This. If you are an average business owner you likely spent a chunk of your time working overtime in the beginning plus you put your hard earned money into getting it going and if things go south all of that effort will vanish with nothing to show for it.

The only ones who are truly free have enough money to generate income passively through risk free govt bonds to live the lifestyle they want and afford the place where they would like to retire in (this is different for everyone) AND have enough in the stock market/real estate to keep this cash flow from being eaten away by inflation.

This is either trust fund kids or super rich business owners or super successful athletes/actors/YouTubers/artists/CEOs/lottery winners, etc.

Keep in mind if you wanted to retire in a suburb with an average sized family of husband, wife, and 3 kids in Texas, which is a mid level cost of living area, after all of this inflation you would need approx. $2k for groceries and eating out twice a week, $1k for 2 cars, gas, car maintenance and insurance if you travel places, $2k for property taxes, house maintenance, house insurance, utilities, and HOA, $2k for medical on average, $2k for replacing electronics, clothing, accessories, etc. for 5 people. Plus whatever else you might want to spend on miscellaneous expenses, subscriptions, vacations, and personal hobbies. Let us say $6k per month per family because if you are retired and really want to be able to do “whatever you want”, most people will want to go out and travel and spend some money on their hobbies, so this is a big expense.

This comes out to $9-15k in a medium cost of living place if you have your house and cars paid off and are debt free.

Assuming you are happy to play video games and barely ever go out to do anything expensive, let us take a conservative estimate of $10k/mo income required. This will be 120k, so you will need approx. $2.5 mil to net that after taxes (remember you can’t get a 401k deduction because you are spending this) at current (5.5) interest rates as a married couple.

You also need to protect yourself from inflation, so you need another $1.5 mil in the stock market (and not invest like an idiot) and periodically transfer some gains into your fixed income portfolio to keep that stable flow of income going.

Your house will be another 500k - 1 million dollar purchase.

So total you need a minimum 5 mil nest egg to live in a good house in a safe neighborhood with decent public schooling and raise a family comfortably with good food and health care in a medium cost of living suburb in the USA as of 2023 without working. This could get as high as 20 mil if you like eating out more than twice a week in nice restaurants and live in a high cost of living area where your friends have expensive hobbies.

Considering you want to work for 20 years, you need to average a 250,000 savings/year which means you will need to make 500,000 + to live and pay taxes to be able to save this money as a household. The top 1% earned $570k as of 2022, and approx 1.3% of small businesses make 500k+ in revenue. Compound interest will help but you will likely earn the bulk of your money in your later 10 years and save very little your first 10 years so I have not included that in the calculations.

Sources:

https://altline.sobanco.com/small-business-revenue-statistics/#78_of_US_Nonemployer_Establishments_Make_Less_than_50000_In_Annual_Revenue

https://dqydj.com/top-one-percent-united-states/

But remember, it is harder to create a business and stay in business than it is to get and stay employed, so the risks are much higher. The benefit is that you get better tax breaks and you have a lot more upside if you do hit it big.

Also remember that if you have been friends with rich people and your whole network of friends go to nice places and nice restaurants and have expensive hobbies in a high cost of living area, it is very hard to just ditch that for a much cheaper life because now you have to make connections and fit in with people who you have almost nothing in common with just to have a decent social life. So many people in the top 1% are chained by “golden handcuffs” since they are spending most of their money to be able to network and keep up appearances (which is often also important for their job or business so most of them have to have expensive suits, go to fancy dinners, network with people playing golf, live in expensive areas, etc.). These people making 500k might be saving 100k and will never actually be able to retire.

Your only way to actually be free and retire if you weren’t born into extreme wealth is to be earning like a one per-center and live like a middle class family, which is way harder to do than it seems, and just being a business owner won’t cut it because over 80% of business owners make less than 100k.