What is the 25x Rule?

Let’s face it. If most of us had the financial means to retire immediately, we would. Trading in blazers for beachwear, and morning commutes for long morning rituals is a phase in our lives we spend our entire careers dreaming about. The majority of our adult lives is dedicated to building a nest egg that we can comfortably perch on for our retirement. But how exactly do we figure out just how big that golden egg should be?

The 25x Rule

The 25x Rule is a parable of sorts in the financial planning world that asserts that in order to ensure a comfortable retirement in the style you’ve grown accustomed to, you are going to need to save 25 years’ worth of annual living expenses. For example, if you plan to spend $75,000 per year during retirement, you will need to save $1,875,000 before you can sing “take this job and shove it” to your boss.  The sooner you reach your target savings number based upon the 25x rule, the sooner you can start living in retirement bliss.

Getting FIREd Up For Retirement

Although most of us are guilty of chasing the dream of early retirement, there’s an impressive subculture of savers that will spare every expense to make that their reality. These savvy savers follow something called the FIRE movement: Financial Independence, Retirement Early.

FIRE adherents worship at the altar of extreme frugality in exchange for shorter working lives and longer retirements.  Why wait until you’re 65 or older to retire when there’s a chance you won’t even be around to enjoy those golden years? Why not aim to hit the beach full-time at 40?  The FIRE approach to financial planning is not for everyone, but retirement planning, in general, is something most adults are focused on, and understandably worried about in many cases.  The best solution to overcome financial anxiety is to have a plan. 

How to Achieve Your 25x Goal

Bear in mind that the 25x Rule is just a starting point for building an overall savings plan. Once you’ve applied the formula to your own life and have a magic retirement number in mind, you’re going to need a strategy to make that plan your reality.  For most of us, salaries alone, coupled with the high cost-of-living, will not allow us to get anywhere near the 25x number, especially if you’re not particularly interested in pinching every possible penny while the best years of your life float on by. You are going to need to supplement your income and savings with income from other sources.  You can take on a second or third job, play the lottery, or invest wisely in order to earn passive income to re-invest and build a foundation for your future. Although in todays economy, investing is easier said than done. Except with addy.

In a world that has seemingly turned its back on the financial concerns of young people, addy offers Millennials and Gen Zers a chance to supplement their income and savings in an investment industry previously unavailable to people with less than $100,000.00 of liquidity. Anyone with even just a few dollars of their savings can become a real estate investor through addy.  

Sooner Rather Than Later

As tough as it is to hear, the time to get going on a strategic retirement plan to optimize your savings is now. Luckily, we’ve lowered the financial barrier of entry into the real estate investment world, so you can invest with an amount that makes sense with your current budget. And most important of all, you don’t have to scrimp, save, or wait to do it. You can start putting your hard-earned money to work for you now, so you can retire sooner rather than later.



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