Financial Freedom At 45

fireworksLet me start by clarifying that I am not retiring at 45. It is rather a goal of mine to achieve financial freedom at 45. My definition of financial freedom is simply about reaching a financial state where you are free from major financial obligations.

I came up with my financial freedom at 45 goals as I noticed I only had 10 years left on my mortgage. I started thinking of my goals and what it would mean once my mortgage is paid off. It felt good and it’s not all that far away …

Financial Freedom Goals

Having short and long term goals is good to have as it allows you to put plans together to achieve them. Everyone’s situation is different but my goals fall into a few categories that will apply to many.

  • Mortgage Free @ 45: As I mentioned, I have 10 years left on my mortgage and only 8 years to go. At some point, I’ll need to accelerate some payments but I feel it’s achievable. It’s important to have challenging goals while keeping them within the realm of achievable.
    [2014 Update] Only 5 years to go. I will have to add some money to achieve this goal. It’s still my target.


  • Loan Free @ 40: I currently have car loans and my goal is to have them paid off by the time I reach 40. I went through a bit of a lifestyle inflation with our primary vehicle and then a couple of years ago I needed to get a second car to commute. All is in good hand and I am targeting to be done in 3 years. One caveat is that I don’t include loans that are producing incomes. I don’t consider those a negative addition if they generate income. Sometimes, that’s how you can boost your future earnings.
    [2014 Update] No loans!!!


  • $25,000 Dividend Income @ 45: This is probably my most challenging goal. I expect to make $5K this year so I have a $20K gap to make up for in the next 8 years. I basically have to increase my dividend income by $5K every 2 years. With simple math, if you assume a 5% dividend yield (which can be generous), I would need to add $100K every 2 years to achieve that and that’s not something I can do. Yet, I still like it as a goal. Over the past 2 years, I manage to set myself up to earn $5K in dividends and I’d like to continue working on growing my dividend income as a true measure of my financial freedom.
    [2014 Update] I am 28% there with my dividend portfolio. I’ll make some progress this year with a transfer from my other RRSP account.
    Dividend Snapshot


  • Maintain a Sustainable Life Style: I have recently turned a page where I paid off a renovation line of credit (it felt good) and I needed to set challenging budgets for our family to achieve that. Considering we had some life style inflation slip up a number of years ago, I believe that maintaining a consistent life style cost is important to achieve financial freedom. No need to keep up with the Joneses.
    [2014 Update] That’s the easy part 🙂 We are keeping our life style pretty stable. Kids are starting to cost some more money as they get older so we can’t really over spent on ourselves.

These goals feel good and challenging enough. I feel it’s important to have challenging goals otherwise it’s just routine. I am not saying that routine is wrong but routine can also lead to a life style inflation if you aren’t careful. Your routine should be to save more as your income grows as opposed to spend more.

Readers: What are your Fianancial Freedom goals?

“Image courtesy of noppasinw /”.

22 Responses to "Financial Freedom At 45"

  1. I would like to be debt free in 12 years. I will be sitting down over July 4th weekend to come up with a plan on how to achieve that goal. I know that it will take some effort, but I also know that my lifestyle is where it is. I don’t need any more stuff.

    1. The Passive Income Earner · Edit

      Realizing that our lifestyle is good enough is probably one of the major mind shift we all have to do I think. Glad to see you are satisfied with yours.

      1. I recommend for inspiriation in this manner. He leads a lean lifestyle and has lots of fun and interesting articles on doing so. He’s been doing the blog for years and there’s tonnes of great information in there.
        In your article you mentioned a few things that likely boost your burn rate. Buying a car to commute is certainly a red flag in my books. My commute costs me $100/yr for secure bike parking and ~$50/yr maintenance on a $300 used bike I bought. My car commute used to cost me ~$12k/yr with a modest used car (add it all up! it’s crazy!). Take that cash and jam it in your dividend paying investments and see if it accelerates your goals.
        Great site by the way, I’m enjoying your articles.

  2. I’m only in my early twenties, but so far I’ve contributed my max TFSA each year into stocks / mutual funds primarily for dividends.

    My goal, I hope is to really rack up my yearly dividend income as you have. Somewhere to the point of 5k yearly by 30, without inflation.

  3. Your goals are great!
    $25k dividend income would be a great boost toward financial freedom.

    We don’t have any consumer debt now so that’s one goal we have achieved.

    love my work @45 – I want to get up on Monday and want to go to work.

    cash flow positive @45 to @65 – Hopefully, I can work part time and achieve this. We’ll have to reduce spending and earn more passive income.

  4. GREAT goals Passive! I need to write a post like this!

    For me:
    -mortgage free @ 50. Very doable. 12 years to go.

    -LOC free in 1 year. Doable at our current rate.

    -$25,000 in dividend income @ 50. Not doable. I would need another $400 K invested for that. Not going to happen in 12 years. I will however, try my best to put a few thousand every year into my dividend-payers. 3 years ago, I had none. Now I own about 15 stocks and a few REITs.

    -sustainable lifestyle – for sure. We plan to start a small garden next year. I want to be able to grow a few things for us, not depend on any supermarkets for small veggies 🙂

    Again, great post!

    1. The Passive Income Earner · Edit

      I figured I probably don’t need to add 400K to add the 20K dividend. In 8 years, with a 10% growth, my current 5K should double. So I would need to raise another 15K in dividend and new money will go a long way in achieving that. It’s a challenging goal but I prefer that 🙂

      Looks like you got a good plan. 12 years on your mortgage is a good plan considering you just got a new place (and a new roof) 🙂

  5. Wow–$5K in dividend income annually is impressive! I still haven’t gotten the knack for it. We make dividends off of our Roth IRA accounts, and reinvest them. We also have online savings accounts….though ofcourse they make a paltry amount compared with the 5% glory days of just a few years ago.

  6. Great goals!

    I recently talked a little about my goals, but my biggest goal is to be “financially independent” by 40 years old. I interchange that phrase with “retired”, because to me being FI means that you essentially meet all your obligations/expenses with passive income (meaning independent of an employer). Of course, I’ll still be dependent on market forces and business model changes….and I’ll likely continue to work in an environment that suits my schedule and makes sense.

    My only debt is student loans, and I hope to have them paid off within 8 years, which would put me at 37.

    I wish you the best of luck with all your goals!!

  7. I’d love to achieve financial semi-independence by 45 as well.

    mortgage free @40 (assuming a bigger house is not bought subsequently)

    I am debt free besides my HELOC used in investing.if the world doesn’t end in the next 3 years I should be more than fine.

    lots of unknown variables, so my dividend income stream will take shape as time goes by…

  8. I hope that you will achieve your goal to be financially free on 45, but personally, I prefer to be financially independent by the age of 30. My aspirations are to reach that by reducing costs and putting large portion of my income into savings account.

  9. My goal is be financially free as soon as possible. Right now I am 23% of the way there. If I continue with my current plan I will be free at 62, this is not ok. I am looking into buying another duplex and have decided to buckle and get rid of the debt we have.

  10. I am preparing a workshop on how to achieve financial freedom before 45 (or years earlier than others) and dropped by this interesting site.

    Let me share with you my personal experience. I passed 45 few years ago. I actually achieved financial freedom a bit earlier than 45.

    The trick to financial freedom is mainly to have discipline in managing your life style. To save more than others and avoid unnecessary loans, e.g. car loans, renovation loans etc. Mortgage is necessary for most of us, but we should find ways to reduce them, such as shorten the mortgage term, rent out rooms not used,have a smaller house or live in area which are cheaper.

    On-going (e.g. monthly) review of income and expenses is required. I figured out than I managed to save more than 30% of my income in the past decades.

    Hard to do that. Yes, it is for some.

    Achievable? Yes. Imagine that if you earn 30% less income, how would you live? You should be able to make it. Don’t forget the magic of compound interests which help you out in the long term.

    Would that lead to a boring life? I don’t think so. There are many resources offered by government to us for free.

    Good luck.

  11. Excellent goal and even better comments! I am 42 and share the age 45 goal. I set that goal several years ago when my wife at the time left me. After the sagging my head and the “poor me” depression passed, I decided to take 100% control of my financial life. My new wife and I are fanatically dedicated to financial freedom by age 45 and have amassed over $6M in net worth with close to $100k/year in passive income. Had it not been for my ex-wife’s leaving me, this wouldn’t have been possible. To “her” good riddens…and HERE HERE to a life of FINANCIAL FREEDOM at age 45!!! R, Fred.

  12. Hi PIE,

    I am finding your articles helpful. I just got my first shares and am looking forward to investing in dividends.

    I am wondering if you can point me to some info. You mentioned earning 5k this year, and that your goal is 25k. I am trying to figure out how much investment is required to generate 5k or 25k of dividend income.



    1. The Passive Income Earner · Edit

      Thanks for stopping by. The average yield from a market value perspective is probably around 4% I would say. My dividend portfolio is around 100K right now and generating a little over 5%. To reach my goal, I need 5 times that amount not including the dividend increases. You could model it with a spreadsheet.


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