, better than 3%, of course, but the next real target is 15%. And if you have a 401k, your contributions count towards this number. So a 50% savings rate cuts that 37 years down to roughly 17. Okay. That's why I wrote retire right here. So that's a big deal. And if you can push it to 75%, the math gets you to about seven years. So I'm telling you to know your savings rate percentage, intentionally push it higher and understand that every percentage point you add is time that you're buying back. However, I want to be very clear on this. If you're one of those fire psychos that like, you're a miser, you're cheap, you have no friends, you don't pay for drinks, you don't pay for dinners, you don't, you're just not, you're a hermit. Okay. Don't become a hermit to reach, to sprint towards fire. Those people are losers. Okay. You need to enjoy your life while you're young. Okay. That's why I recommend the book, Die With Zero. This is common sense to most Europeans, but to Americans, it's like, I need to save forever. And then you die with, you know, $5 million portfolio. Guys do not be the fire guy. That's eating subway sandwiches at a nice restaurant to save $10. Okay. You look like an idiot. Okay. That rant on fire brings me to number three. You need to at least know your financial independence number. Okay. And we'll get to two quick formulas here in a second. So this is the number that most people never calculate. Okay. It's one of the biggest financial mistakes you can make because you don't understand your finish line. It feels like an impossible concept. Um, until you actually figure this out, your FI number is the amount of money you need invested so that your investments alone can cover all of your expenses. So you don't need a job. You don't need a paycheck, just your portfolio paying for your bills. So here's how you calculate it. Take what you spend per year, yearly expenses and divided by 4%. That's it. If you're spending $4,000 a month, that's $48,000 a year, 48,000 divided by 4% gives you $1,200,000. That's your FI number. You can also just multiply your yearly spending by 25 and land in the same place. So you take your yearly expenses times 25. It's the same thing as dividing by 0.04. Okay. 4%. So that 4% figure comes from decades of research into how, uh, how long portfolios actually survive in retirement. So historically withdrawing 4% per year has allowed portfolios to last 30 years or more across most market conditions. Okay. So I have a source for that down below. It's basically called the Trinity study. Now here's the piece that's easy to miss. Your FI number isn't fixed. It moves based on what you spend. So if you cut your monthly expenses from 4,000 to 3,300, let's say you cut 700 bucks, your FI number drops from 1,200,000 all the way to $990,000. That's $200,000. You no longer need to save too. Okay. You just bought yourself a finish line by trimming these yearly or monthly expenses slightly. So think about that for a second, because all you have to do is control your spending. Yes. I know there's inflation. Yes. I understand that it's hard to save. Yes. I know that it's probably easier to make more money than it is to cut, cut, cut. And you're have a better lifestyle anyway. Again, you don't want to be the hermit or the miser that never, you know, gives nice gifts, presents, gives back to the community financially, whatever. Marco, I give back with my time. People only care about money, dog. They don't care about you pouring the soup in the line. Okay. This is important, but you also need to realize once you reach social security, if it still exists for my generation, if we've not expanded into 17 more wars by the end of this video, basically you don't have to come up with that full 3,300 a month or full $4,000 a month, because guess what? Social security is going to take care of a chunk of that. So you just need this portfolio to bridge you to social security or bridge you to 59 and a half when you have access to most of these funds in the form of like a Roth IRA, a 401k, things like that. That's why a taxable brokerage is pretty important for people that make that want to not make a certain amount of money, but want to retire sooner. That way you can access those funds without penalties whenever you want, that kind of a thing. Most of my investments are in a taxable brokerage because your boy ain't trying to work to 59 and a half, bro. I think I'm basically retired at this point. That's why I kind of don't care about how I act on this channel, not trying to sell you anything, except a membership to Whiteboard Finance University, but check out a taxable brokerage if you haven't already. Now, the next section is what version of financial independence you want to choose, okay? Not full FI, but there's Coase, there's Barista, there's a lot of really interesting things. But before that, here's a word from today's sponsor, JM Bullion. In