Can You Retire With 5 Million Dollars?

Can you retire with $5,000,000 five million dollarsCan you retire with 5 million dollars? For most people, the answer would be: Heck yes! I’d retire in a heartbeat! Using the 4% safe withdrawal rate as a guideline, the annual income will be around $200,000. That’s more than most people make every year and it should fund a very comfortable lifestyle.

However, accumulating $5,000,000 isn’t exactly easy. You’d probably need to be in the top 1% to reach $5M in net worth. That’s about $420,000 per year in household income. Here are some of the top income earners:

  • Executives of large companies and public institutions. Eric Barron, the president of Penn State University, made over $800,000 last year.
  • Highly paid professionals such as surgeons, lawyers, and investment bankers. A highly experienced anesthesiologist can make $500,000 per year.
  • Business owners.
  • Entertainers, sports stars, and other celebrities. Floyd Mayweather topped the list in 2018 with $285 million of income. George Clooney came in second with $239 million. Most of that is from the sale of his tequila company, not bad at all.

These people tend to be very successful and $5 million isn’t out of reach for them. I did a little internet research and it seems people who reached “pentamillionaire” status aren’t quite as ready for retirement as you’d think. By the way, nearly three million households are worth over $5 million in the United State. That’s a lot of rich folks.

Take my poll at the end of this post. 40% of voters don’t think $5 million enough to retire on. That’s over 5,000 people which is much more than I expected. Wow, please leave a comment and let us know you need more.

*Updated for 2019.

A Spending Problem

One issue with earning the top 1% is that you spend like you’re rich. Which you are, but it probably isn’t sustainable. You can’t make that much income forever. Last time, I used a profile of a Canadian couple who was having a rough time after the main breadwinner was laid off from his $300,000/year job. This time, I’ll use an example from Financial Samurai. Sam published a post about how much it costs to live in an expensive city – Why households need to earn $300,000 a year to live a middle-class lifestyle today. Here is the expense spreadsheet.

Can you retire on $5 million?

This family barely has anything left after tax, deduction, and expenses. The only significant savings they have is their retirement and home equity. They are maxing out their 401k contributions every month. Nice job on that front. However, this family will be in huge trouble if one of them loses their job. It is unbelievable how close to the edge this family is living. Unfortunately, $300,000 doesn’t go very far in San Francisco, New York, and other expensive cities. At this level of expense, this family will need at least $5 million to retire. I don’t see how they’ll get there with this saving rate.

Personally, I think this family can reduce their monthly expenses tremendously. If they set their sights on FIRE (financial independence retire early), then I’m sure they can get rid of the Volvo XC90 and drive a cheaper car. Their food expense also seems very high to me. Lastly, they are spending a lot of money on their kids. Kids aren’t that expensive if you’re a little frugal. There is a lot of room to cut back on this budget. However, regular people are living for today and they aren’t thinking about financial independence. That’s why I’m trying to spread the word about FIRE through Retire by 40.

Regular Folks

Okay, that’s enough about rich people and their first world problems. If these wealthy households can’t figure out how to live like normal people, then they will have to deal with the consequences. For the rest of us, we need much less than 5 million dollars to retire. Here is how to calculate your ballpark target for early retirement.

  1. Track your expenses
  2. Take your annual expense and multiply it by 25
  3. Add some margin if you have expected expenses such as college expense or long-term care.

RB40 household example

  1. Our annual expense is about $55,000.
  2. $55,000 multiplied by 25 = $1,375,000
  3. Margin: $125,000 for college

So we’d need about $1,500,000 of investable assets to have a good chance of a successful retirement. You probably shouldn’t include your primary residence in this calculation.

Currently, we have over $2 million invested so I’m pretty comfortable with my early retirement. However, this isn’t quite enough security for Mrs. RB40. She needs a bit more margin and that’s one of the reasons why she isn’t quite ready to retire yet. (Besides, she likes her job). Here is my opinion on our early retirement based on the current expense.

  • $1.5 million – Barely enough to FIRE. We’ll probably be okay, but we need to have some backup plans. I’ll continue to blog and hustle to make some income. At this level, Mrs. RB40 won’t feel financially secure.
  • $3 million – Comfortably FIRE. This gives us some margin for errors. I wouldn’t have to worry much about generating active income. Mrs. RB40 will feel financially secure enough to pull the cord and retire early. We could withdraw 3% and that’s pretty much foolproof. As long as our spending stays at this level, we’ll be fine. You can see the analysis below.
  • $5 million – We’re rich! $5 million is more than enough. If we can keep our lifestyle inflation reasonable, we will have a good base to build wealth for future generations or donate it to a good cause.

RB40 household with $3 million

I logged on to my Personal Capital account and used the Retirement Planner to see how we’d do with $3 million in savings and spend $90,000 per year. There is a new feature where you can see how you’d do with different savings and income. It’s pretty neat. I created a new scenario with these parameters.


  • Savings: $3,000,000
  • Social Security: $25,000/year at 67
  • Social Security (Spouse): $25,000/year at 67
  • Blogging: $30,000 per year for 10 years. I made $65,388 from blogging last year, but the blog income is unstable. I’m pretty sure this income will crater as soon as we see a recession.

Spending Goals

  • Retirement Spending: $90,000 per year starting this year.
  • College: $40,000 per year from 2029 to 2032.

Here is the result – You’re in very good shape for retirement. We forecast a 95% chance your portfolio will support your goals, including $90,000 per year in basic retirement spending.

retirement planner $3 million savings

I also ran this scenario through FireCalc and other retirement calculators. They all agree that $3 million is plenty for us. Withdrawing 3% is very conservative and the portfolio should last indefinitely.

Sign up with Personal Capital if you don’t have an account yet. The Retirement Planner is a fantastic tool that use your real data to help you plan for retirement. I highly recommend it for DIY investors.

Can you retire with 5 million dollars?

Lastly, the problem with money is that you always think you need more. I figured we’d feel wealthy if we ever reached $5 million in net worth, but maybe that’s just because we’re not there yet. It’s easy to say $5 million is plenty to retire on. However, I might change my mind once we get there. I’ll update this post when we reach $5 million and let you know what we think then. It will probably take me a decade to get there, though.

It seems people who have $5 million also think more is better. I read some discussions in various forums and people hesitate to retire even when their expenses are under control. It’s tough to find “enough.” That’s the one more year syndrome. Or is it one more million bucks syndrome? You can’t buy time. You have to take that into account when it comes to retirement. Don’t wait too long if you can retire comfortably. You need to enjoy life while you’re young and healthy.

How much do you need to retire right now?

View Results

Loading ... Loading ...

Do you think you can retire with 5 million dollars?

*Sign up with Personal Capital if you don’t have an account yet. The Retirement Planner is a fantastic tool that use your real data to help you plan for retirement. I highly recommend it for DIY investors.

The following two tabs change content below.
Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
Get update via email:
Sign up to receive new articles via email
We hate spam just as much as you

191 thoughts on “Can You Retire With 5 Million Dollars?”

  1. I feel like I could leave my W2 at 3 million and achieve FI to a reasonable degree. But I’d definitely “feel the pressure” to keep driving and hustling for a lot more money until probably the 5-10 million net worth point.

    Then at that point, knowing myself, I’ll probably double down on effort and won’t be satisfied until I hit 100 million (probably start a semi-self funded startup at that point)…but that’s a conversation for after 5 mil.

    • Late reply but surfing the internet looking for justification to retire. I agree with you….thought I’d be good at 3 and the budget would work. Needed some wiggle room so went to 4. Approaching 5 now and having second thoughts again. Another year, another million, whatever it is. It’s like a disease. I’ve set an age instead of a number now. 45 and I’m done. There’s no getting past that right? We’ll see.

      • I’ll be 45 this year and i’m at 7. Strategically decided from an early age to not get married or have kids in order to maximize my freedom. As you mentioned, it is like a disease. For me the disease is the fear of some impending financial collapse like never before that will have me starting all over. Note: i have a very well balanced and diversified portfolio and one fully paid off property in the hottest spot in Miami. I drive a basic Toyota, don’t drink, no drugs and extremely healthy lifestyle.

  2. Some comments regarding the expenses list…

    1) Do you really need full time childcare if both parents are not working? I’d rather use this time when kids are small to do something cool together (or just hang out). Later kids go to school and you don’t need childcare anyway.

    2) The healthcare costs in the US are amazing… I live in Amsterdam, Netherlands and we spend 250EUR per month on full health insurance for a family of 4.

    3) It’s a good idea to move somewhere cheaper for retirement. Not only it costs less, but also you’ll feel less social pressure to drive that brand new XC90 and wear hugo boss.

    4) Seems weird to me, that you need a minimum 180k$ netnet per year to live on retirement, when average household income in the US is 68,4k$. From European perspective, the 180k$ net is a wealthy lifestyle.

    5) I decided to pay off my mortgage when I had some excess cash and I’d recommend that to anyone. In theory your investments give you 6% avg, and the mortgage costs 3%, but I wouldn’t want to worry if investments go wrong. I wouldn’t ever retire with a mortgage on my primary residence, period.

    • another strange item in the spread sheet is the 401k, which is for retirement, but the articile is the budget during retirement… why would you need to put away money when you are already in retirement. that is a 37k expense unnecessary, put in there just to make the arguement

  3. I believe people are answering this question incorrectly, i believe most are thinking to themselves I want 5 million or more to retire, but do you need 5 million to retire? Many post are spot on, you need to have a strategy if you plan on retiring early with any amount of money. I would personally be fine with 2 million to retire, but I want 5 million to retire, so I would work or focus on reaching 5 million before retiring.

