How Much Do You Really Need to Achieve Financial Independence (Ep. 108) |

On this solo episode of The Lawyer Millionaire podcast, I explore a common yet crucial question: How much do you really need to achieve financial freedom?

Setting Financial Goals Tailored for Legal Professionals

Imagine waking up and realizing you’re just a small step away from achieving your lifelong financial goals. This episode is designed to help you, as a law firm owner, understand the steps needed to pinpoint and reach those goals efficiently.

The Power of Milestones

Hitting financial milestones is an essential part of your journey to independence. Whether you’re aiming for your first million or your tenth, identifying clear targets gives you direction. But remember, money is not just a number; it’s about what it allows you to do. Consider how a substantial amount could change your lifestyle. Would it enable you to work on your own terms, picking only the cases you enjoy? Or perhaps even step back entirely if you choose to do so?

Understanding FU Money and Work Optional Lifestyle

Achieving financial independence translates into having the choice and flexibility to decide whether you want to continue working, change the way you work, or explore different passions. This is often referred to as having “FU money” – a position where you work because you choose to, not because you have to. It’s about living a work-optional lifestyle where your finances are robust enough to weather any economic storm, letting you focus on what truly matters.

The Practical Math: How Much Do You Really Need?

For the mathematically averse, worry not—we’ve got a straightforward formula to determine your financial needs: the 4% rule. This rule is a guiding principle suggesting that if you withdraw 4% of your portfolio annually, you can sustain your lifestyle over a 30-year retirement. Put simply, work out your annual income goal and divide it by 4%. This provides a benchmark for the amount you’ll need to save.

Starting Early is Key

The essence of compounding cannot be overstated. Beginning your saving and investment journey early allows you to capitalize on growth over time. For example, saving $600 a month from age 25 can remarkably yield $2.5 million by age 65, assuming a 9% return rate. The lesson here is simple: the earlier you start, the less you’ll need to save overall to reach the same goals.

Taking Action Today

Start by defining your financial number today. Work backwards to identify how much you need to save monthly to achieve it. Remember, financial independence isn’t solely about a figure; it’s about shaping the life you envision. At The Lawyer Millionaire, we stand ready to assist you in crafting a strong financial strategy tailored to law firm owners like you.

Connect with Darren Wurz:

Transcript:

Darren Wurz [00:00:00]:
Imagine waking up one day and realizing you’re just $1,000 away from your lifelong financial goal. Welcome to the Lawyer Millionaire podcast. I’m your host, Darren Wurz, financial planner for law firm owners. Today we’re diving deep into one of the biggest questions I get from attorneys. How much money do I need actually to be financially free?

Intro [00:00:24]:
We are on a mission to help lawyers and law firm owners maximize wealth and achieve financial independence. Welcome to the Lawyer Millionaire with Darren Wurz from Wurz Financial Services.

Darren Wurz [00:00:38]:
Before we dive in, a quick plug for the Lawyer Millionaire Book Club, our exclusive book club for law firm owners and lawyers. If you’re not a part of it, you should be. It’s so exciting. We just finished reading the Psychology of Money by Morgan Housel and We’re kicking off Q2 with our next ready, which is Shoe Dog by Phil Knight, the creator of Nike. It’s not only a great opportunity to read some awesome books, but it’s also a fantastic way to meet other lawyers, network and exchange ideas in a fun and engaging way. By the way, we have, I think 75 members at this point and climbing, so get in there. The link will be in the show notes and if you want to chat with me about your own financial goals, there’s always my calendar link in the show notes. I’d love to show you how we can help you achieve your goals.

Darren Wurz [00:01:28]:
All right, let’s get into our topic today, which is setting those financial goals. And I started off by talking about what if you were just $1,000 away from your all time lifetime financial goal? And you know what? That actually comes from a real story. I remember this call. I got a call from my clients one day. He actually called me up, he said, you know What? I am $1,000 away from my all time financial goal, which for him was one and a half million dollars. And that was amazing right now. I mean, it’s been a few years since then, so he’s gone even higher. But that was an incredible moment just to realize that he had set this goal for himself and he was so close to it and to actually realize that financial goal and you know, that’s just the power, the magical power of compounding.