my hand, I have five ounces of gold, real gold. At the time of this recording, gold is trading at around $4,500 an ounce. Over the last 12 months, it's up 43%. The S&P 500 over that same period, 26%. Over the last five years, gold is up 149% versus 80% for the S&P. This is why I personally allocate a percentage of my net worth to physical gold bullion. I buy all of my physical gold and precious metals from JM Bullion, and I've been doing that for over 10 years. I treat it like insurance on the rest of my portfolio. When inflation runs hot, which it's going to do more, and the dollar loses purchasing power, gold has historically been one of the best places to be. JM Bullion is one of the largest precious metals dealers in the country with over $11 billion in precious metals sold, more than 6 million deliveries completed, and over 400,000 customer reviews with an average rating of 4.8 out of 5 stars. Use my link in the description so they know I sent you. Happy stacking. Okay, so some of you may not know that there's not just one version of financial independence. There's a whole spectrum, okay? Some people say, I'm on the spectrum. I don't know. I am on this spectrum. I'm more towards the right of this spectrum. But depending on where you are in life, okay, one of these is going to make much more sense than the others. Okay, and I'll show you why I like Coast Fire. So on the left-hand side, you have Lean Fire, okay? Lean Fire is basically built on a super frugal living, typically overseas, okay? So you have like your Portugals, your Philippines, maybe even the Balkans now is becoming more popular. But basically, these people, they work maybe, I don't know, 10 to 15 years, and then they take their portfolio and basically peel off maybe a couple grand a month, if that, and they live, you know, Latin America, things like that, and they live for significantly less than they would in the United States, okay? Then you have Barista Fire. Barista Fire is kind of like semi-retired fire. So it's basically where your portfolio has enough money to where this job, this easier job, let's just call it being a barista, whatever, it can offset your bills, plus you have your retirement portfolio, that nut, right? So you combine the two, and you're basically barista, financially independent. Number three is Coast. This is my favorite. You know why? Because typically, if you assume a net 4% or 5% return, I assume a 4% return, I say stocks will make, let's say, 7% ROI over my lifetime, minus 3% inflation with a 4% safety withdrawal rate, okay? Then what this does is you front load the portfolio early, okay? Say 100,000, 200,000, 500,000, million bucks, okay, when you're in your, I don't know, 30s, 40s, whatever, and you can then stop contributing because the assumptions are that you're going to coast, that's why it's called Coast Fire, to your fire number, which brings us to the next thing on the spectrum, which is full fire, okay? We just calculated this in the last slide. It's your annual expenses times 25, or divided by 0.04, aka 4%, okay? This number will coast to this number without you adding another penny. Make sense? If those assumptions are correct, okay? We can always go through World War III, so who the hell knows? Now, you have fat fire. This is like the final boss, okay? This is when you want a very comfortable retirement. There's different definitions for it. I'm not going to get into specific numbers, but typically, this is people living off multiple six figures a year in retirement, okay? This is the full fire spectrum. Again, my favorite is Coast because you can really focus on grinding early and letting the market and compound interest do the rest. If you still haven't opened up a brokerage account, I do this with a taxable, okay? Yes, you can do it with a Roth. Yes, you can do it with a 401k or a SEP IRA or whatever. I do this with a taxable because I don't want to not be able to touch my money before 59 and a half with penalties. With this, with a taxable brokerage, all you need to do is pay long-term capital gains tax after one year. If you haven't, check out the links down below. It helps me a lot at no additional cost to you. Okay, so here's where it all comes together, okay? I wanted to draw a Venn diagram, but it's too hard to actually write inside these circles, so I just drew these three connected together. Okay, so these three numbers, they aren't separate ideas, okay? They're all connected between each other. So your net worth tells you where you're at today. Again, it's your financial report card. Your savings rate, okay, tells you how fast you're getting to that finish line that we talked about, how fast you're moving. And your financial independence number tells you exactly where you're going. That is the finish line. So most people are wandering, not wondering, wandering financially, not because they're bad with money, again, that I