  4. its always a difficult decision, based upon personal goals as well as insecurities ,I am 59 with 7.2m in investment income own another 1.8m in property and receive a passive income of 15k/mo and still working medicine full time

  5. 3 million should be enough for most people unless you plan to live in a high cost city like NY or SF If you budget properly and work on making the principal grow in retirement by investing in stocks with good dividends and a mixture of bonds you should be fine and not outlast your money

  6. You are right on. If you want financial freedom it is a lifestyle not an income and people who are conspicuous consumers have signed up for the rat race – the more they make the more they spend, no way out!

    I am shocked anyone would say you need $5MM to retire early and comfortably. If you are focused and reduce wasted expenses like mortgage interest, overpaying for services like day care and food deliver then you can cut costs significantly. Unfortunately people think financial freedom means spending money without any focus which means then you need to be filthy rich.

    FIRE will work for folks who are predisposed to focus on life and experience not money – unfortunately too many people are in the rat race and they will never have true freedom, sad but true.

  7. $5 million is more than enough to retire on, the question is, how do you invest $5 million so that it produces a stable flow of dividend income with as little market risk as possible?

      • The poll asks how much you would need to retire *right now*, not later. Personally, if I was 60 I would feel 3 million is more than enough. However, I’m 30, so even if I had 5 million it wouldn’t be enough for me to decide to immediately retire age 30, I’d definitely take a year long sabbatical, but I’d prefer to aim for more while I’m still easily earning a high income at a job I enjoy. I suspect your readers are fairly young and are answering similarly.

  8. $5 M sure is a lot to retire with and live from. That’s about double the number we currently are aiming for 🙂 If people focused on cutting down their housing and transportation costs and invest the difference, that would do more for their long-term retirement plans than they realize.

    Being house poor makes America poor.

    • Quality of life, multiple contingency plans for risk mitigation and location will have a big impact on retirement wealth needs. Also consider the rate of compounding interest, ‘one more million’ grows quick when you’re already at 5. Don’t run out of money and find yourselves a burden to your children’s finances or looking for a job at 80, be the grandpa who retird at 40 only to drain your kids savings – your legacy will be ‘selfishness’. With the increased inheritance cap you can easily create comfort for future generations. Get smart with a trust to protect your inheritance gifting and think about somebody other than yourself for a minute.

  9. My FIRE goal is $3.5mm with a paid off mortgage. My side hustles will probably make some amount of money but I am going to assume they won’t for the purposes of planning. 3.5% on $3.5mm would pay for a very nice lifestyle once my mortgage is paid off.

    On another note, the childcare expenses cited by Financial Samurai don’t seem crazy for a VHCOL city. The $2000/month for daycare might even be low. The other expenses all seem higher than they need to be, but for example $500/month for clothes isn’t outside the realm of normal for an upper middle class family. I think the real issue is that the above lifestyle isn’t middle class, it’s upper middle class. Upper middle class people tend to underestimate their place in the pecking order and assume most people live that way.

  10. I don’t know how to answer this poll because it’s not clear if the question assumes that you own your own home or other non-liquid assets when it asks whether you need $5 million to retire.

  11. I think Sam’s example is the tail wagging the dog. It’s almost a worst case scenario of everything – and maybe that’s the point.

    For example, $2100 a month on food for three is $70 a day. The USDA numbers for a family of four (extra child) is around $1100. Weekly date nights of $250? Since the child had childcare and has a baby/toddler number, it doesn’t likely eat much either.

    The mortgage payment looks to be for about a 750K house. That might be the going rate in those cities, but still a little high. With the property tax on a 1.5M property, we’ve lost all reality in a comparison to retire on $5M.

    There wouldn’t be annual $6000 for the baby/toddler stuff as crib, toys, stroller are one time costs… and total about $500. Diapers can be expensive, but that’s a narrow age window.

    I can’t imagine needing to spend $6000 a year on clothes. Some people may spend it, but it’s not normal. What are they doing with all their clothes from last year. I have clothes from 1993 that are fine.

    Of course the 529 plans count as savings, not expenses. Also, it’s good that Netflix got a mention in the $7200 annual entertainment expense. It’s 2%.

    • I guess that’s the high cost of living in the Bay Area. My brother lives pretty frugally and he probably spends a lot less than that. I should check with him when we visit next time. Yeah, a 1.5M house is middle class over there. It’s pretty crazy.
      $6,000 per year on clothes sounds way too high for me too. I probably spend less than $200/year for myself.

  12. As somebody with a net worth of over $5M, I can say that it definitely doesn’t feel like enough to retire on. First, as others have pointed out, most people who earn enough to amass a net worth of over $3M probably live in an area with a high cost of living.

    Second, there’s a big difference between a high net worth and a large investment portfolio. In our case, about $1M of our net worth is in our house, and another big chunk is in a number of rental properties. Our house obviously generates no income for us. Neither do some of our private equity investments.

    When trying to calculate how much passive income you can generate, you should not use net worth – you should use your income generating assets.

    • That’s true, but you could convert net worth to income generating assets if you really want to. People could move to a more moderate cost of living area. Once you retire, you don’t have to stay. It’s all about priority. If you’re tied down to an expensive location, then you’ll have to plan for it.
      Also, I said investable asset in the post.

      • Good point – we could definitely sell our house and move to a less expensive location. The problem is that I think that would really impact our happiness. Although we love the area we live in, the real issue for me would be moving away from the friendships we’ve built over the last 2 decades. I would think it would be tough to start over socially at 50 years old just to save some money on living costs.

        Of course, if our kids lived somewhere we might want to move to be closer to them. I could see that being something that would increase, rather than decrease our happiness.

  13. Those numbers blow my mind! The current median individual income in the US is $31,786 and $59,262 for household. So how are there so many people claiming that they couldn’t live off of a $200,000.00 per year income if collecting a 4% interest off of that $5 million. I’m sure 90% of the US could live very comfortable lives paying themselves only 2% from that money and letting it grow!

    • its really simple. if you currently make a household income of 800k annually then you need more than 5MM- its all math folks. simple math. everyone has a different standard of living. this is not one size fits all

        • When you finally get to the place of making $800k or more per year, you’ve likely worked many years at a lessor rate – and if you’re a business owner that number may vary or not be sustainable…there’s two types of wage earners – those who spend what they make and those who live below there means and save….it’s very simple…
          We went from 45k in debt and making 60k a year to 6mil in the bank and making 1mil a year house paid off in one of those expensive cities…took 30 years of sacrifice and hard work and calculated risk…
          One example, when we bought our house our broker encouraged us to buy as much as we could afford as prices consistently climb…we could afford 800k but settled for a 400k fixer…saved for the next 10 years every penny we could and eventually rebuilt our home with the 900k nest egg – not having the stress of possibly getting foreclosed on while I started my own business…our 1.3 home was now worth 2.8…
          Delayed gratification

      • IIRC, as per Vanguard, a 60/40 portfolio of stocks and bonds has returned an average of ~9.x% since sometime around the 1970s. For 5MM, that’s about 500k a year. However, the tax would be way lower, since most of the returns are from capital appreciation, and dividends too are taxed lower. In high tax states (the types where you’d more typically find a couple making 800k a year), the returns from a 5MM portfolio are likely to match the after-tax take home from 800k in income.

  14. I can easily understand why many people think they need more than $5 million to retire (especially to retire early). Many who can attain that level of net worth live in a HCOL area and don’t want to have to move after retirement, so housing would be a huge expense. For me, unsubsidized health insurance tops $20k a year for a healthy family of three. Add in all health care expenses for a year including dental, vision, copays, etc, and it’s over $30k. I can imagine health problems could easily double that figure.

    $5 million isn’t hard to attain these days. You’ve made it to almost $3 million and you retired in your 30s. If you kept working and early retired by 50, I think you would have well over $5 million net worth. Many families in my area have two working parents both making over $150k just in base salary.

    • $3 million in a lump some in your 30’s would be incredible. If you had a fairly decent financial advisor with a proven tack record. Within the first couple years you could see double digit % returns on that money.

  15. Accumulating $5M for a professional couple is possible. One professional and one non-professional is also possible. Think about it.

    $150K Income 1 + $75K Income 2 = $225K Income for 2 people
    Lets assume NO Growth and the above is average of 35 years.
    Total Gross Income = $7,875,000

    So, now you know you have earned more than $5M.

    It comes down to a popular saying that I learned when I was very young:
    “It is not you earn stupid, it is what you keep that counts” (its like the K.I.S.S saying)

    If you add a 5% growth factor over time to a high amount of savings (over $25%), then $5M is possible by 65.

    I came to this country at age 23 and started working at 24, and I have achieved this at age 52 years. Not possible with 95% of the people since they do not sacrifice and do not focus on driving cars to the last day, and then driving it to the Junk Yard. All of my neighbors lease cars and get new ones every 3 years. I buy cars that have 6 figure mileage and then drive them into the ground. I have not had a car payment since I was 28 years old. How many can tolerate that ‘sacrifice’. When the weather is better, the AC goes off and windows are opened. Fly during the best ‘sale’ seasons and still take 2 good vacations per year. Go eat out with Groupons and Other deals as much as possible. Buy in bulk for 80% of the repeat items like 12 boxes of favorite cereals when they come on a great sale. Again only 1% of the people can do this consistently.

