How much money is enough for you to retire?

Is it $250,000, $500,000, $1,000,000, $2,000,000 or perhaps more? How much money will you need to retire early? If you listen to the personal finance entertainers on TV, you might need as much as $6,000,000 to retire early.

The media seems obsessed with “How much money will you need when you retire?” I’m a bit a different because I want to know how much in income will you have when you retire?

How much money you need in order to retire early largely depends upon

  1. the lifestyle you plan on living
  2. the debt you may still need to pay off and
  3. if you’re trying to leave a legacy to your beneficiaries.

Everyone’s priority in retirement is different so there’s not a blanket number that can be thrown out that covers every single person. What if someone’s grandchildren live down the street meanwhile another’s live on the other coast? What if your hobby is board games meanwhile someone else’s is amusement parks? You can see just by asking some very logical questions that there is not a number. Drives me crazy when I hear people try to throw “the number” out like that.

Lifestyle is the key component in determining how much in income you’ll need. I once worked with a gentleman who was still working his corporate job as he approached age 70. From the outside, it appeared that he could have retired years earlier, but I later found out that he lived an expensive lifestyle. He had a big house in a gated golf course community and drove luxury cars. He and his wife would take a limo to and from the airport for vacation travel. I guess all that stuff made them happy but a couple of years later he died.

In reality, he could not have retired earlier due to their lifestyle.

I know others right now that are bringing in $7,000-$10,000 a month in retirement yet they are spending every dime of that each month keeping up appearances. The assets that they have are being held hostage. Assets can create income but not all assets are equal. For example, they don’t want to sell the big house to get the equity out. They are taking huge depreciations on their vehicles trading them in every 3 years. Even with that income and those assets, there isn’t an emergency fund and covering all the bills each month is causing unnecessary stress. That is the way they are choosing to “survive” their retirement.

I would rather live and enjoy than survive.

If you live a $3,000,000 lifestyle, then you better have at least $3,000,000 to cover it. For the rest of us, we’ll get by on much less.

What’s MY number? I found out years ago as I was writing my book “Retire Early. What are You Waiting For?” that I don’t have a total savings number. The reason is because I’m focused on my lifestyle and the income I’ll need to support it, while maintaining an emergency fund. If I need $2500 a month, I am looking to bring in a sustainable income of $5000 a month in retirement. That allows me to maintain an emergency fund as well as have savings for travel and necessary large purchases such as a vehicle. Until I turn 65 that will come from my assets and online ventures. At 65 I will have a pension and social security.

How much money is enough for you? Only you can answer that question based on your  DIAL. Debt, Income, Assets, Lifestyle. Only you know your needs and your lifestyle.

Having some assets and using them properly can offer you sustainable income. Although risky, you can retire early without assets if you have sustainable income from other sources, such as a pension. (Remember, you might have a lot of assets but if those assets can’t generate any income for you, they won’t help you retire early.)

All your numbers in your DIAL work together. The retirement number you are looking for is generated by looking at your lifestyle including your debt. The way to get to this number is by looking at your income and where you can generate it, including your assets. It’s better to have a plan. That’s why I created DIAL into Early Retirement.  Once you get your DIAL in order, you’re free to retire when and how you want.  What are you waiting for?