You are Focusing on the Wrong Number for Retirement

The Accumulation Model Does Not Work

Picture of by Dr David Phelps

by Dr David Phelps

Too many people are focusing on the wrong number. (If you are hard-working, a high-income earner, and want to be a high net-worth individual… this is for you.)

Some focus on their business metrics. Those numbers are important for the profitability and sustainability of your business, but the number I refer to has a more lasting impact.

Imagine being able to run your business the way you want to. Imagine not having to run a business at all. Imagine spending your time doing what you love with those that you love.

The number that can get you there is your Freedom Number.

The Number that Sets You Free

What does it take to set you free? Not just to retire, but also grants you the options and ability to do what you want to do, when you want to do it. 

That’s what we aim for, and there is an actual, specific to each person, dollar amount that we each can put a bullseye on.

For me, I never want to stop “working” because I love what I do. Hopefully, you are in the same boat – You love what you do or you're able to evolve into a position that you love more than when you started years ago. But even if you don’t want to stop working, there is still a dollar amount that will give you the freedom to do more of what you want.

But if there is, in reality, a specific dollar amount that we each can aim for, why are there so many still stuck working until their 60s and 70s?

The Traditional Retirement Plan is Not Enough

There is always a sacrifice period. A time when you devote a lot of your time to acquiring skill sets, getting educated, and trading your time for money. But how quickly can we move on from this period to the freedoms we want?

I believe that answer lies in the plan you have in place to translate that value, what you’ve earned, into more time. Another way to say it is: How can you put your money to work, so you don’t have to? 

In my experience, too many financial advisors will build a retirement plan for others based on an accumulation model.

The accumulation model is a loose plan where you save as much as you can in one asset – financial products like stocks, bonds, annuities, mutual funds, and ETFs. It does take discipline and hard work to save, which is commendable. But it lacks specificity (it is one size fits all) and flexibility.

Financial Advisors say “Let's build it up and someday when you're ready to retire, we’ll [finally] look at the plan. We’ll use our algorithm to determine how long you may live before your money runs out.”

Their algorithm is based on several factors but I’ll just dig into one of them right now: What they think the inflation rate will be. The last 40 years before this one had an inflation rate of 2% or less. Not a huge factor. Now we're dealing with an inflation rate of at least double, probably more than triple the amount. All this to say, I don’t have much confidence in their algorithms as I’ve seen them still being based on past inflation rates.

The Biggest Issue with the Accumulation Model

The biggest problem is that financial advisors use a depletion-type model. You accumulate then you deplete it. It is simple (nothing wrong with that) and sounds like it will work, in theory.

So if you build up enough then chisel away over the years, hopefully, if you have enough built up, you can survive off that model until you die. 

It doesn't happen that way. Even if it did, that is too tight of a line to walk. Who wants to always have in mind not to spend too much before they die? The idea of your death becomes a factor when determining how much you can spend now, and what you leave behind. And to be honest… it makes this model a bit morbid.

That's the plan that financial advisors give to people. I hear it all the time with the doctors, dentists, and other health professionals I work with. 

I ask these doctors, “What did your financial advisor recommend before coming to Freedom Founders looking for an alternative plan?”

Their response: “I need at least 8-15 million dollars to live the lifestyle that I'm accustomed to if we want to live off of my retirement.”

To me, that sounds ridiculous. I'm not against building wealth to that amount. My issue is with that kind of advice and the unspecified goal. That’s why so many feel like they never have enough. You have to work hard and grind out money for most of your life, leaving most of your time and memories on the table.

The Sad Consequence of the Accumulation Model

This accumulation retirement plan leaves the weight of “never having enough”. What most don’t realize is that this causes so much regret and resentment for those who have worked all their life.

They get a higher, society-recommended, education. They take the risk of owning and running a business or practice. They work hard to provide a comfortable lifestyle for themselves and their families.

But they can't stop. They can not get off the treadmill. Why? Because the accumulation/depletion model does NOT work. I see the results of it in the doctors I work with. I hear from them about how it has damaged their thinking and caused tension and stress in their lives.

Some of the people in my group even call this model, the death model. Depletion to death.

An Alternative to Depleting Your Wealth 

The model that I use is based on acquiring the right assets and building your net worth. But not blindly putting money into these assets. Not “keep acquiring because we don’t know if it’ll be enough”. 

We (The Freedom Founders Community) build our assets on our needs for cash flow that replaces our active income. This will be different for everybody depending on your lifestyle and can change, but it’s by your choice alone and not the whims of the market.

The best part is that you live off of the cash flow from your assets and not the actual asset. There is no depleting what you have built. You can continue growing it even while you live off of the cash flow.

When you can build assets that create passive, sustainable, and predictable income (assets that are also an inflation hedge which is important for future wealth), then you never run out.

In our community, once an individual has determined their freedom number, based on cash flow corresponding to assets – We do NOT choose the assets first – it changes everything.

It gives one the freedom to start changing their life. It grants the ability to slow down, bring in associates, partners, partnerships, and the option to transition out or sell your business. It folds the time it takes to reach your goals. 

That is why determining your freedom number needs to be the first step in achieving your freedom.

Who Freedom Founders is For

Our mantra is getting  our members financially free in three to five years or less. Freedom Founders is not for someone just coming out of school who still has a large amount of student loan debt. 

If you’re just getting started in your career, increasing your skill sets, education, and value to a business (yours or somebody else's) is the priority. This is the sacrifice period I mentioned earlier.

The people in Freedom Founders are at a different stage in life. They are high-income earners who have worked hard to build a business and a career, but no longer want to be tied to it. They desire speed to their goals and are looking for an alternative to a plan they have tried and realized is not working for them.

Many of our members reach financial freedom in 18 months or less, based on where they are. But without a viable plan that's based on their specific cash flow needs, not accumulation, there will never be an end in sight.

It is tragic to see hard working, good people continue grinding it out until their health begins to break down and death begins to loom closer and closer. For some, death is how they finally get off the treadmill. 

If you want to avoid this, and you would rather build those memories today (rather than someday that often never comes,) you need to start focusing on the right number that will get you there.

Keep this in mind as you work hard to provide financial security for your family. You do NOT need to trade your freedom and your memories with them for it.

To your freedom!

– David


P.S. Whenever you’re ready, here are some other ways I can help fast track you to your Freedom goal (you’re closer than you think) :


1. Schedule a Call with My Team:

If you’d like to replace your active practice income with passive investment income within 2-3 years, and you have at least $1M in available capital (can include residential/practice equity or practice sale), then schedule a call with my team. If it looks like there is a mutual fit, you’ll have the opportunity to attend one of our upcoming member events as a guest.

2. Become a Full-Cycle Investor:

There are many self-proclaimed genius investors today who think everything they touch turns to gold. But they’re about to learn the hard way what others have gained through “expensive” experience. I’m offering a free report on how to become a full-cycle investor, who knows how to preserve and grow capital in Up and Down markets. Will you be prepared when the inevitable recession hits? Get your free report here.

3. Get Your Free Retirement Scorecard:

Benchmark your retirement and wealth-building against hundreds of other practice professionals, and get personalized feedback on your biggest opportunities and leverage points. Click here to take the 3 minute assessment and get your scorecard.

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