    So, it is maximizing the income, minimizing the expenses, sacrificing for a worry free future, and then just keeping the discipline to continue, and then it becomes a habit.

    Paying off the House as soon as possible is the key. And, yes, I do live in a big metro and have real estate taxes of $15K per year, but it is a paid off home so it does not matter anymore.

    So, yes, it is possible to hit the $5M for sure before 65 and put yourself in a worry free mode.


    • Think about the things that you classify as sacrifices. Then think about how many people are not willing to live their lives making such huge sacrifices such as those.
      Now, imagine if we included people from China, Africa, or say Mexico into this conversation. The median individual income globally is $1,480 per year. The average monthly income in China is equal to $200 per month.
      Including myself, it is insane how spoiled we are in the US. What the freak would we do if our economy collapsed and overnight we had to start living like the rest of the world???

  16. What is enough is based on each individual’s desired lifestyle. I think for the majority of Americans, $5 million is more than enough.

    But if you live in a high cost of living area such as NYC, based on my calculation, you need $480,000 to live an upper middle class lifestyle.

    Now if you want to maintain an upper middle class lifestyle in NYC in retirement, you will need north of $10 million in investable assets to be able to generate $480,000 a year in passive income.

    • In 40 years, living expenses would be much much higher than they are today. 50k would be worth like 15k in today’s dollars. I’ve been retired just 10+ years and many prices have already doubled, including restaurant meals, college tuition, movie tickets, home prices around me, health insurance.

  17. I have a comment on the budget in the post. There is no way their utilities are $220 per month. I live in California. Our gas and electric is never lower than $220 just by itself. Not including water & trash. Cell phone costs are not mentioned. I’d say that are at “zero” leftover though I do think $2100 for food each month for three people is a lot! We spend a lot on food and never spend that much.

    • Everybody’s budget is different. Some items will be more, some will be less.

      We live in SF and our electric bill is under $200-month. Natural AC.

      A lot of random stuff does indeed come up. So the budget is tight.

      You need $7.5 million to generate $300,000 using a 4% withdrawal rate. As a result, this family’s budget will be tight with a NW or $5 million if they want to retire early.

    • Yeah, but who fills up their car with 92 octane gas everytime?

      And tons of those expenses are temporary — daycare, college savings, baby costs, etc. — or seem way high ($600 a month for Netflix and entertainment when you’re already saving for 3 weeks of vacation a month? $500 a month for clothes? $500 a month for baby stuff (you’re not buying a new crib/carseat every month, and diapers don’t take that big of a bite out of your budget)?

      I get the point — HCOL areas, with kids, both parents working, etc. are costly….but that budget more than accounts for every possible need (you’re maxing out 2 401ks and saving $8k a year for college, have $300 a month for house maintenance, paying down mortgage, saving for vacations, etc.) AND want already.

  18. I just voted for $2 million (excluding the apartment I live in) – based on my expenses I’m sure that would work, and I seem to spend more than many FIRE people. At $3 million, I would be very comfortable, and wouldn’t spend it all.
    Based on our actual investment pot, we could probably spend almost double what we do, and still be OK. The thing that having a bigger pot gives me is peace of mind. Having more doesn’t make me want to go out and spend money just because I can. In fact, early retirement has had the opposite effect, it has given me more time to think and made me more thoughtful/conscientious in my spending.

  19. When I first started on my FIRE journey I just arbitrarily chose $5M as a goal. I then dove in deeper and thought $125k/year would be an ideal income to have and being conservative wanted a 3.25-3.5% SWR (3.5-3.8M). Add a little more margin and $4M was my target (this would be outside my primary residence which is already paid for).

    Now that I am rapidly approaching that new goal I am not sure if I would pull the trigger or not because once I am out of medicine it would be incredibly hard to go back so I better make sure I have enough. Because I am way ahead of schedule (originally thought hit at age 53 and not 48) I think a few more years of padding the nest egg still let’s me have a very early retirement for a doc and be super safe ($5M outside of home is new goal and who knows, maybe I shift the goal further back if I still beat my original planned date at age 53).

  20. Here is the problem. I am way in the 1% having achieved a net worth of $3.7m by the age of 27. Then started three other companies now Net worth is Mickey Mouse money. It doesn’t matter. I cannot spend it. But it is not the point nor the point of why such successful people work. We can’t actually help it. It is a competition a game. We cannot stop playing we see opportunities everywhere and can monetize them faster than others. We walk into restaurants and count customers, square footage, staff our brains calculate all the time every and all opportunities it is a genetic default. I would love to turn off and retire but I would end up somewhere else see what everyone else see as a problem find a solution and another business. It is sad. We cannot turn off what was never designed to be turned off. We are the 0.25% because of that reason we are not normal. We do not fit in with everyone else. We have few friends. We are absolutely regimented with our time. So retirement is not possible it was never an option from the first day after college. If you are that person you know what I am taking about. For us retirement is for the other 90%.

  21. You say expenses X 25, but don’t you have to “gross up” the expense number first? After all, you have to pay most of your expenses with post-tax dollars.

  22. Background: I’m 56 and my wife and I have a net worth of $5.1M (cash + 401k), not including the value of our home (no mortgage, today worth ~$750,000). We have no debt, our cars are 3 years old, my wife doesn’t work, and I own my own business. 2.5 years ago our net worth was ~$1.3M. That’s when I quit my job and opened my business, which has been the source of our wealth increase. We had some lucky breaks early and I don’t expect the business to generate nearly this much profit in the years to come. We have 3 adult children who are still financially dependent on us and live with us.

    The above is to set context. Before I started my business I was sure $5M was enough to retire and I was convinced I’d retire immediately if I suddenly had that much money. Now I don’t think it is enough. Mostly because of our kids. I’ll never convince my wife to cut them off. But it isn’t just that. A stock market crash could have a big impact, as could a major health crisis that insurance doesn’t fully cover. Plus my wife spends a lot which is a very touchy subject at home (she buys discount but makes up for it in volume, + an ungodly amount in grocery bills). Now I think we need $8M. I wonder if I manage to get us to $8M if I’ll think we need $10M to retire. If we didn’t have the kids to support and we could get our annual spending down from $180k-$200k/yr to $120k/yr, I’d feel comfortable in semi retirement and maybe full retirement. In some ways I’m super lucky, but the constant spending gets me depressed. Budget Smudget. With that said, our current net worth gives me a lot of practical flexibility. I’ll never work for another asshole again. Probably TMI.

    • Congratulations on your success. Great job over the last few years!
      Thanks for your input. I hope $8M will be enough for you. You’ll probably have to figure out how to keep your expense steady.
      You’ll never have enough if you spend more every year. $120k/year sounds reasonable with your wealth. Good luck!
      Thanks for sharing your story.

  23. Congrats to you and glad you are enjoying your work and all that security. Good place to be since you actually have more freedom anyway: you have the choice to go on your terms, whatever those are.

  24. I am 53 and plan (hope) to retire in 1.2 years (will be 55). The biggest challenge seems to be the mindset to “let go” of the steady income (security). I feel like I am the position financially to retire but want to be able to help my kids as they grow their families (assuming they have kids). My House is paid off and I have investments of $5.8M (not including my home). The costs of health insurance is also a big concern. I really want to pull the trigger to retire but mentally hard to get to that place.

    • Yeah it’s actually quiet a challenge to make the call, I’m 51 and working rotational work 28 on 28 off in crazy locations around the world and earning more than I ever dreamed of.

      We have invested about $6.3. We live a relative frugal lifestyle if you take into account that we live on a yacht that we are slowly sailing around the world and investing about 130% of my take home income, yet i’m nervous about taking the leap.

      It’s an irrational thought, but I came from relative poor and fear having to take any job at 67 to feed and cloth my family. It’s also hard to explain and sounds greedy but as your career peaks you earn more so there is a bigger attraction to stay. If I finish this project we would be worth $9.5 at 55

  25. Most of these readers must be young people (under 35) that still have dreams of living like a rock star. Almost 40% of readers think they need over $5mil to retire? What? As you stated only 3.5% of Americans have this kind of wealth but millions of Americans retire just fine every year……
    I think you answer your own question…..$1.5 is doable but not easy, $3mil is easy. So with that said $2mil right in the middle would be fine. Of course that assumes one doesn’t have credit card debt, home mortgage, and car loans……All will eat wealth!

    • Thanks for sharing!

      I just tried putting the same numbers into PC and it seems to think you now have an 81% chance rather than 95%. Maybe I’m doing something wrong or they changed their algorithms?

  26. It will be less than a million dollar for me. My goal is to reach the million dollar mark but I think I can do it even on half of that. But I also do not plan to live in the US after retirement. No amount of money will be enough for you to retire if that is what you solely base your retirement on. Because your desires will always go up and you want to keep up with that. When you reach your target of 3M or 5M, you will probably still not feel safe.

    I recently read White Coat Investor’s post about his million dollar income last year. Some of the things you start worrying at that point are the inheritance you leave for your children, private schools, and medical schools for them. If you ask the billionaires, most of them are probably not ready to quit as well. No amount of money will be enough. If you really want to quit, at some point, you have to let it go and just quit. But you do not have to stop earning income on your retirement. If you truly enjoy doing something that is also making money, you can keep doing it. For me I have a date set for my retirement, that is more important than the target money.

