I thought about this the other day: how much money do I need to retire? Technically, even if I had all the money in the world, I probably wouldn’t “retire” but just take it easy. I would still work and do my online stuff but again, I would take it easier. But let’s just ask it for fun, how much money do I need to retire?
Well, given the fact that I don’t have my own house yet, haven’t finished paying back my student loans or have my life situated the way I want, I would need a lot of money. But we can’t all win the lottery… and even if we did, how much would actually be enough?
This is mainly food for thought to see how much you guys would actually need to be comfortable for the rest of your life.
I know everyone is a different age, have different needs in their lives and so on, but I figured I’d just base it off someone that is in their 20s or even 30s that is looking to retire extra young. Most people don’t retire until mid 60s but all of us have the dream of retiring when we’re young so we can enjoy things, right? Well, let’s get into it.
Say You Won the Lottery
Say I won the lottery, how much money do I need to retire? I know everyone plays differently and the jackpot varies depending on what game you played but say you won $35 million dollars (current estimated cash option for the Mega Millions), could you retire off of that?
My answer is yes. If I were to live happy without having to think about money, I’d say $100k yearly would be good enough to be comfortable. Now, with $35 million, that could last 350 years of my life. Plus, I’d have enough to purchase a new home, pay for all my expenses (foods, clothing, all types of insurance, cars, luxury items, etc).
Now my goal used to be to aim for something much much lower, maybe $250,000 but I definitely couldn’t retire off of that, just take an extended break.
Making a Living Online
A lot of people try to work from home full-time but do you guys plan on doing that for the rest of your life? And what if you made John Chow type money (like $30k-$40k monthly), or a super affiliate (we’ll say probably $100k monthly), how much would you need to save up before you officially retire young?
In my calculations, I think $6 million would be enough to retire. Based on $100k yearly to live comfortable, you could 60 more years without worrying too much about money.
If you made John Chow type money, you would probably need to work for 16 more years. And if you were a super affiliate, you would probably need to work for five more years.
Then again, if you made that type of money working online, I’m sure you wouldn’t stop if you hit the $6 million goal.
Working a Day Job
If you work a day job, more than likely you won’t be retiring anytime soon. Typically, the average person makes somewhere between $40-$50k yearly. Based on my $6 million retire numbers, that person wouldn’t reach that in their lifetime.
Matter of fact, most people won’t ever make a few million. But then again, most people won’t retire early.
So, how much money do I need to retire? Well, everyone has their own set amount but I just ran through how much I would need. Again, just food for thought if you ever needed to try to calculate how much you would have to save… realistically.
Anyways, what do you guys think?
I’m too young to think about that right now, but if I had to, I would say that to be comfortable when you retire you would need to have about the same amount of money per year as you would if you were working.. so that depends on your housing situation etc. Obvioulsy I’d love to win the lottery, but then sometimes you can win TOO MUCH money and you wouldn’t know what to do with it.. I just hope I’m not a poor pensioner.. I’ll probably keep a wee job going for some extra cash
You’re never too young to think long-term. I’m 25 and my retirement fund (or really, my do-anything-I-want fund) is steadily growing. Yay the power of compound interest, too!
Don’t forget to factor in interest and inflation. It’s not just a straightforward division, and in fact, you can probably get by with a smaller sum if you can invest above the rate of inflation.
This is a great post and we would love to have something like this to feature in our magazine if anyone wants to submit one, info@mixitupmagazine.com
I think this is very important because what we do now will affect us later. I am all about saving up and rewarding yourself with a trip somewhere but as we get older we do need to set some money aside for the future. This is a great start to get people thinking of what they want/ should invest in.
Thanks
Ed Troxell
MIX IT UP Magazine
Well even if you left $2M in the bank it would generate $100k a year in interest. Plus you’d need $1m for a nice place or 2 and a couple of decent cars.
As you say you don’t wanna get there too late to really enjoy it!
I wish I could retire now, but like Olga said, I am too young to retire now. As Sacha said it is good to start a retirement fund early on.
Thanks for the article, it is a nice thought to think of retiring, but ill have to put that on hold for now.
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I am really young to be deeply engrossed in thoughts about my retirement plans, but I believe as the others say, that you can get by with a much smaller sum. I would say about $2 or $3. That would be living really comfortably as well, because it will generate more as the interest goes up.
-Randy
Olga – I think you would actually need a little more than how much you would be making at a regular job because your expenses automatically increase when you’re working by yourself or whatever.
Sacha – I’m 26 and I already have a retirement plan as well. But you’re absolutely right about inflation and interest… honestly, I didn’t include all of that… or even taxes. But it was just food for thought.
Ed – Saving is key… I was taught that you should save just incase… for instance, if someone was to get laid off then they’d have their savings to tap into if all else fails.
Music – I think it depends on the bank you put it in. Are interest rates that high? I think most banks only give like 2% at the highest… unless you put it in a CD but then you can’t touch the money for a while.
Tech – Realistically, I don’t think any of us would really retire so young. I’m sure we’d get bored, plus, we would probably want to make more money if we could. Maybe even invest in something…
Gasoline – You’re never too young to think about early retirement. And yes, I agree, you could get by with a lot less but I came up with that number so people could potentially buy their own house and then settle in.
Jay
How much money would I need to save up for my mom so she can finally retire? What amount of money (in Canada) would I need to give her so she can retire and I can leave?
Of course coming up with an accurate answer to each of these questions is impossible. Instead, you develop a best guess estimate. This estimate should include a best case and worst case scenario.
I have no pension, but I own my own home with no mortgage. I also have quite alot of cash in the bank. If I get a financial advisor to invest this for income for me, with index linked investments (so that the capital goes up with inflation) and I want to retire on an income of, say, £15000 per year before tax in today’s terms, how much cash do I need in the bank to generate this income, which would enable me to retire and live a life of leisure? Thanks!
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Your Social Security benefits will be reduced by two-thirds of your government pension. In other words, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits.
The Windfall Elimination Provision primarily affects you if you earned a pension in any job where you did not pay Social Security taxes and you also worked in other jobs long enough to qualify for a retirement or disability benefit.
I think this is very important because what we do now will affect us later. I am all about saving up and rewarding yourself with a trip somewhere but as we get older we do need to set some money aside for the future.
In other words, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits.