To answer your question, you only get taxed on the money you make from the money in a taxable account. So if you put $10,000 in a taxable account and it pays you $200 worth of dividends and grows to be worth $11,000, you would just be taxed on the $200 worth of dividends (when you receive them) and the $1,000 of capital gains (when you sell the investment). You were already taxed on the $10,000 so you wouldn’t be taxed again. Make sense?

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These figures are partially due to a highly progressive tax code that was implemented in the mid 2000’s that really went after income levels above these thresholds. Further, I carefully observed my happiness level from making much less to making much more. Any dollar earned above $250,000 – $300,000 didn’t make a lick of difference. In fact, I often noticed a decline in happiness due to the increased stress from work. 

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- Limited discussion until the end of the book (p. 290) about Sequence of Return Risk. This is something few people understand and it is flat out dangerous to lead someone to potentially believe that they can retire decades earlier than "standard/normal retirement age" with significantly less money than they would supposedly otherwise need to accumulate by age 65, immediately starting withdrawing from these funds, and that their money will likely double, triple, or quadruple by the time they're much older. Yes, this is possible IF someone can remain flexible (on taking withdrawals from their assets, on generating income in "retirement"), IF someone has alternate income sources, IF market conditions are generally favorable during at least the first decade of "retirement," etc., but there is a major risk here as well. The author does mention these items and does provide a few cautionary words, but I do not think this was stressed enough for the average reader to truly understand the complete impact/considerations. I feel like most people will think, "oh, awesome, I can retire in my 30s with $1.25M, starting taking withdrawals right away, never run out of money, and my portfolio will be worth multiples of the $1.25M in my later years." More time should be spent discussing sequence of return risk.

What is meant by Financial Freedom


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If you have 20 years left to live and only require $60,000 a year, having $1,200,000 can also be considered enough even if you make zero return. The only problem is that your purchasing power will decline by ~2% a year due to inflation. The other problem is that you don’t know exactly how many years you have left to live. Therefore, it’s always better to have more rather than less.
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