    • Thanks for sharing. I think you’re right. When you have a lot, you still want more. At that point, you need to work on reducing your desire. Figure out what is enough is the hard part. Good luck!

      • 5/4/2018. Scenario: I am 53, 28 years at one company and burnt out still working and contemplating retiring. One child will be graduating from College in June of this year and the other in 1 year (June of 2019); no other kids. My house (valued at approx $1.2M) is paid off. Dread work and have $5.3M in liquid investments……Want to pull the trigger but because I am so conservative hard to pull the trigger…..You are so correct – the more you have you still overthink it….JUST DO IT?

        • It sounds like you’ve done very well. Nice job.
          My usual suggestion is to take a 3 months sabbatical and see if you like early retirement.
          Treat it like a retirement, not a vacation.
          5 million should be plenty for most people. Good luck!

  27. Great blog, truth is there isn’t really a number it is more of a state of mind… let me explain, for years I lived on $8k take home as I saved and made smart investments. Over the last decade I made some very wise investments allowing me to spend $30k+ a month without concern and still live debt free while saving for our future. My challenge is I could retire now making much more than I made for most of my life assuming a 4% draw down. Problem is honestly I don’t think I could adjust my lifestyle back to what it once was! If I had to I would but as long as I work in a business I enjoy I can live “frivolously” do everything that I want to do without fear. If I retire I need to tighten the belt so I think the reality for most people is they can’t HAPPILY retire until they have“FU” money where they can’t EASILY spend more than they make. Assuming they are not buying super cars one a week or gold plated toilets. I know my twenty year old self would kick me in the teeth for saying this but it is a sad reality that reverting backwards to what was once a comfortable lifestyle would be a miserable existence for my current self.

  28. I will have no government pension, … Seeing from our country… Long term non residents will not get anything… (You have to work in my home country for 15 years or more)….when we are 65 …So I have been investing …. And have between 2 and 3 million… So hopefully that will cover it …CPO

  29. I too have tried multiple scenarios to find a way to pick up the pace in My Early Retirement Journey! Good for your wife for sticking to her guns! It’s good to show that FIRE is a personal choice and may not be for everyone.

  30. Thanks for this RB40. We have been lurking in the FIRE and Personal Finance blogs for years and now we have broken out into the comment sections!

    Our goal is 5MM, but that assumes we continue to save at the rate we are currently (50-60%). The thing for us is that we REALLY like investing. Some people like to buy cars or shoes or whatever their hobby might be, but we love buying investment properties, stocks, and other alternative investments. It serves as our hobby and also as a shared interest in our relationship.

    So we want to have enough money to keep making money if that makes any sense. And as a few other bloggers have mentioned, being able to leave a legacy for the kids is always there in our minds.

    Thanks so much and keep inspiring us all to hit that goal and enjoy our efforts.

  31. My plan is to reach networth 5m before retire. Currently I stand 3.5m. Hope to reach 5m by age 50+, in 7-10 years. I registered my domain thanks to inspiration from Joe, but still didn’t get time to put anything there. Me and Spouse have full time job in Technology and we still enjoy our job though stressful lol..

  32. I marvel at folks who insist they need a six figure income (or even high five) to retire. Unless in unusually expensive area, what are they spending it on? Polls and research indicate that after achieving the median income (about 50k), more has sharply diminishing utility at increasing happiness. If you need twice that or more to be satisfied, your “hedonometer” is broken.

  33. I’m sorry, but this is crazy. You can’t retire on “$5M.” By retiring on a set amount of money, a “number,” you’re at the mercy of whatever happens to interest rates, on the income side; and inflation for certain will eat you alive, on the expense side! Also, all of your retirement earnings will be subject to the highest tax rates. A better plan for retirement freedom is based on establishing durable streams of passive income. For you, Joe, that would include leveraged cash-flowing real estate, residual website ad income, and royalties from that book you need to write. Also, I think you need to take a more complete look at taxes. Recently, you mentioned making an IRA contribution to get a tax deduction, with the intent to make a Roth conversion later. (Note that that puts you in the mentally-odd posture of rooting for a downturn, to hold down the cost of converting.) Putting money into restricted retirement accounts is a “life deferring” option. Why shouldn’t you have the use of the money both now, and in the future? In an IRA, the money will eventually come out as highly-taxed ordinary income. If you instead kept the money in an after-tax account, you could at least get favorable long-term capital gains tax rates on the sale of a stock market investment. You could also avoid future taxes on the money entirely by purchasing real estate and never selling; or by holding the money in a Roth IRA account. If your stock portfolio balance reached $5M, it wouldn’t “really” be $5M. The government will claim a share of it in taxes, and rates are unlikely to ever be as low in the future as they are at this moment. I wish I’d known as much about FI, real estate, retirement accounts, and taxes at your age, as I do now. I would have shoveled a lot less money in the direction of the IRS along the way. Now, I’m gaining a better understanding of the tax system as a series of incentives for activities the government wants to promote: job and income creation, housing, energy exploration, etc.

  34. By the way, since many people worry about taxes in retirement, we legally haven’t paid taxes (state or federal) for over 20 years. Why? Just didn’t make high enough wages. And, Social Security is not taxable in Oregon. Even working for two or three months on a seasonable basis when needed, may not raise one’s income high enough to require taxes. Most people can live on $50,000 a year in retirement.

  35. Another provocative and interesting article, Joe. Thanks.

    So, my wife and I have been retired for over 25 years now. Made our series of stupid moves like building a 3000 square foot dream house on three acres in Oregon as part of the process. Then, finally sold everything after ten years, including house, cars, furniture, stuff. Why? All that money, and all those things that we thought we wanted and needed to make us happy in retirement, were an illusion. We found that all that stuff owned us. Yes! We we prosperous. Yes! We lived in a gated community. Yes! Our neighbors were among the most successful people of the community. Yes! We had become a somebody after 20 years of working.

    When we sold everything after ten years in retirement, we became a nobody and freeeeeeeee from it all. We have lived on a nest egg of $200,ooo and social security for 15 years plus traveling around the world doing seasonal jobs when needed. Two million, five million to retire? Really?

    Our investments are nothing fancy…just $100,000 in I Bonds (Treasury Bonds from 2001) earning 5% a year, and the other $100,000 in high yield dividend paying stocks (earning 8% a year in REIT’s, BDC’s, and Utilities).

    My advice…don’t get sucked into the millionaire complex. I left my first career at age 45 to travel the world professionally. Felt silly at the time, but looking back now in my eighties, it was the right decision for me. When we travel now, we no longer climb Kilimanjaro, or Mt. Kenya, or do our own safaris on a shoestring in East Africa, or trek up the Northern Highlands in Papua New Guinea or spend three months biking around New Zealand. We are so glad that we did those things in our 40’s and 50’s and 60’s. Now we carry a light backpack in our 80’s and stay in hostals in Europe. It doesn’t take $5,000,000, or $500,000 to live an extraordinary life.

    • Thank you for bringing us down to earth. I think most people overestimate how much they really need to live a good life too. You had some great adventures. That’s really admirable. Hopefully, we can do the same soon. I’d love to spend more time in the south pacific. That’s a really neat area.

      I agree with you on taxes. At our level of spending, it’s not a big impact.

  36. I don’t understand having current expenses like $40K-$60K and thinking you need $3-5 million. I get it that you want to cover the what-if scenarios and healthcare\long-term care is a big problem. But if you are withdrawing maybe 2%/yr your balance will most likely balloon in 8-10 years. I mean what is going happen that you must have $100K+/year in the first 8 years?

    I get it that people want to be extra safe but how long will it take you to go from $2 million to $3-5 million, maybe 10-20 years extra? You are never going to be 100% safe even with $5 million.

  37. One million people with NW above $5M? Wow. Where is that data from? Income statistics I’ve seen before from the IRS but who computes NW? It’s such a hard figure to nail down which is what makes stealth wealth possible.

  38. I think you need to be a bit more specific about what form the 5M should be in. I can think of several scenarios where people worth 5M or even more would not be able to live off their assets. If their home is half of their net worth, and the other half is not invested properly, for example.

  39. I’m surprised at the high number- $5 million is a lot in investable assets. I think my number would be around $1,200,000 investable assets but that’s just including myself. I think I would still like to work part-time if possible so that I can get extended benefits for the family (braces are expensive!).

  40. In my younger days I was a butler for a rich family for two years. Old money had married old money. I can say there’s always someone else who has more. They were more jealous of others then us working folk. To them money was status, and they never had enough status to satisfy. A good lesson to learn when I was young.
    Today I have less than many friends. It’s being content and knowing when enough is enough. I think that’s why I ponder leaving the US. We’re way too consumerist.

  41. Your budget doesn’t seem to factor in taxes unless I missed it?

    Anyway, the FS article also got me thinking about “my number” as well. In theory, we have enough now to pull the trigger, but we’d have to cut back about $1.5k worth of expenses. That 1.5k goes toward fun stuff like travel and eating out right now. If anything, I assume we’d want to do more of those things if we both retired early. The other issue is healthcare cost inflation. My assumption is that premiums will continue to rise by 10%/year for the forseeable future. That effectively adds another point or so worth of inflation on top of my current budget. So I wouldn’t feel comfortable at more than a 2.5% withdraw rate. Given these assumptions, I’m looking at wanting to accumulate another 900k or so before pulling the trigger. I wonder if I’ll feel the same way in 10 years or so once I reach that amount. It’s easy to come up with lots of what-if scenarios that require ever-lower withdraw rates.

