Wer financially taken care of has, lives without worries. Can work, but doesn’t have to. Occasionally throws himself into projects and takes extensive vacations in between. The dream of financial freedom sounds something like this. Which most people have probably already fantasized about.
Private banker Beatrice Schobesberger can confirm this. In almost 40 years of financial advice, she has encountered the idea constantly. “But people talk about it without having a concrete idea of what it means,” she says.
What is missing is a clear number in front of our eyes. How much Money it would really take to drop the pen overnight. And to live only from your assets. Perhaps because the sum is valued so high that people immediately surrender, suspects salary expert Martina Ernst. Or because people always need something to dream about.
So if you don’t want your bubble to burst, you’re free to continue dreaming of your dream of financial freedom. Four experts are now presenting the facts to everyone else:
How much money it would really take to pay off the salary of an average full-time earner every month – and for the rest of his life (that’s currently 2,500 euros net). Whether this can only be achieved through inheritance or general prosperity. And what investment strategy is needed in any case.
The four percent rule: Could even work for a lifetime
First, the milkmaid calculation: If you want to pay yourself 2,500 euros net per month, you need 30,000 euros a year. Over 50 years that’s 1.5 million. Nothing is adjusted for inflation yet. But you should keep in mind that every 36 years… purchasing power halved. Interest is also missing. And you have to have 1.5 million first. This is more precise.
Florian Märzendorfer, financial planner for young academics, relies on this Four percent rule. You take your annual expenses (30,000 euros) and multiply them by 25. Power 750.000 Eurothat you have to have in order to stop working. Sounds better than 1.5 million. However, what is needed here is the willingness to do so Capital market to go.
The concept was developed by researchers in Texas in 1998 and only works if the assets are invested in stocks and bonds and earn an average return of four percent annually. The result: Even in the worst case scenario, the capital was sufficient to last at least 30 years. And: “It is assumed that inflation can be taken into account when withdrawing money every year,” says Märzendorfer.
Sounds rosy, but there are still a few things to consider. First: In Austria you pay Capital gains tax (KESt) on dividends (27.5 percent), so a quarter of the income is lost. Secondly: If you make a significant loss in the first few years of your investment – yes, there is a risk – you have to be able to react.
Continuing to withdraw money would not be wise because the total amount could shrink radically and the compound interest effect could suffer. In general, the longer you want to live with the four percent rule, the less reliable it becomes, explains the financial planner. If you want to protect yourself, you should therefore calculate more conservatively. And reduce the percentage.
The three percent concept: more conservative, more cautious, more realistic
“Three percent is an interest rate that you can realistically set if you are prepared to enter the capital market,” says Beatrice Schobesberger and consults a payment plan calculator, of which there are many online:
Do you have a fortune of 500.000 Euro and achieves a net return of three percent with a good investment strategy 23 years 2,500 euros a month flow into the account. (At a Million Euro they would even be 90 years!) Net return is the keyword: it means that expenses and taxes have already been deducted.
The longer the investment period, the lower the risk of loss and the more realistic the three percent becomes.
by Beatrice Schobesberger
After 23 years, the 500,000 euros will probably be gone, but it is still enough for the average pension period (women: 25.3 years, men: 20.2 years). And in some industries it can actually be generated independently.
Salary expert Martina Ernst reveals which ones later in the article. The first question is how to invest your money in order to actually get three percent out of it.
One hundred percent stocks: a good investment strategy?
Anyone who expects guidance from Robert Karas, Chief Investment Officer of Gutmann Privatbank, will be disappointed. Because of course they don’t come from professionals.
“Blindly handing over the money issue to experts has never worked,” says Karas. Dealing with finances and investment strategies yourself is the first step to the three percent.
The most important factor is not knowledge, warns Karas, “but rather that your own emotions don’t get in the way.” Because if you want to get three percent or more out of it, you have to learn how to do it Shares to deal with.
Historically, they are the best generators of returns, but they can lie in the basement for years. “People who are unfamiliar with the subject will not be able to stand it,” says Karas. Especially not if they are dependent on the money invested. He would therefore never recommend that beginners rely 100 percent on stocks, “that would be naive.”
The idea of keeping your money safe in a savings account is even more naive. Because only one thing is certain: the loss of purchasing power. “No matter how you twist and turn it. There is risk involved everywhere,” concludes Karas. If you want to minimize it on the stock market, you have to diversify widely.
A good methodology would be via ETFsthese are exchange-traded funds with low fees that contain a large number of individual stocks. If saved over a long period of time, ETFs offer the prospect of a good return. Practical if you’re not one of the lucky ones who inherits. But to those who have to earn their wealth themselves.
Saving for financial freedom yourself – it’s possible
Over the course of their working life, the average full-time earner earns roughly 1.2 million euros. If you don’t have any expenses for the rest of your life, that would be enough. Unfortunately it doesn’t play that way. And yet you can save a solid sum with this income if you start early.
How? Martina Ernst explains this and refers to the current Stepstone salary report. After three to five years of experience, career starters earn around 2,350 euros net per month. If you manage to save 500 euros each (even if it hurts), financial freedom will be within reach long before you reach retirement age. Anyone who doubts this, look inside oneself Savings plan calculator.
Investing 500 euros per month in a broadly diversified ETF (the MSCI World with 1,600 individual stocks is used as an example) results in an average of 514,000 euros after 30 years. Half a million would have been cracked. Even if “only” 180,000 were deposited.
Having everything taken care of by the age of 50 can work. “If I really want that, the goal is impossible,” says Martina Ernst. As long as you live frugally and have had well-paid jobs until then. The salary expert reveals where these can be found.
Career planning: You can earn well and save a lot in these jobs
One thing is clear: setting aside 500 euros a month at the start of your career is only affordable for very few people. This becomes easier over the course of your working life as your expertise increases and at the same time your salary (as well as the amount that can be saved).
Today, 35-year-olds have the chance to earn a net monthly salary of 4,000 euros if they work in the right industries, reports Martina Ernst. Or successfully self-employed.
As examples, she cites top experts in investment banking, managers of larger teams, salespeople in the insurance or pharmaceutical sectors, and management consultants. Assembly abroad would also be lucrative, says Ernst. “But not in Germany, but on the oil rigs.”
It turns out that the portfolio of well-paid jobs is broad. However, money should never be the only factor in pursuing a career path. “You should be enthusiastic about a topic,” explains Martina Ernst. Only then would you create added value. This could increase the likelihood of earning well and – if you still want that – putting your feet up at some point.
It was a comforting thought. Whoever is rich is not automatically happier. The credo has long been that an invisible limit would be set at an annual income of around $90,000. Until US psychologist Matthew Killingsworth surveyed almost 34,000 working adults for a study in 2023 and refuted the assumption. If you are already happy, money will make you even happier. The new cap is half a million dollars. Only those who are already unhappy should be resistant. Not a penny over $90,000 should be able to put a smile on your face.
The psychologist’s thesis is controversial and should therefore not be taken at face value. Nevertheless, people have an inherent desire for financial security, says salary expert Martina Ernst. She relies on this Maslow’s hierarchy of needs. After the basic physiological needs (eating, drinking, sleeping), safety comes second. Basic material security plays an important role in this. But when a person feels financially secure is highly individual, reports banker Beatrice Schobesberger.
“In private banking you meet people who all have or once had money. That doesn’t mean that they felt safe.” Let alone: they had the feeling that they were “taken care of”. Private banker Robert Karas has also only met a few people who have closed the financial topic because of their wealth. “Often there are diffuse fears. The worry of actually having to make a living from it.”
If you were financially secure, the money would in most cases be passed on to the next generation, says Karas: “Anyone who has looked after their money all their life won’t suddenly throw it upside down at 70.” Although there are known exceptions confirm the rule.