As we all strive for financial stability and freedom, one question often comes to mind: At what age do most people become financially free? Financial freedom, the state where passive income or savings can support living expenses without relying on active employment, is a goal for many. However, achieving this milestone may depend on various factors, such as income, expenses, savings, and investment strategies.
There is no one particular answer to this question for everyone, as personal circumstances and choices play a significant role in determining one’s path to financial independence. Some individuals attain financial freedom relatively young, while others may require more time to build wealth and secure their financial future. So, what can we learn from those who have successfully reached this goal? What do we need to do to follow in their footsteps?
Why are we at 40PlusFinance.com focusing on this topic in particular? We are on our path to financial freedom, but at the same time, we have two young adult kids and are very interested in helping them attain financial security. We are still working on educating them about credit cards, establishing savings goals, and if and when they should start investing in things like the stock market.
Throughout this article, we’ll explore the concept of financial freedom in depth, examining different factors and strategies that may accelerate or hinder our progress toward this objective. By understanding the challenges and opportunities associated with achieving financial independence, we can better prepare ourselves to forge our unique paths toward a more secure and fulfilling life.
Key Takeaways:
- Financial freedom varies based on income, expenses, savings, and investment strategies.
- The average age of financial independence varies due to personal circumstances, education, and job markets.
- Only 1 in 4 young adults in the U.S. are financially independent of their parents by age 22.
- Factors contributing to delayed financial independence include rising living costs, changes in employment, student loan debt, and parental support.
- Financial independence means having sufficient income, savings, or investments to live comfortably without relying on a paycheck or external assistance.
- Strategies for achieving financial independence include creating a solid financial plan, living below one’s means, diversifying income sources, and investing in rental properties or cash-value life insurance.
When Does The Average Person Achieve Financial Independence

Financial independence is a significant milestone for many people as it marks when they can stand on their own two feet without relying on others for support. As we examine the average age at which people become financially independent, it’s important to note that this can vary vastly based on individual circumstances, education, career choices, and more.
The Pew Research Center reported that in 2018, 24% of young adults achieved financial independence at age 22 or younger, compared to 32% in 1980. For a strict definition, financial freedom starts at 150% of the federal poverty level annually. However, it is still commonly thought that young adults will and should achieve complete financial independence during this phase of life.
So, what factors contribute to the age of financial independence? Let’s explore some key elements:
- Income: According to a U.S. Young Adult Financial Independence Study, 56% of young adults earned between $10,000 and $50,000 in 2020. The income level deemed “enough” by respondents for their current needs was $50,000 or less for 51%. But is this a realistic expectation given the expanding costs of living?
- Education: Pursuing higher education may delay financial independence for some individuals, as the cost of attending college continues to rise, and students often need assistance from their families.
- Job Markets: Job markets play a crucial role in financial independence as young adults need sufficient opportunities to secure stable and well-paying jobs that enable them to support themselves.
Given these factors, it’s clear that there’s no easy, one-size-fits-all answer to the question of when the average person becomes financially independent. Personal circumstances, opportunities, and financial decisions will inevitably shape each individual’s path toward financial freedom.
Most Parents Contribute Too Much Money Towards Their Adult Children