    In all likelihood, it might be a decision that gets made for me in the next major downturn. If I were to get laid off, I’m not sure that I would pursue another full-time job.

    • You’re right. My budget is based on take home pay. At $55,000 expense per year, we wouldn’t have to worry much about taxes. Our investment income will be taxed at a lower rate than earned income. We’ll see when we get there, but I don’t think it will be a big problem.

      It really depends if you will travel and eat out more after ER. We eat out less because I cook more at home. Travel didn’t change much because our kid is in school. Once we’re both retired, we’ll travel more. However, that travel will be slow travel. I plan to sell our home so we won’t have that big piece of the expense anymore. Traveling is cheaper than living in the US in many locations. Slow travel is the way to go once you have time. Good luck!

  42. So disappointing…only riches can afford to retire early and this poll just proves it. This whole FIRE thing is a hype.

    • It’s easier to retire early if you make good income, that’s for sure. However, I think you can still retire early if you make less. You just have to live more frugally and be more creative. If you’re willing to move oversea, it gets much easier. Don’t give up.

  43. The math on this article is great, but the missing component is Inflationary Risk, given the time period considered. So now would need to place a Real Rate of Return for most long term projections like this. Just a thought. Take Care!

    • The 4% rule covers inflation already. Good retirement calculators like the Retirement Planner and FireCalc has inflation built in. You can increase the default inflation % if you think 3% inflation is too low. I think 3% is very fair in this environment.
      I’ll put this in the main post. Thanks!

  44. Tick tick, tick tick. One thing you can’t buy no matter how much wealth you accumulate is time. We retired last year with about 4M in assets. Today we’ve reached over $5M thanks to a little help from the market. Fortunate at age 58 to have a pension, I would have retired at the same age and been very comfortable worth $3m. If we get SS one day we’ll consider that an inflation offset.

    We’re currently traveling the world during the winter and enjoying our home in the Midwest in the summer. We spend rather modestly and believe $3m would have been more than enough to sustain our lifestyle and provide some inheritance to our children. Tick tock, tick.
    tick, you can’t take it with you.


    From Hawaii


  45. I’ve always saved and invested assiduously and figured $5 million was my magic number for early retirement. When I ended my teaching career at the age of 58, I had more than $4 million in assets (including my home). Although that seemed both too young and too risky at the time, I’m now nearing 60 with over $5 million. Since my wife (a programmer who quit 12 years ago to raise our two sons) and I live reasonably frugally (no boats, fancy cars, vacation homes, or art collections), our investments are producing plenty of passive income. The boys are in college, our four-bedroom home in a booming city is worth about $750,000 (no mortgage), and our savings, whole life, trust, retirement, and investment accounts (rather stock-heavy) are together valued at roughly $4.3 million, generating around $60,000 a year. I also have a modest annuity and my wife a small trust that together bring in approximately $2,000 per month. We travel internationally quite a bit, albeit not first-class, and I do occasional work for former colleagues. We’re thinking about leasing a place in Hawaii or New York or London for a few months and trying to decide what we want to focus on in the coming years.

    • I should also mention that a state pension will kick in for me at the age of 65 and that both my wife and I will delay taking social security benefits until we’re 70.

  46. Our FIRE number would be $3 million. Our annual expenses will probably hover around $30k to $60k a year, upwards to $80k if we wanted our children in private school.

    That $2,000 in transportation even hypothetically is considered conservative in Canadian standards. My friend is from Toronto. Her older Honda cost $600 a month in just insurance alone. Gas + 13% sales tax adds a fat penny too.

    I’m really surprised at the poll answers, 39% of people’s need 5+ million to retire? Why?!

    • $3 million is good for us too. 🙂
      $600 per month for insurance? That’s insane. Why is it so expensive? That’s how much we pay per year. Crazy!

  47. I find it interesting the number of couples here leaving their imprint. As a single person (all my life) I have made it a point to make sure that my lifestyle is downsized a little each year since I turned 40 (13 yrs ago already)! At this point I have about $375k in investments, a healthy $310k in a 401k, a very tiny pension from a job early in my youth, my home which I own outright ($425k) with the intent to sell it in 2 years when I leap off the treadmill. In that I’ll only be 55, not working seems a little crazy in that I’d get bored pretty fast. I’ll work a little in ‘retirement’ and travel a good deal in my (paid for) RV. My guess is that I can probably earn enough to sustain myself on the road while counting on very little from any one asset account. In that I have another 15 yrs until SSI kicks in (projected at $30k/yr) I think I should be okay without anything major happening. So with just a tick over $1MM saved alone, I think I’ll be fine if I adhere to a pretty strict but comfortable budget. I’d be open to any kind of suggestions.

    • It sounds like you’re doing very well. Congrats! Being single gives you more freedom to do whatever you want. That’s really nice. Working a little in retirement is good. It brings in some income and keep boredom at bay. I’m planning to work part time for many years as well. Enjoy your retirement!

  48. Great website – love reading the examples.

    I am amazed at how many people estimate they need $5M or more. I just turned 50 and hope to be able to retire by the time I am 57 or 58. My wife hopes to retire at 55 which would be a year or two before me. I think our minimum goal is $1.8M, but anything higher would be AWESOME!

    Our current income is $200k gross and we have $1.2M in our retirement accounts. I think many people fail to realize that many of your costs will be reduced when you retire. For example, you will no longer be contributing 10 or 15% to your 401k (huge savings). Hopefully you will have paid off your mortgage too. When I try to estimate my future goals, I first have to figure out my current (real) earnings. I take my gross salary $110k multiply by .90 (since I put 10% into my 401k) and then multiply by .75 (to estimate my tax rate) for a annual total of $74k. For my wife, her numbers are $90k multiply by .85 (since she contributes 15% to her 401k) times .75 for taxes for an annual total of $57k. Grand total take home pay is $131k or roughly $10k per month after healthcare deductions. Subtract out our monthly mortgage of $2.5k and we are left with roughly $7.5k per month that we seem to spend each month. Although we live very comfortable, we never feel that we have tons of cash left over at the end of the month. But we do have emergency cash and no debt other than the mortgage and car payments.

    We live in the Northeast and our home is currently worth $700k. When we retire, I am seriously thinking of moving South and downsizing. Based on current market values, I hope that will provide another $200k into our savings.

    Fast forward 7 years or so and, assuming an annual 6% return on my investments, our nest egg should *hopefully* grow to $1.8 to $2M+. In addition, our mortgage will be paid off. In my estimation, we should be able to take out 5 or 6% (roughly $10k/mo) to replace our current incomes. Now before anyone says that is too aggressive, my plan is to only draw down that amount for 4 years and then reduce our annual deductions closer to the 4% mark. My reasoning is that my wife will start collecting a pension of roughly $3k/mo in that 4th year. In the 5th year my SS will kick in and in year 6, my wife will become SS eligible. Of course, depending on our then current finances, we may opt to defer her SS a few years so that she earns the extra 8% for each year she waits.

    Sooooo – if all my numbers are “close”, we should have a better lifestyle in retirement and *hopefully* our monthly income will almost DOUBLE. Depending on how long we live, I hope we can leave a sizeable estate behind. I sure hope my dreams become a reality 🙂

  49. Joe: I want to thank you for introducing us to Personal Capital. I’m currently 51 and plan to retire at 55. Although we have a rough idea we never knew where our expenses are until I use Personal Capital to finally crack it. After knowing where our expenses are, the rest is easy, just use 4% rule, or even 3% or 2% and see whether you can cover.

    The other concept that I think useful is your FI ratio (expense/passive income). The normal 4% rule has one potential problem: people can panic and sell during market downturn. If your passive income (from rental, pensions, …) already cover a majority of your expense, then there’s less pressure to sell. Using the expense analysis from Personal Capital, we’re able to to calculate our FI ratio (55%) and what % we need to withdraw from portfolio to make up the difference (2%).

    A hedge fund manager friend of mine advise a even simpler rule: keep 2-3 years of living expense in cash, the rest in low fee S&P mutual fund. This way you don’t even need to deal with stock/bond splits or FI ratio.

    • You’re welcome! I lover Personal Capital too. It’s a great too.
      Good luck on your FI journey. 2-3 years of cash on hand is very conservative.

  50. True, that would be part of rebalancing the portfolio. For a very early retirement (such as at 40), the simulation should be run for 40 or 45 years to determine safe with-drawl rate (at least 95% probability of success) and the optimum asset allocation. True, it is only a projection but it is considering and quantifying uncertainty and gives you a pretty good idea regarding with-drawl sequence risk.

  51. Very interesting indeed. Using Monte Carlo simulation at the following link with 60% of 5 million dollars in stocks, 40% in bonds and 10% in cash, one can withdraw at 3% per anum (150000 dollars) for 30 years with a probability of not running out of money at 99%. A withdrawl of 175000 at 3.5% brings the probability of not running out to 96%. At 4% withdrawl (200000) the probability drops to 92%. The 3.5% withdrawl is ok but 3% withdrawl rate is perfect. Therefore, preferred safe amount to retire is 5.7 million for 200000 withdrawl per anum.

    • This is just projection. I think it’s best to be flexible with your withdrawal rate. If the economy is doing well, then 4% is pretty good. When we have a recession, then cut back to 3.5% or 3%. You just have to pay attention to your finance and react to the economy.