Darren Wurz [00:02:23]:
I hear this from my dad as he’s retired, but his money continues to grow and he is watching it and he keeps telling me he never thought he would have as much money as he has now. It just continues to compound and grow. And that’s the magical power of compounding growth. You know, a million dollars used to be a Huge milestone, right? Millionaire. And that’s why we’re called the lawyer millionaire, you know, and millionaire still has a certain ring to it. It still. It certainly doesn’t mean what it used to mean, right? A millionaire in 1925 was a lot different than a millionaire in 2025. And that’s just the reality of inflation, which we’re all kind of dealing with today, right? You know, today we have more than millionaires.

Darren Wurz [00:03:07]:
We have. We’ve gone beyond billionaires, we have centibillionaires. And within our lifetimes, we will probably see our first trillionaires. Mark my words, there are changing. The meaning of financial success is changing under our feet. But anyway, hitting milestones is still important. Whether it’s your first million, your first 10 million or more. Setting clear goals gives you a target to aim for.

Darren Wurz [00:03:33]:
So what’s your number? Do you have a number? Is there a number you’re trying to reach? I wonder what it is, right? What is it? Think of it. Put it in your mind. Well, let me tell you something. Money is not the goal. Money’s a great goal, but money itself is not the goal. The goal is what money allows you to do. And it’s not all just about a number. Let me ask you some questions.

Darren Wurz [00:03:56]:
If you had a million dollars, maybe you already have a million dollars. If you had another million dollars, how would your life change? You know, we asked this question, right? If you won the lottery, what would you do? Right? And it’s hard to come up with an answer. If you had $5 million, would you still work? Would you work differently? What would be different about your life? Most attorneys don’t really have a set retirement age like other professionals. And maybe you’re the same way. Maybe you love your work, you derive purpose from it. Especially if you’re a law firm owner, you have a business, it’s part of who you are. Business owners are really the same way, right? And so it’s not necessarily about hitting a certain number so you can stop working necessarily. It’s about financial independence.

Darren Wurz [00:04:40]:
And that means having choice. The choice, the ability to choose whether you’re going to work, whether you’re not going to work means working on your own terms, picking the cases that you truly enjoy or, hey, walking away entirely. And that, my friends, is what we call FU money. That’s the FU money stage, right? When you are at that stage where you could walk away, right? Wouldn’t that be a great feeling to think, you know what? I don’t have to, Bill. I don’t have to Hire. I don’t have to continue growing this practice. Sure I can if I want to, and that’s fun and I want to create a great organization, but I don’t need to hire anymore. And if no more cases come in, I’ll be just fine.

Darren Wurz [00:05:24]:
You know, that’s what we call a work optional lifestyle. No stress. No stress. The economy can do what it wants. F you. Right. The government can do what it wants. F you.

Darren Wurz [00:05:36]:
Because I am going to be just fine. Choosing only the high value cases. Choosing only the cases that interest you. Working part time or working seasonally, running the firm without being tied to daily operations. The ability to pursue passion, projects, hobbies, even a second career. The meaning of retirement is changing. You know, when people retire, they often. Statistics show that people who stop working tend to die.

Darren Wurz [00:06:08]:
It’s very real because our work is so much a part of our lives. And when we stop working, we become sedentary, our minds stop thinking, we lose a lot of our sense of purpose. And so many people don’t want to retire. Maybe you don’t either, and that’s perfectly fine. But what it is, what it is about is about having that work optionality that’s really, really powerful. Get the money. Get the money up front, right? Accumulate the money to get to a point where you have that freedom and that flexibility. But how much money do you actually need? Right? Well, let’s do some math.

Darren Wurz [00:06:44]:
You ready? Ready for some math? Where are my math people at? Lawyers tend to not like math. Maybe you do, I don’t know. But most lawyers I talk to, unless you’re maybe in some kind of legal area that requires a lot of math anyway. There’s parts of math I don’t like either, but I tend to be pretty good at math. This math is not so hard. Okay, so. So bear with me. I’m going to give you one simple formula and you’ve probably heard this formula before.

Darren Wurz [00:07:15]:
It’s the 4% rule. Have you heard of the 4% rule? The 4% rule gives you a nice barometer to know how much money you need. And we’ve heard of it, but have you ever really used it? If you’re really like, put it into practice. Just done a little test case on yourself. So the formula is this. Take your annual income goal. And by the way, if financial independence is all about income, it’s about how much income can you generate, you know, having a stream of income that supports your life and is going to keep up with inflation. That’s financial independence, period.

Darren Wurz [00:07:48]:
Now how you generate that Income, that’s another story. It could be your portfolio, it could be passive income sources. Let’s say it’s your portfolio. It’s your, it’s your, your stocks and bonds, your investment portfolio. And a lot of people get tripped up because they think they need an income producing portfolio. Well, let me tell you something. Every portfolio is income producing, okay? And the 4% rule, basically the reason that, you know, let me tell you where the rule comes from. There were a lot of studies done to see with different types of portfolios, different percentages of stocks and bond, different allocations.

Darren Wurz [00:08:26]:
What is the safe percentage amount at a bare minimum or maybe maximum? I don’t know what’s generally a safe percentage that you can start with, right? So you have this portfolio. I’m going to draw out a certain amount to support my lifestyle. What’s a percentage you can start with? And have the ability to give yourself a raise. Now that’s the part people miss. The ability to give yourself a raise to keep pace with inflation. You see, because you’re thinking 4%. Well, crap, my money market is doing better than 4%, right? So that seems low. But here’s the kicker.

Darren Wurz [00:09:05]:
You’ve got to be able to give yourself a raise every year. You’ve got to be able to move that needle up each year because every year things are going to cost more. We started off this episode talking about $1 million today isn’t what it used to be, right? So that’s why we start at 4%, because it gives you the room to move higher. You know, by the time you’re older, 20, 30 years into retirement, your withdrawal rate is going to be higher, potentially. That’s okay. It’s going to increase slowly over time, okay? But 4% gives you enough Runway to make those increases. So they did a lot of math. They looked at all kinds of different market scenarios, right? Good markets, bad markets, bull markets, bear markets.

Darren Wurz [00:09:52]:
What’s the percentage that survives everything? Okay? And generally what they came up with was 4%. Now I can show you the studies. It varies based on your allocation, different types of portfolios, right? 4%. Now your portfolio needs to be a mixture of two things. And I’ll just caveat on this for a second. It needs to be a mixture of growth and income. I just mentioned this. A lot of people make the mistake of thinking they need to switch to an income portfolio.

Darren Wurz [00:10:23]:
You need growth and income. Here’s why. You need to combat the effects of inflation. And the only way you’re going to combat the effects of inflation is with Growth. If you have a 4% bond and you’re living off that income, guess what? Next year it’s not going to be enough income because everything’s going to cost more and you’re still going to be getting the same amount of income. So you need growth so you can buy more of the 4% bonds to get more income. This is all hypothetical, okay? Right. So hopefully I’ve illustrated that.

Darren Wurz [00:10:55]:
Let’s say 50/50 or 60/40, that’s the magic number. A good chunk in growth, a chunk in income, you offset the risk. You’ve got income producing assets, you have growth to fuel more income in the future. We could get into that in a lot more detail. But anyway, we digress. So the 4% rule assumes a 30 year time frame. So generally retired age 65, you can last until 95. That’s a good time frame.