In our society, many young adults struggle to achieve financial independence. One reason may be the increasing trend of parents providing financial support to their adult children. According to a Pew Research survey, 55% of Americans believe parents give too much financial assistance to their young adult children.
However, opinions on this matter vary among different age groups. Only about 31% of those aged 18 to 29 think that parents are being too supportive, compared to 55% of those aged 30 to 49 and over 60% of individuals aged 50 and older. Why do we see such a difference in opinions between age groups? One possible reason is that younger adults might still need to feel the full impact of financial dependence on their parents.
Unfortunately, parental support may have long-term consequences on young adults’ ability to achieve financial independence. AARP reports that more than half of American adults think parents do too much for their adult children. In this context, it is crucial to ask ourselves: how can we balance providing support and promoting self-reliance among young adults? Furthermore, what about our own goals of financial freedom?
The financial challenges faced by young adults today are undoubtedly different from those faced by previous generations. For example, a Pew Research study noted that 55% of 18- to 29-year-olds think finding a job is harder today than it was for their parent’s generation. In light of these challenges, we must ask ourselves: are we as a society adapting our support mechanisms in a way that genuinely empowers young adults to achieve financial independence? And, more importantly, how can we help young adults navigate the path to financial freedom?
Only a quarter of young adults in the United States are financially independent of their parents.
Recent studies have shown that only 1 in 4 young adults in the U.S. were financially independent of their parents by twenty two, the age most Americans believe they should reach this milestone. This represents a significant decline from the 1 in 3 young adults who were financially independent in 1980. This section will explore the reasons behind this delayed independence and differences in financial independence by gender.
Reasons for Delayed Independence
Several factors contribute to the delayed financial independence among young adults, including:
- Rising living costs: The cost of housing, education, and healthcare has dramatically increased over the past few decades, making it difficult for young adults to become financially independent.
- Changes in employment: The job market has evolved, and many entry-level positions now require higher education or specialized skills. This can prolong the time it takes young adults to secure stable, well-paying jobs.
- Student loan debt: To meet the requirements of more specialized jobs and secure better employment opportunities, many young adults are taking on significant student loan debt, which can weigh on their ability to achieve financial independence.
- Parental support: With these challenges, parents may feel it necessary to provide financial support for extended periods. This support can inadvertently delay their children’s transition to financial independence.
Financial Independence by Gender
There are notable differences in financial independence rates between genders. Pew Research Center found that young men have experienced a decline in financial independence and are now less likely than young women to be financially self-sufficient. This shift is partially attributed to women increasingly participating in the workforce and pursuing higher education.
Understanding the barriers to financial independence for young adults is essential in addressing the issue and helping them transition to economic self-sufficiency. As we continue to explore this topic, we’ll further examine the impact of these factors and discuss potential solutions that could facilitate this critical transition for young adults.
Financial Independence Meaning
Financial independence means having sufficient income, savings, or investments to live comfortably and meet obligations without relying on a paycheck or external assistance. Attaining financial freedom is not necessarily about accumulating vast wealth but instead developing habits and strategies to manage our finances effectively and sustain a comfortable lifestyle.
How to Become Financially Independent
To achieve financial independence, we need to adopt certain habits and techniques. One of the initial steps is creating a solid financial plan that outlines our goals and the steps necessary to reach them. This includes setting a budget, tracking expenses, and finding ways to increase our income.
We can maximize our savings and investments by living below our means and avoiding unnecessary debt. Additionally, diversifying our income sources, such as engaging in side hustles or passive income streams, will enhance our financial stability.
What is the financial threshold for achieving independence?
Determining the amount needed to achieve financial independence varies for each individual based on their lifestyle and financial goals. A commonly used benchmark is the “25 times rule,” which suggests that we should aim to have at least 25 times our annual living expenses saved or invested. This rule is also referred to as the “4% Rule”. While it does have some shortcomings, it’s a good starting point.
For example, if our annual living expenses amount to $40,000, we would need $1,000,000 ($40,000 x 25) saved to be considered financially independent. Remember that this is just a guideline, and individual circumstances may require adjustments to this figure.
What is the timeline for achieving financial independence?
The time it takes to become financially independent depends on factors such as our starting financial position, income, savings rate, and investment returns. Consistently evaluating our financial circumstances and adjusting our plan is crucial in determining how long it will take to reach our goal.
Maintaining patience and persistence throughout our journey toward financial independence is essential. By staying committed to our financial plan and adopting healthy financial habits, we will be well on our way to achieving the freedom and security that financial independence provides.
How We Are Becoming Financially Free After 40

In recent years, more of us have been aiming to become financially free at a younger age. While financial freedom isn’t a one-size-fits-all concept, many people succeed after age 40 (like my wife and me) through various strategies. This section will explore two popular methods: single-family real estate rental properties and cash-value life insurance.
Single Family Real Estate Rental Properties
One of the tried-and-true paths to financial freedom, and one we use ourselves, is investing in single-family real estate rental properties. Through this method, we acquire properties and rent them out to tenants, creating a passive income stream that helps us achieve financial freedom. Let’s dive into some key aspects of this strategy:
- Location matters: For the best return on our investments, we should choose properties in areas with strong rental demand, low vacancy rates, and a robust job market.
- Property management: Managing rental properties can be time-consuming and challenging, but hiring a property manager can significantly reduce the burden and ensure a steady flow of rental income.
- Long-term commitment: Remember that investing in real estate is a long-term strategy. We should be prepared to hold onto our properties for a considerable time before seeing significant financial returns.
Cash Value Life Insurance
Another strategy for achieving financial freedom after 40 is investing in cash-value life insurance. This type of policy supplies a death benefit to our loved ones and accumulates cash value over time. Here’s how it works:
- Regular premiums: We pay regular premiums into the policy, like any other life insurance policy. These include the cost of insurance and fees, as well as contributions to the policy’s cash value component.
- Grow tax-deferred: The policy’s cash value component grows tax-deferred over time, providing us with a gradually increasing tax-advantaged savings vehicle.
- Access funds: We can access the cash value funds through loans or withdrawals, allowing us to use them for various purposes such as investing, emergencies, or retirement income.
By using these strategies and remaining committed to our long-term financial goals, we have made enormous progress toward financial freedom and independence. Still, a way to go on that, but with the help and support from a community like Cashflow Tactics, we can continue to work towards our goals methodically.
Kurt has gone from the financial lows of the ’08 financial crisis to personal financial success. He is a professional real estate investor owning properties in multiple states.
One of his passions is financial education and the pursuit of financial freedom.
You can learn more about Kurt here.