  52. I grew up lower middle class. Broke through, dropped out of college and made first million by 21. Been doing well ever since, and expenses slowly creeping up over the years (mostly due to family, 4 kids). Now at 37, am worth over 25M but feel like it’s never enough and always living with anxiety. Have plenty in the bank and in good investments, but am always paranoid. And lately generally unhappy due to lack of freedom. Maybe I need to see a shrink.

  53. I like the article – I think it’s true when they say people with 5 million are not normal and they are not ready to retire –
    I am 42 – I have been able to put together a staggering 4.5 million dollar net- I have a construction company as well as a string of rental that crank out around 11k per month in income – My situation is I am not driving expensive cars or traveling the world sipping fine wine and playing all the time- I have a 9 year old son who’s schedule runs my life lol- I also noticed that it’s lonely at the top – I have all they toys a guy can want but people my age are busy working and raising kids – I have a puppy that I spend a lot of time with – my wife loves her work so that impedes our ability to just do what ever – I am extremely thankful that I have been able to stack up my net worth. frankly it’s not the net worth for retirement I would be concerned about it’s your passive income or income in general –
    In 2 years my
    Rentals will be paid off – the only reason they are not now is because 145 per loan a month is all I pay for interest each so there is no big rush to be free and clear – yes the tax man is also excited for me to pay them off so he can get a little more money- my advice live well under your means – enjoy the simple things in life – a walk in the park- a coffee along the way – simple living – if you met me on the steeet you would never know I had money- it’s creates security for me and my family but I don’t let it define or change me – You will
    ALWAYS want more- once you put money in its place and become content with what you have your money will no longer have the power over you –
    Admitidly my personal goal is 5 mill- not because I feel I need it but because long ago I though it would be a worthy goal to achieve penta millionaire status – I am on track to do so by end of 2017 maybe 2018 – my ultimate idea is 5 mill net- 11k rental income and continue working in my construction company at a very reduced amount of time and earn another 10-15k a month – I don’t really wanna touch the principle – I wanna live on my rental income and what ever I can drum up in construction –
    Once my son goes to college then maybe we will travel the world but for now we will just keep doing our thing –

    Be kind to others – keep your word- be a good human – love the lord and allow for greatness in your life because we all posses the ability for greatness not just fiscally but from all sides of the table –
    Be well my friends

  54. Ever since I was 20, my dream has always been to be financially independent. My goal is to retire at 50, actually I’ll never “retire”, I’ll just do something else. I have been fortunate in my career and had the luck to start and sell a successful business. I am 43 now and live a somewhat frugal lifestyle. We own our home free and clear and have 120k saved for each of my kids, 8 and 10, college educations. We will have 5M at age 50 with 90% saved in after tax dollars. We do own a 2nd home with a 850k mortgage and that is our only (yes, BIG) expense. I’d love to pay that off before I retire for piece of mind but I don’t think that will happen or is a wise thing to do. My wife will receive a $2,200 pension in 7 yrs if she retires at 50. I feel the key is to save no matter how much you make.

  55. This question is partially about location as well as what you plan to do when retired.

    If you want to live off of your retirement assets in prime Manhattan, SF, Vancouver, London, Hong Kong, Paris, etc, then $5m is going to be tight, especially if you have kids. Private school in Manhattan can cost $50k a year alone and a 1,500 sq ft apt with 2 bdrms can go for $3m + $3-4k per month in co-op/condo fees. At 3%, $12-14k per month would not even cover the mortgage and fees.

    It’s not crazy to think that $5m is not enough to retire on in certain cities. I am going to push for $30m (only at $5m now but income is growing over 20% annually and savings growing faster than that). Not because it is rational, but because 1-I don’t want to retire early as I own several businesses and love working, 2-I want to have extra cash so that I can help people and get involved in philanthropy, so in addition to my monthly expenses, I need extra cash to invest to grow my “giving” portfolio away. That way 20 yrs from now, when I am in my 60s, I can still do something productive for other people but without the demands of running a business.

    Also, this couple is obviously overboard, not just in terms of spending but spending:income ratio. I know many people who spend $4-5k per month on restaurants in NYC, however, they typically make 7 figures.

  56. I’d say this article is pretty accurate. I’m nowhere near $5 million (my personal net worth is <$50,000, but I'm also in my 20s), but my father has accumulated that much over his lifetime. He's 59 and his net worth breakdown is something like this

    $1.2 million house (paid off)
    $3.1 million in a 403b/deferred income account
    $1.4 million investment
    $250,000 cash (checking account, of which he'll take $50,000 here or $100,000 here and pump it into his investment accounts as appropriate)
    No debt (other than monthly credit card expenses that are paid off in full automatically)

    As you mentioned, he's top 1% when it comes to income, but it varies from $500,000 to $700,000 per year and it hasn't been that high all his life. Federal income tax (especially on the higher end of that range) is $100,000-$200,000, depending on where he is in that range. He started off making $40,000/year in the late 80s, then $100,000/year in the early 90s, $160,000/year in the mid 90s, $200,000/year in the early 2000s, $300,000/year in the mid-2000s, and so forth.

    He maxes out his retirement contributions up to his employer match, but somehow he's allowed to contribute an extra $25,000 per year in some deferred account plan, the details of which I'm not familiar with. I thought tax deferred contributions were capped at around $25,000 per year per individual (with "catch up" bonuses coming into play as one gets older), but his total tax-deferred contributions to all of his retirement plans are just a shade under $50,000 per year.

    His total net worth is $5.95 million but unlike the Canadian couple mentioned in the first post he is not "house poor" and the bulk of his assets are liquid and therefore accruing compounding returns in the stock market (not individual stocks, of course, but broadly diversified ETFs/mutual funds)

    He plans on working until he's 71 and his financial advisors estimate conservatively that his total net worth will just exceed $10 million by the time he retires.

    He's obviously extremely comfortable and he does not feel constrained on any purchases. He spends $150,000/year and saves and invests the remainder.

    • Thanks for sharing! You dad is doing extremely well, congratulations to him! Great job in his retirement accounts. I think some executives have access to plans where you can contribute to their 401k with after tax money. That can really bulk up their retirement accounts.

  57. I nearly spit out my coffee when I read the “$4,500/month on wine, restaurants, clothing and grooming, and travel” I can’t even imagine. I guess it is a constant battle against life style inflation and I can imagine it is easy to start treating your self to small things and then it spirals out of control.

    • That’s our whole monthly expense. Some people live it up too much and need to know when to cut back. Pretty crazy to spend that type of money when you don’t have income.

  58. 3M seems like the right number for us. At 3%-4% that gives us a very reasonable income. The one thing I consider for deciding how soon to exit my day job is how an early exit affects Social Security payments later on. If one reduces income too soon, it will negatively impact SS payments, akin to drawing SS. Do others take that into account too?

  59. $5M! Of course you can retire on that. Using a conservative DGI figure of a 3% yield that’s $150K before tax. Assuming you’ve paid off your mortgage by that point, that would easily be enough.

    If we had $1M I would snap your hand off – that would easily be enough to live on, in Australia. In Australia, if we split that $1M, as $500k in each of our hands. The income would be almost tax free.


  60. $5M is an insane number for me. With a 4% SWR that would mean approx 16k of income to spend on your retirement needs. This is higher than most peoples active income. I’m personally aiming for something between $1m-2m and consider it a very comfortable retirement

  61. $5M – no problem. My plan finances a very comfortable retirement with half that. of course, I have no one else relying on me either. If I had a wife and a couple of kids, I suppose $5M might be closer to the magic number.

  62. I think $5 million would be more than enough for me.

    I’m a bit north of $3 million and about 70% of the way to having my assets generate $100k per year in income (real estate investing and P2P lending). I think I can close the gap with what I have, but an extra $2 million would certainly be more than what’s needed.

  63. Great article, I have found that most people who accumulate 5 million dollars through business and hustle are not the kind of people that are happy in retirement.

  64. The comments here remind me that most people dislike their work. Rather than accumulating $5mil or some number, the people I envy are people who love their work.

    • Yes, we still have a mortgage. The budget will be much less once the house is paid off. We’d probably move to a cheaper location at some point as well.

  65. Yes, we can retire with $5M. We are targeting $2.5M of investable assets. We could retire now with a smaller nest egg but $2.5M not only meets ours current spend it supports retirement goals like traveling half the year and allows for multiple factors of safety.
    I also frequent a FIRE site/forum and a few interesting points I’ve gleaned: Retirees don’t seem to have a lot of problems managing “unexpected expenses” and the 4% rule seems to be working out for the retirees including ones retired just before and after the Great Recession.

  66. I think there are two types of expenses that you need to consider in retirement, the ones you can control and the ones you can’t control ans/or predict. Most people seem to focus on the ones that they can control, which is a good start. Food, housing, taxes (somewhat), etc. Even with unpredictable inflation and economy, most people have a handle on this. But its the other things that probably include divorce, health/medical, how long you’ll live and a variety of other things that can be out of your control. Items like health are really big, because its not only the cost of medical care, but the fact that you might not be able to work like you planned, or even live where you planned. I have a friend who was in a terrible car accident. Not only can’t he work, or even feed himself, but his wife had to quit her job to care for him. And even with good insurance, you’d be amazed what it doesn’t cover. Yes they planned the low-cost retirement home, but since its not near the medical facilities they need, it doesn’t help much.

