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How Much Money Do You Need To Retire?
How much money do you need to retire? How much do you need in terms of your net worth and investments to be financially solvent and happy when you’re an old fart?
-By Caleb Jones
Let’s look at a few examples.
There are guys who are perfectly happy, in their forties, fifties, and sixties, living in a small, semi-crappy studio apartment, just relaxing, not owning a car, and not traveling too much. But they are legitimately happy with this lifestyle.
Now, to be clear, there are people who are low-income who claim they don’t need money and rich people are dicks. Those people are full of shit. They are unhappy being low-income; they’ve more or less given up on life, and now it’s all about sour grapes. I’m not talking about them. I’m talking about a reasonably small category of men who are legitimately happy living a lifestyle like this.
I have several brothers, and we’re all radically different even though we have the same parents. One of my brothers bought a house as a rental property many years ago. Since then, he has paid off the house; he has renters in the house who make the house payment to him every month. After all of his property taxes, upkeep expenses, and all that, I believe his net income before taxes every month is about $1,400.
He’s in his early forties, and he lives a life similar to what I just described. He’ll go to Thailand, rent some little shitty apartment and do yoga all day, then he’ll go to the Philippines and hang out there a while. There are times when he’s spent up to a year sleeping on a friend’s couch. And amazingly, he’s perfectly happy with that lifestyle. Whenever he wants to get laid, he goes to Thailand and pays some hookers. He’s never had kids, never been married, hasn’t had a serious girlfriend in 15 years, and he lives on $1,400 a month. And that’s all he needs to be happy, more or less.
That may not be you; odds are, it’s not. It’s certainly not me. I would jump off a fucking cliff if I lived that lifestyle. (If I made $1,400 a month, I’d shoot myself in the head. I’ve never made $1,400 a month.)
So my retirement number would have to be much larger than that. Do you understand now that there’s no way I can give you one number that you need to have in the bank so you’ll be set for retirement?
Crunching the Numbers
Here’s another problem I see: I see a lot of young guys who arrive at a number and decide that’s all they need (per month or per year) to retire—but they’re wrong. That’s the number that will make them happy right now when they’re 26. When you get into your forties and fifties and beyond, you’re going to want a little more money. Statistically, the vast majority of you reading—regardless of how young you are, how red pill you are, or how Alpha you are—will eventually be living with a woman, even if you’re not married or monogamous. If you’re a younger guy, whatever number you have in your head now for retirement probably isn’t going to cut it down the road.
That also applies to having children. The majority of you who don’t have children right now are going to end up with at least one kid, even if it’s by accident. So you have to account not just for the money that would make you happy today, but how much money will make you happy forty or fifty years from now.
I’ve been a victim of this. When I was a young guy, I fantasized about making $50,000 a year (as my normal income). I was convinced life would be perfect at that amount. Within a couple of years, I was making that much. Later, I thought the same thing about $100,000 a year; if you know my history, that was a huge goal of mine for a long time, and I hit that goal at age 27. It was awesome, but within two or three years, I thought to myself, This isn’t that great. It really isn’t that much. I’m not actually complaining, but this isn’t a dream life at all.
And by the way—at the time, I was traditionally married and had two kids, so it really wasn’t that much.
So I raised my income goal to $250,000 a year, and it took a few years, but I hit that goal too. At that point, I thought, This is pretty good… but it could be a little better.
Today, I make much more than that, and I’m very happy. My net worth isn’t that great, in my opinion, but I’m at the point where I could live the rest of my life at my current income. My point is, I was wrong in terms of how much money I thought I would need to make myself happy in the long term. And most likely, most of you are making the same mistake when you’re visualizing these numbers. You need to maybe double it or possibly triple it.
The Other Side of the Coin
There are some of you in the audience who are at the other extreme from men like my brother, like I am. You want a lot of money; you’re the ones who scoff when I mention a minimum of $75,000 a year. Some of you want closer to one or two million a year to be happy, and like me, you’re willing to work for it. That’s great. The only thing is, your number, in terms of what it’s going to take to make you long-term happy in retirement, is going to be much higher. You’re looking at a minimum net worth of at least $10 million to get to the point where you feel comfortable based on your lifestyle objectives.
In my opinion—and that’s all this is, Caleb’s opinion, not Alpha Male 2.0—every man in the Western world should be worth at least $1 million by the time he turns 50. By the time you get to that age, you’ve been working for 30 years, longer than some people have been alive. And you don’t have a $1 million net worth? What the fuck have you been doing all these years? And I’ve felt this way for 25+ years, not just after I started making money. If you’re not 50 yet, you should consider this a Tier 1 goal.
Any man reading is capable of accomplishing this. There are no excuses on that one.
If we start with the Alpha 2.0 minimum of $75,000 per year for a baseline level of happiness, that means if you want to continue that income past the point of retirement, you should assume a return of four percent. If it makes you more comfortable, you can assume an after-tax return of four percent. That’s what I do; I plan for my investments to make only four percent. If I make more than that, great. But I try to keep that expectation as conservative as I can. I don’t want to build a financial plan that requires my investment portfolio to always make 12 percent—especially these days when Western civilization is collapsing right before our eyes.