Darren Wurz [00:11:23]:
If you think you’re going to retire much earlier, you’re going to retire at 55, use a lower percentage. Maybe 3.5%. Maybe 3%. Okay? And here’s how the math works. It’s your annual income goal divided by your percentage. I’ll say that again. Your income goal, how much income you need each year divided by 4%. In that first year, my first year of retirement, I’m going to need $100,000.

Darren Wurz [00:11:48]:
Okay. And the next year I’m going to need more because I’m going to increase it with inflation. Okay? 100,000 divided by 4% on your calculator, you’re going to do 04 gives you 2.5 million. Okay? So for me to have a salary basically from my portfolio of $100,000 a year at age 65, and for that to last until 95 with inflation, I need $2.5 million. Okay? You can do that on any number. Maybe it’s 200,000 a year. Okay? Divide by 4%. You need $5 million to make that work.

Darren Wurz [00:12:28]:
Now, there’s a lot of caveats, right? You know, retiring at different ages, then there’s the impact of Social Security pensions. Maybe you’re working part time, you know, maybe you have other passive income sources, maybe you have other goals you want to spend money on. Right? But this is, this gives you, this is actually a really good framework to help you kind of get a baseline. Now if you are really trying to assess this in detail, we can help. This is, this is the bread and butter of what we do. And so if you really need help diving in on this in a lot of great detail, we would love to help you. The link to My calendar is in the show notes. And by the way, listeners of this show get $250 off their first month of membership.

Darren Wurz [00:13:14]:
So just mention this episode in your intro call and you’ll be eligible for that. Okay, so we’ve talked about the 4% rule. That’s how much, how you know how much money you need to save, right? But now let’s talk about how to get there. Because now you can work it backwards. You know your goal, you know what you’re shooting for. Now, how much money do I need to save? Right. You can use a compound interest calculator to work it backwards number of years and figure out how much you need to save to get to that number. Let’s use $2.5 million as our example.

Darren Wurz [00:13:48]:
If you invest, and I’m going to use a 9% interest rate. If you invest $7,400 a year, well, 7,399, but we’ll round up, start at age 25. By age 65, you’ll have two and a half million dollars. Let me say that again. If you invest $7,200 a year starting at age 25 and you get a 9% rate of return, by age 65, you’ll have $2.5 million. Now, there’s some assumptions that go into this math. So why don’t you understand this? One of the big assumptions, the biggest assumption of all is our rate of growth. The US stock market from 1950 to 2009 gave us a 10.9% average rate of return, the S&P 500.

Darren Wurz [00:14:33]:
Okay, so I’m dropping that by a couple percentage points just to be safe. So you could use 11%, which would mean you’d need even less money to invest. But here’s the thing. We don’t know exactly what the stock market’s going to do. So always save more than you think you’ll need. Always err a little bit on the side of being less optimistic and then you’ll be pleasantly surprised. Right? But think about that, $7,400 a year as a first year associate. That’s nothing.

Darren Wurz [00:15:03]:
Now, I know you’ve got your student loans, you’ve got all kinds of things, other things you have to pay for, but you know, on a monthly basis. What’s that, five, six hundred dollars a month? Am I doing my math right? Eight hundred dollars a month somewhere in there. Help me out. Okay, 600. Yeah. $600 a month is $7,200. Okay, so that’s about $600 a month. You can do that it might be a little bit of stretch at the beginning at age 25, I get that.

Darren Wurz [00:15:34]:
But you just stay on pace, stay on pace with that for the next 40 years, you’ll have $2.5 million. And you may need, you may not need to save that much because you’ll have employer matches in your 401k, maybe profit sharing bonuses, all of those things can accelerate your savings. So think about that. $600 a month for 40 years can give you $2.5 million. Now, the key really is starting young. And why is that? Why is the key starting young? Because you give yourself more time for your money to compound. Let me just illustrate this for a second, right? Let’s say you need, you want to accumulate a million dollars. If your time frame is 30 years, you’re going to need to invest $7,336 a year.

Darren Wurz [00:16:31]:
So let’s say you start saving at age 20. Let’s say you start saving at age 35, right? You wanted to do your loans first. You wanted to take care of some other things. So you start saving at age 35, you’re going to save until 65. To get to a million dollars by 65, you need to save $7,336 a year, about $600 a month, a little bit more. Okay, let’s say you started earlier, you started age 25. The amount you need to save is less than half of that. Wow.

Darren Wurz [00:17:08]:
Just a 10 year head start. You only need to start saving. You only need to start with $2960 a year. Over a 40 year time frame, you’ll get to a million dollars. Wow. Wow. That’s a little bit more. That’s 200 some dollars a month versus 600 some dollars a month.

Darren Wurz [00:17:32]:
That’s a huge difference. But this just goes to show the power. Now let’s say, let’s imagine you were able to start with the full $600 a month. At age 25, you can see you’ll get to, you’ll get to $2.5 million versus you wait 10 years, you’ll only get to a million dollars. Wow, that’s incredible, right? That’s the power of compounding. And all of this is we’re using a hypothetical rate of return of 9%. Okay? So starting early, you gotta start early. The key is to start early.

Darren Wurz [00:18:08]:
Next steps for you, go define your number today, determine how much you need to save. And let me give you one more example here before we go. And that’s Warren Buffett, right? Warren Buffett. Legendary investor. But Warren Buffett, you know, not only did he invest well, he wasn’t the world’s greatest investor, but here’s what he did. He did what he did consistently, and he got a really, really early head start. I think he started investing at the age of 10 or 11, and he was a millionaire by the age 30. Okay.

Darren Wurz [00:18:38]:
He didn’t become a billionaire until much later in life. I think he was 65 or maybe. I don’t know. He was, he was later in life. Most of his money came towards the end of his life. The guy’s been investing for 90 years. Just about. So when you invest that long.

Darren Wurz [00:18:57]:
Yes, compounding is on your side. And here’s the truth. Here’s the lesson. A little bit, a little bit of savings goes a long way. So if you’ve been putting off savings, if you’ve been putting off investing because you’re growing your business, I hear you. But guess what? You got to start. You got to start now. The best time to invest was yesterday.

Darren Wurz [00:19:22]:
The second best time is today. So take $100 a month. If you have not been putting any money in your investments because you’ve been strapped for cash, you’ve been putting all your money in your law firm. I get it, I support it. But you’ve got to take advantage of what’s happening in the market and you’ve got to experience that compound growth. Take $100 a month and start putting it in a brokerage account and investing in the S&P 500. Do something right because it’s going to be huge down the road. It may not feel like it.

Darren Wurz [00:19:54]:
We’re impatient. But the key to wealth is patience. Remember, financial independence is not about hitting an arbitrary number. It’s about creating the life you want. And in the next coming up episodes, we’re going to talk more about that. Of course, a number does help and work. Optional lifestyle is within your reach. If you just have the right plan.

Darren Wurz [00:20:17]:
Start by defining a number for yourself. Work it backwards to see how much you need to save on a monthly basis. And go. And you know what? This is what we do here at the Lawyer Millionaire. We help clients get on the pathway to wealth. Are you taking all the steps that you need to take to maximize your wealth and your financial well being? Take our Lawyer Millionaire money Mastery assessment and find out instantly with your money mastery score. Just click the link in the show notes. Well, that’s a wrap for this episode of the Lawyer Millionaire podcast.

Darren Wurz [00:20:55]:
I’m your host, Darren Wurtz. See you next time.

Outro [00:21:03]:
Thank you for listening to the Lawyer Millionaire. Click the Follow button below to be notified when new episodes become available. This content has been made available for informational and educational purposes only. This content is not intended to represent investing or tax advice. Always seek the advice of a qualified investment or tax advisor with any questions you may have regarding your own financial circumstances.

How Much Do You Really Need to Achieve Financial Independence (Ep. 108)