How Much Money Do You Actually Need to Retire?

Hey there,

Let’s talk about one of the most misunderstood topics in moneyland: retirement.

Specifically: How much money do you actually need to retire?

Some folks will tell you it’s $1 million. Others will say $5 million, a paid-off house, a yacht, and a vacation home in Lake Como. Meanwhile, your uncle thinks retirement is just code for “drinking beer on the porch until you die.”

Here’s the truth: There’s no one-size-fits-all number. That million-dollar myth? It’s catchy, but lazy. It’s like saying, “You need to be 6’2” to be happy.” Cool if it happens, but not the actual key to joy.

So let’s break this down the smart way.

Step 1: Know Your Number (For Real This Time)

There’s a simple formula called the 25x Rule. Basically:

If you spend $50K a year, you’d need about $1.25 million.

Spend $80K? Your target’s more like $2 million.

This math is based on the idea that you can safely withdraw 4% per year from your investments without running out of cash before you kick the bucket. (Yes, that includes things like inflation and market dips. It’s a rule of thumb, not gospel.)

If that sounds scary, hold on...

Step 2: Focus on What You Control

Retirement isn’t just about hitting a giant number. It’s about covering your lifestyle. You’ve got options:

• Lower expenses → Smaller retirement goal.

• Move somewhere cheaper → More bang for your buck.

• Work part-time in retirement → Delay withdrawals, stretch your dollars.

• Start investing earlier → Compound interest becomes your BFF.

Also, Social Security isn’t dead (yet). It might not cover everything, but it’s not nothing.

Step 3: Reverse Engineer It

Let’s say you’re 35 and want to retire at 65 with $1.5 million.

You’d need to save about $800/month (assuming a 7% return). That’s not pocket change, but it’s doable. Think: driving a used car instead of leasing new, or cutting back on overpriced lattes and those “accidental” Amazon splurges.

Don’t know your number? No problem.

This week, sit down and:

1. Estimate your future annual expenses.

2. Multiply by 25.

3. Use a retirement calculator to figure out how much to save monthly.

It won’t be perfect. That’s fine. Perfect is the enemy of done. What matters is starting.

Bottom line: You don’t need to be rich. You need a plan.

Most people think retirement is an age. It’s not. It’s a math problem. Solve it early, and you can stop working when you want to — not when you’re forced to.

Now go calculate your number. Like, right now. Then set up that auto-transfer and get back to your life.

You got this.

Tommy,

Banking On You 🧠