    Were probably near the $3M range, but at 55 its debatable if that’s enough, and healthcare is the biggest unknown. $15K/year just for health insurance, not including copays and deductibles. Those that are younger and pay a lower price may want to keep in mind that healthcare expenses only go up as you get older, at least until Medicare can kick in. $5M would definitely be better.

  67. hello,

    I am wondering how much people need so much money to retire.
    I think it is possible to live a a good life on less than 1 million dollars. Is it so expensive to live in the states?

    I think i would need 300-500k dollars, so that i can retire and never need do work again. I am 24 years old, and I know I can reach that goal before 30 if I work hard on it 🙂

    best regards from europe 🙂

    • It’s mainly housing and health insurance. Housing can be very expensive in nicer areas. Where do you live in Europe? 500k sounds very low for retirement. I assume you’re single. It’s probably more expensive when you have a family.

  68. It’s not about how much you need to retire, but where and how you want to retire. I have retired on 500k USD while living in eastern Europe where typical consumer prices, living expenses, land, properties and services are on average quarter to one third of US/UK prices and I still save up over 60% of my investment income to reinvest and grow further. Taxes are low, healthcare free and of higher quality than in US/UK, people are friendly, society traditional – family oriented, no wars, earthquakes, tornadoes, less urbanization, smaller population density, more nature, beautiful countryside. If I wanted to achieve the same level of standard and quality of life in the US I would need at least $5M, that is a huge difference. Fore example : I live in a 3000 sq ft villa, with 15 acres of woodland, pond and stream, 3 acres of garden and the property taxes are only 36 USD a year (yes, thirty-six USD a year, while bought for $108k)! That’s a difference! I also have my own maid working for me full-time for only $390 a month, three cars (2012 Audi A6, 2014 Jeep Grand Cherokee and 2010 Honda Civic) annual insurance is only $310 a year in total and I could go on and on and on…

    • Where do you live in eastern Europe? We are planning to visit the area someday. It sounds like you have a very comfortable lifestyle. I’d love to live in eastern Europe for a few years. Your cost of living sounds very low.

    • Yes – where do you live in eastern Europe? That sounds very interesting. I know that Montenegro is a very beautiful country. The sad thing is that there are not a lot of job opportunities there but it certainly makes sense if you are retired or whatever to be there. Is it warm there? I hate the cold…. but everything else you mentioned is awesome!!!

  69. I think that the fundamental question has to be asked. How much do you REALLY need to live comfortably on? If you have been living the rich life for a while, $5m probably will never be enough. If you can live comfortably on $30k a year then $1m is going to be just fine. It’s always good to supplement that with a bit of part time work or side income to top it up though.

  70. 10 million or more. Too many unknowns out there to actually cut off the career before having at least 10 million. I really like this post and think it is interesting because I was thinking about this same thing the other day and wrote a post about it:
    I think to me that its great to keep working in some capacity. I really respect and am intrigued by those who work for themselves blogging. I don’t know if I could do that. For now I’m focused on working hard at my job every day and also succeeding with investing. Who knows what will happen? thanks for the great post.

  71. You brought up one really good point, executives and high earners can’t seem to wrap around early retirement because of “expense”. They are unable to control spending.

    Another great point: to err on the calculation on the cautious side, that’s exactly what I’m doing delay calling it quit just yet, even my numbers have exceeded my expenses. So, with caution, I’ve just bought an investment property with cash, and it will be my retirement house. The one draw back is the location, it’s in the Midwest. So, down the road we might live 1-3 months in the Carribean, or Southeast Asia for the winter. We do enjoy the change in weather though. Anyhow, at least the housing cost will be cut to the bare minimum to taxes and utilities. Food is the cheapest thing in America when you cook at home. Health insurance is the most expensive, and I pray someday we’ll have universal healthcare, we’ll be set? haha!

  72. It absolutely depends on your “burn rate” but we figure a $1M portfolio, plus a paid off home, plus some small workplace pensions will “do it” for us. The $1M portfolio should spin off conservatively about $30k per year in after tax income.

    We’re halfway to the portfolio value and more than halfway to owning the home. We need to work until our early 50s for the 25-year pension. Then done 🙂

    So, between $2M and $3M is the goal.


  73. Right now, we need more to retire. As long as the mortgage on the house is not payed off, we need a whole lot more to live on the 4pct rule.
    We live “semi frugal” lifestyle. We have house that is less than the rule of thumb for the mortgage. We pay attention to spending on wants and needs (it is a thin line, agreed). We could shave off the expenses. we are not willing to take the impact on our life.
    And 5 million would be more than enough!

    • We live a semi frugal lifestyle too. The housing is the biggest expense for us. We love where we live and we don’t want to move at this time. Maybe when Mrs. RB40 retires, we’ll think about relocating to a cheaper location. She doesn’t want to move, though. I think I know how you feel.

  74. We know that we *could* get to $5M net worth, but it would mean extending our careers for at least another decade, if not more like 15 years. And that is definitely not worth it to us! We started out on that path of spending like people of a similar income level, but pretty quickly realized that that didn’t make us happy, and we switched to the more frugal course. Having done things both ways, I can honestly say we don’t miss the baller life at all. And by saving our income instead of spending it, we’ll have a lot more time to enjoy our actual lives, instead of continuing to slave away for a paycheck. We’re all about “enough.” 🙂

    • I’m not willing to extend my career for 10-15 more years. Life is too short for that. I’d rather live modestly and free to do whatever I want. Glad to hear you’re aiming for the FIRE life. 🙂

  75. With 5 million, we could retire to the place we want to live (2 million for a small house in a good school district, 3 million to live off of). Right now we could retire to say, the tiny town where DH’s parents live, but that sounds unpleasant. (Not because the inlaws are unpleasant, but we would quickly get bored.)

    Our current amount saved isn’t enough to buy a house and have one of us have a job where we would want to live. We could rent on one high DH salary, but we’d have to be super frugal. We’d both have to be employed and I don’t see how I could get a job. :/

  76. I think the “never enough” issue is partly psychology, but for us, mainly that you don’t really “have” what your asset balance shows. If you’re invested in the market, there are unknowns about if/when the market could drop 40% putting you in a situation of needing to rebuild that over several years. Even if you have a pension, there may be some level of unknown if you don’t have assurance of COL increases, but few still have those. Also, we feel uncomfortable about the cost of health care and long term care if needed. We left our corporate jobs at 51, not based on a magic number, but when we felt it was best “on balance” for us. Along the way we made some choices to avoid tightening those golden-handcuffs to the company, lived below our means, and then left to enjoy a less structured lifestyle. We left with between $2-3M, and shortly after downsized to a very comfortable paid-off condo. 4-years later, so far so good!

  77. Last year at this time, I wrote and explained all our finances and money coming in, our retirement accounts, money saved, and our plan of retiring in 3 years and moving to mexico…I wanted to quit my 30 years nursing career because physically I just couldn’t do it…we took a 60,000 cut in pay, but in the last 15 years we had been putting most of all my income into savings and retirement funds, and even with not having the 60,000 extra, I have still managed to put 2000 a month into our money market savings account, even making close to 200,000 a year combined income, we live in a cheaper area and home, we only eat out maybe a couple times a year, I do all my cooking from scratch, we both bought used cars cash 10 years ago and they are still running and will last until we retire in 3 years, so yes you can make really good money, but you choose your destiny, you can work till your 65 or you can live frugal and retire early enough to really enjoy it…we got married 15 years ago and we both chose to live frugal and retire early….and thank you for the advice last year about being okay to quit my job, this last year has been about taking care of me and its the first time in 30 years:)

  78. We would like to have somewhere around $1.5 million dollars invested/saved before we really declare early retirement. We expect to be there in the next year or so, which is great because we will still be under 30. We earn a great income and live very affordably, but still love life and travel full-time!

  79. Of course I could do it with $5 million! 😉

    I think $1-2 million is a more realistic goal for a wide swath of people (with the higher end of that range required to thrive in a higher COL area).

    • $1-2 million is a lot more realistic for regular people. $5 million is probably out of reach unless you make really good income.

  80. It is tough to find your “enough” spot. Many people adapt their spending to level of income, and keep comparing themselves to others who are more successful. So it could be a never ending rat race.

    You are right that the average person probabaly needs to accumulate 25 – 33 times their annual expenses to retire. If you add in pensions and social security however, that amount could be lower. I think that anyone who cannot retire at $5 million does that because they are not willing to downgrade their expensive lifestyle, or because they enjoy the process that got them to the $5M in the first place.

    • If a person can’t retire on 5 million they are way past the level of stupidity. You don’t need more, you need to learn how to be responsibile like adults. Nobody on this board is 11 years old, plain and simple. American people have a consumerism problem compared to the rest of the world. There are people in third world countries that have WAAAAAAAAAAAAAY less than what a low income family has in the States, and they get by pretty goddamn well. It’s just like an ad I read once said, a lot of older people don’t know sh*t about saving and because they’ve made some pretty stupid decisions, half of them have nothing to retire on because they spend too much or don’t know anything about saving and it’s an issue affecting the majority of older people.

      It’s why my mother spits on people that whine about how $300,000 a year isn’t enough then laughs at them when they get reduced to 10 an hour, but she’s managed to survive on $9.50 an hour her whole friggin life with no help from the Gov at all, even during times when I couldn’t find work and she had to take care of both me and my brother. So if you can’t retire on 5 million? You’re either stupid, wasteful, or have a problem worse than an alcoholic. Warren Buffet is a Billionaire and the man is frugal as hell. You older people can learn a lot from men like him. Greed is never a good thing.

