What is Financial Independence (FI)? According to Wikipedia, FI is defined as:

"State of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses."

For the majority of us, without the benefit of inheritance, we will begin our financial journey through working, saving and investing. We all hoped that one day we will save enough or that our investments are able to provide sufficient passive income for us achieve FI. Unfortunately for the vast majority of people, they may never be able to achieve FI in their lifetime.

There are two sides to the equation for FI. The income side and the expense side. Many will try to cut their expenses to the bare bone in order to make it easier for the passive income to cover their reduced expense. This is dangerous when they are young as the expenses will grow as they age. The real and better solution is actually increase your passive income. And that means working longer if you have to.

My own journey to achieve FI is as follows:

From age 25-50: I was in pre-FI mode. During this period, I was building up the foundation to the sources for passive income. I invested in dividend paying stocks, and when I had sufficient savings, I invested in a second property. At 50, my passive income was around $55k pa., nowhere near my expense of $130k pa. I was just not working my savings hard enough.

From 50 to now: For the past 2 to 3 years, my passive income has grown to over $100k pa, (it was > $120k last year) still unable to cover my annual expense. I could be in FI mode if I cut back on my expenses but at 56, you would want to YOLO ! Indulge yourself once in a while.

What was clear to me was that all my passive income sources were no match for the most important income generation asset of all - myself!

That's the reason why I advocate that we should all work as long as we can. Once we stop work, we give up this important asset to make income!

Besides the financial aspects, once you stop working, you also give up the other non-tangible benefits of working.

Next I will share how much asset I needed to deploy to generate >$120k pa in passive income.