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# System prepended metadata

title: Critical Mass

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# Critical Mass

> A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets.

Taken from *[Bob Brinker](http://www.bobbrinker.com/terms.asp)*.

Critical Mass, as a concept appears to be slightly different from the Retirement corpus. 

Initially, we grow our assets by savings. Investing these savings over time then starts to accumulate assets in terms of yearly incomes. A simple 10% saving rate, if not invested, will accumulate one year's savings in 10 years. While with investing, it will do so in much lesser period depending upon the rate of investment return. Then one day, we see that we have assets worth income of multiple years. And after some years, the yearly growth of our assets can become equal to the yearly income. At this point in time, we have reached the Critical Mass. And now the possibility to retire from a day job / salaried job is a real possibility. 

Actually speaking, the salaried job then makes a lot less sense after that, since the regular income gets a worse tax treatment while the tax on the capital growth can be deferred for a long time. Much better to do the latter rather than the former.

The best way to reach a Critical Mass is to save drastically in the initial years and accumulate as fast as possible. Although doing it the slow and steady way up to the 50s with wise savings is not a bad thing. By keeping this in mind, one can change from the more stressful kind of jobs to more relaxed ones much before the actual retirement.

This way of thinking is slightly different from the usual Accumulation phase where you work, work and work and suddenly when you cannot or do not want to, you take an (arbitrary) age-based retirement and hope to live off whatever you have got.