      Give me 5 million and it will last me till my death because I’d have no issue at all living a cheap lifestyle abroad in Asia where the dollars would really stretch. You know whY? Because I don’t have a spending problem like 90% of the Western population. I have an ordinary cellphone, not a $400 phone. I bike ride everywhere I need to go, because I refuse to work where I have to drive 30 or more miles to get there. You people make me sick with this “I need more” attitude.

  81. I agree with you it boils down to expense rates. Those who reached this milestone on moderately high income over a period of decades probably have low enough spending habits to make it a sure thing. But for those with a seven figure annual income, maybe not, like a family who is living below their means on 9M per year could still blow through a 5M nest egg in a short time. On the other hand if they have low fixed expenses and the right mindset, they could hunker down and go the distance.

    Most people I know who reached this point had help from stock market returns. Some were in the right place at the right time, like early hires into tech companies that gave lavish stock option awards and whose share price subsequently surged higher. Others bought shares the same way the typical mall rat accumulates handbags, they combined a very high savings rate with a strong tilt towards equity.

    As for the retirement decision, I’d say the big nest egg may bias the decision in its favor, but it won’t be the only factor. I don’t think we can accurately predict future expenses, while they probably won’t swing as wildly as share prices, you never know whether you or someone in your family may have an unexpected need for whatever reason. Others may question the reliability of the 4% annual drawdown, it likely depends on portfolio returns beating inflation by this much over long stretches of time. Over the past century this has been a good bet in the USA, but just because something hasn’t happened doesn’t mean it can’t.

    I believe that even for those who don’t want to retire at all, a big nest egg is well worth the effort. It gives you flexibility, whether this means getting out of a bad situation at the workplace, getting into the ground floor of a startup, or doing something that has meaning to you regardless of your ability to impress anyone else with your performance. I am most grateful to my younger self (and to ample good luck along the way) for giving my middle age self the financial wherewithal to avoid managerial responsibilities.

    To answer your question, my expenses are a bit less than yours but I use a 3% annual drawdown so my target is about the same. My portfolio passed that point over a decade ago and I still work full time. I’m willing to stay on so long as my working conditions are to my taste, or until I find something better to do.

    • You’re right. We can’t depend on the stock market to keep doing well, but I think most people who achieved FI are flexible enough to adapt. They have the drive to work toward a goal and that should enable them to deal with life’s curve balls.
      3% is great. It gives you a lot of cushion. We are working toward that as well. We shouldn’t have to withdraw much in the early part of our retirement because we will work part time.

  82. We’re no fans of the 4% withdrawal rate due to expensive equity valuations and low bond yields. $3m is our target. Buy a nice house for $300K, and live off the remaining $2.7m at 3% withdrawal rate. $2.7m at 3% withdrawal rate would make ~$80K per year in income, more than enough to live well.

  83. I like that you use expenses instead of income for the multiplier, it works a lot better for people who live below their means (and excludes taxes)

    If we had 5 million, we wouldn’t be at work right now!

    • I would have never been able to retire early if I use income for the multiplier. We saved more than 50% of our income when I was working and it worked out much better to look at expense. I probably should figure tax in there somehow.

  84. $2.25 million for me. That’s not quite a “retire today” number, but here’s the rub: is that in tax-qualified or non-tax-qualified accounts? I have my retirement strategies separated into a pre-59.5 and post-59.5 calculations.

    Lifestyle inflation for the rich is real, as is what I call “social spending.” My friend worked on Wall Street, and he has told me that it is not unusual for a high-income worker there to 1) take drugs, 2) have a mistress, and 3) spend like they make about 50% more than they do, to show off. Between those three, a $300k salary can disappear quickly…

    • It would be ideal to have more money in the tax free account. Most of our retirement fund is in our tax advantaged accounts. We’ll slowly move them into the tax free account once Mrs. RB40 retires. It takes a lot of planning to minimize tax, but it’s worth it.
      Wow, social spending sounds like fun. 🙂 But it is not very sustainable. You’d need to keep working until you die to live that lifestyle.

  85. My husband and I are retired. Not at 40, unfortunately, but earlier than usual. This is not easy to do, but my advice is to invest in good quality dividend paying stocks, and learn to live on less. Until you stop working, reinvest all of the dividends. When your dividends grow to reach your expenses, you are ready to retire. Change the setting for future dividends from “reinvest” to “cash”. Since you only spend dividends and no principal, there is much less chance of running out of money. And some day we will get Social Security to supplement our income. Our monthly expenses are about $6000, thanks to mortgage & property taxes ($1500/mo) and health insurance ($1000/mo). (Looking forward to Medicare to reduce the health insurance expense.) Be sure to allow a little extra for error, unexpected expenses and income taxes. If you choose really well, your dividend income will increase each year when the stocks raise their dividends.

    • I love dividend stocks. That’s the easiest way to fund early retirement. Rental properties are good too, but they are much more work than dividend stocks. A little margin is good because we see dividend cut once in a while.

  86. Well, I “retired” with only 2 million in assets. I think it’s pretty normal to never feel like you have enough.

    People always want more – more toys, more spending, more of everything. We have a comfortable dividend income of around $48k per year. Could we live on less than we do? Sure. Would we want to? Probably not.

    At some point, living on less becomes pretty uncomfortable. The wealthy probably have this same problem.

    • It sounds like you did it just right. You’re right about always want more. I’m sure I could spend more money, but it wouldn’t make a huge impact on how happy we are. Life is very good right now and we don’t spend that much.

  87. We could get by on $1.5MM as I plan to keep working on a part-time basis for as long as my health holds out. I’ve successfully changed my “paycheck” into a “playcheck” and use that to fund all our adventures. My big concern is time as no matter how much wealth you have everyone only has 24 hours in a day.

    • Working part time is a great way to go. That’s what I’m doing and it’s working out really well. Part time work keeps you productive and help bridge the gap until your full retirement age.

  88. We feel confident there are several nice places we can retire with less than $1 million. We’re currently traveling the world to look for affordable retirement destinations abroad. That said, if we pick a higher COL area in the states or abroad, we may need closer to $2 million to retire.

    $5 million would be crazy to retire on! I’m not sure what we’d do with all that money.

  89. The problem with figuring out how much is enough is that the unknowns that we face are large and unquantifiable. Chief among these are medical expense, aging care, and the risk of fraud or theft. Every guide about retirement that I’ve seen says to “look into” long term care insurance–not purchase it–recognizing that the cost is not reasonable, considering the chances of needing to and uncertainty of being able to draw on it. Fraud is also a huge concern. I know a widow who has simplified her life and consolidated her accounts, but now is considering a sure-fire, can’t-miss investment that she needs to move her money to today because the financial world is going to hell in a hand basket and everything in her safe portfolio is going to fall to zero. She is taking this seriously, because the pitchman is related to a friend. There is going to be a lot more of this taking place as Boomers age and their faculties diminish.

    • I really hate elderly fraud. Can’t they make a living some other way?
      Long term care is also a big issue.

  90. We read these articles with a very different “lens” and I have been looking for others to comment who may be in our situation. Many of the articles on “enough” to FIRE/be FI deal with having large sums invested. We (hubby and I) both have pensions from our work in the public sector that will cover our expenses when I retire (he is already retired!) With both of our pensions we will have about $5,000/month and that is without Social Security and income from rental properties too (but we may sell those in a few years). I have a 6 year “gap” until I can collect my pension, so our plan is to spend down our investment accounts starting next year so I can “retire early”. Our income will go up in retirement – so why keep going to work when we have investment accounts that will only generate more taxes down the road when we have to withdraw funds…. I read a lot of personal finance blogs and have not seen many people in our situation. If we had $5 million with our future plans…we’d be traveling the world right now!

    • You are in a great position with your pensions. They are rarer these days so that’s probably why we don’t see many articles about them. Pensions are great, but it’s tough to retire early because you have to put in a certain number of years.
      I think you are in a very good position to retire early or at least transition to part time. 6 years isn’t long at all.

    • My husband and I are in a similar situation. We both have served 20 years in the military and are retirement eligible. Our combined pensions will provide over $8000/month. We also have rental properties and tax-advantaged investment accounts. Our plan is to live off our pensions and watch our investments grow. We may tap into them for travel when we’re empty nesters.

    • I am due a Fire Dept pension from a large East Coast Fire Department in a large, populous, growing county in about 17 more years. However, anything can happen so I’m not banking on it. I am planning as if it will not be there when I retire but we can still retire comfortably when I am eligible. If it is there, it will cover our living expenses and we will “blow” the dividends while moving as much as possible over to our Roth accounts for our heirs and charities.

  91. I would guess somewhere between $3-$5 million for me. I think you nailed it when you said “It is tough to know what enough really is”. And I’d rather error on the side of caution because you never know what curveballs will be thrown your way in life. On top of that, retiring young (i.e. 40 or so) give me pause when it comes to using the 4% rule since that “safe withdrawal rate” was estimated based on 30 years in retirement and I’d hope to live longer than 70.

    It is tough to know! But always a great question to ponder and to see what others think. Thanks!

    The Green Swan

    • I think it’s good to err on the side of caution too. I still think 4% is pretty good, but I wouldn’t adjust it for inflation every year. I’d probably withdraw 4% of the portfolio. 3% would be even better.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.