say in all my videos, it's because they have no map. They never reverse engineered their final destination. So it's the same people who exercise three times a week, but they don't see results because they aren't tracking their calories. I keep going back to the calories analogy because it's the easiest thing to analogize. Oh, these cookies are malicious. It's the easiest way to make a comparison to finance. Calories in, calories out. Money in, money out. It's not rocket science. So you can't outwork a bad diet and you can't out-save a spending problem with the savings rate. So these three numbers, they give you all three. So here's what I'd suggest you actually do today. Not eventually, today. So step one, calculate your net worth. Add up every asset, subtract every debt, write the number down. You're done. Step two, calculate your savings rate. Take last month's income, subtract last month's expenses, divide by income, multiply by 100. That's your current savings rate. Step three, calculate your financial independence number. Take your monthly expenses, multiply it by 12 to get your annual number, then multiply that by 25. That's your finish line. Now look at the gap between your net worth and your FI number. That's your mission. That's all you need to do. Again, if you're 200 pounds and want to get to 165, you know that you need to reverse engineer a caloric deficit to lose 35 pounds over a given period of time. So again, you guys, you need to understand that all this works together. This is your diet. This is your working out. This is your sleep, right? Things like that. It all comes together. And guess what? When you have all three of these working at the same time together, it's going to compound on top of each other, okay? Maybe your diet is good, but you don't work out and your sleep sucks, okay? Even though diet is 80% of the battle, but you know what I'm trying to say. Again, it's not a fitness channel. I'm just giving you an analogy. So again, you guys, these three need to work together. Okay, guys, here we are at my honest thoughts at the end of the video. These three numbers aren't complicated. They never were, okay? The reason most people don't know them is because they simply haven't learned, okay? It's like someone who doesn't know what to eat thinks that they're eating healthy, but really half the food over there is just sending them through the roof for their daily calorie amount. So again, once you understand the three numbers that we talked about in this video, it's going to be a lot easier to get to this million dollar mark, okay? I promise you. But I do want to emphasize this. Yes, I kind of alluded to like any income works, but if you remember what I said in the beginning of the video, in 2026, you guys, we were getting decimated by inflation, completely crushed. Our PP is getting crushed. You need to make at least 75 grand a year, okay? I know to some people that sounds crazy, you know, oh, I'm never going to get there. You can do it a million different ways, okay? You can pick up extra shifts. There's a phrase that my mom always told me, who doesn't have it in their head has it in their legs, meaning like if you aren't smart enough to earn it, you got to work hard enough to earn it, okay? So if you're dumb and you know you're dumb, pick up an extra shift, okay? If you're smart and you know you're smart, increase your education, get a better paying job, okay? It's not rocket science. And if you're a psychopath and have both the hard work ethic and smart, start your own business, okay? Don't work for someone else. You got to get to at least 75 grand a year, period. Now, if you are at that level and you still feel lost, check out my private community, whiteboardfinanceuniversity.com, wbfuniversity.com. Guys, it's $10 a month to get financially ripped, okay? You're going to be on the beach. Everyone's going to say, I bet his portfolio is incredible. All joking aside, live streams every Thursday at 5 p.m. We have over 450 members in there. Every Thursday is a hoot. We have fun. It's a lot of just... Think of it like a meetup that you would go to in person, except it's people from all over the world, mostly Canada and the States, but there's also people from Europe as well and Latin America. It's really cool, okay? Just think of it like a group of friends getting together. We have full courses. We have full classrooms. I share every trade. Check out these trades right here, bro. It's not an options trading community, but these results are unbelievable. I should be charging literally $100 a month. I'm not exaggerating. So anyway, thank you for watching. Check out whiteboardfinanceuniversity.com, and as always, have a prosperous day. Marco, I don't like your caloric analogies. You're fat-shaming. Oh, damn right I'm fat-shaming, fatty. Put down the burger. Do the reverse curl and get it away from your mouth. Go run some hill sprints.