So, if you take the $75,000 yearly income and factor in four percent returns, that means you need to have $1,875,000 in cash-flowing assets to pay you that $75,000 a year. For this discussion, let’s round that up to $1.9 million.
Here’s the tricky part. That means you need to have $1.9 million in paying assets, not just a $1.9 million net worth. What does that mean? For example, if you pay off your house, the value of your home gets added to your net worth. But does your house pay you money? Of course not. But you still have to pay property tax, upkeep, any association fees, and so on. Bottom line, your house is an asset to your net worth, but it is not a source of income.
So just because it’s in your net worth doesn’t mean you can count it toward the monthly or yearly income figure you’re using in your financial planning. The $1.9 million figure above needs to be $1.9 million in assets that are paying you money in addition to your non-paying assets.
Let’s say you have a paid-off house and a small personality-based Model A Alpha 2.0 business. Whatever those are worth, they don’t count toward the $1.9 million. You would have to have $1.9 million on top of that. If you have a Model B Alpha 2.0 business, that becomes an asset that you can include in your $1.9 million net worth.
The point is, you can’t just say that as long as you get your net worth to $1.9 million, you’re guaranteed the $75,000 a year you need to be happy. It has to be $1.9 million in paying assets.
For you guys who want more than $75,000 a year, you’ll need a number that’s much bigger than $1.9 million. If you want the big money, you’re looking at numbers beyond $10 million. Just use your calculator and the four percent baseline to figure it out.
You need to sit down and visualize yourself in your fifties (if you’re already 50+ then just visualize yourself at your current age or perhaps 10 years in the future). Sit down with a spreadsheet and write out everything you want and how much it costs to achieve your ideal life—yours. Not your brother’s, your friend’s, or anything else’s, but yours.
Will you want kids? Will you want a wife? What kind of apartment or house do you want to live in? Will you own a car? What kind of travel do you want to do? Write down everything, write down a monthly cost, and come up with a total monthly after-tax figure that you will need to live in terms of your retirement. Then convert that to an annual figure, divide that by 0.04, and you will get the amount of money you will need in paying assets to maintain that lifestyle.
Get ready to be surprised. It’s going to be a big number. Some of you need really to get to work because you’re way behind schedule on this. You’ll need a lot more money than you expect.
The next aspect is this: I would not plan on getting any assistance at all from your government in your old age—no welfare, no Social Security, government pensions, nothing. It is very unwise and reckless to assume that in 25 years, the government of your collapsing European country, Canada, or the U.S. is going to be solvent enough to help you pay your bills in your old age. If the money comes, take it if you want (I won't) and consider it a bonus. But don’t rely on it. You want 100% reliance on yourself so that you’re covered no matter what happens.
The Concept of Retirement
I think retirement is stupid. Men are objective-seeking missiles, and there are exceptions to this, but once men retire, that’s usually when they die. I never plan on retiring. I think it’s a mistake to look forward to retirement.
Instead, as you get older, focus more on aspects of the work you enjoy doing. That way, you can work because you want to work, and you can work the hours you choose instead of the hours you have to work.
That doesn’t mean you don’t need any money. Investing is a core skill you need to learn because you need to have a good net worth as you get older in case you can’t work, the economy collapses, or if you get sick. At some point, you might need the buffer. You do not want to be in your fifties, sixties, or seventies and worried about money—trust me! That, to me, is the ultimate in life failure. The last thing you want to worry about when you’re that age (and dealing with age-related problems) is money. So you don’t want to retire, but you want to have plenty of money saved in your long-term, solid investments to make sure you’re covered in your old age. Consider that money an insurance policy for your happiness, not retirement money.
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John 2020-11-09 09:45:03
Personally, for me, happiness is having less to have to maintain and worry about. So a $1000 a month rental or condo with a low cost used car I barely have to drive or maintain is the very definition of happiness. Currently I make 6 figures in a low'ish cost of living area, compared to say out west, but to be honest the majority of that goes to raising a kid and separation maintenance. Without a kid and paying separation maintenance that need for a certain cost of living goes way down. So like your brother I could easily live very happily on $40-50k a year.
Blackdragon 2020-11-09 10:01:55
So like your brother I could easily live very happily on $40-50k a year.At least for now. If you're under the age of 35 you'll probably change your mind about that later.
CTV 2020-11-09 10:33:04
That's another factor.. creating a business that you can do and not have to "Retire" from. That's what I factored into my business idea.. That's why I'm going to Psychotherapy. It doesn't make a ton of money, but can be done as Private Practice it is very free as far as scheduling. I don't have to take insurance. I'm going for 2 licenses so it's varied on streams of revenue. Business idea wise.. will require some work outside of therapy. I've got GI Bill for school part so I'm covered debt wise. Yes it is government money lol. The only location dependent portion is licensing, you most def need a command of the language to wherever you move to.
John 2020-11-09 10:34:40
So like your brother I could easily live very happily on $40-50k a year.At least for now. If you’re under the age of 35 you’ll probably change your mind about that later.
CrabRangoon 2020-11-09 12:57:07
I plan on a sort of "semi-retirement" as I get into my 50's and beyond as I'm close to debt free and have a good amount of funds stashed already. I always want to work and keep meeting goals. I'll cut back on hours I "work" but mainly to pursue fun hobbies like music. Most people that play music know there isn't much money to be made, it's more of a passion project. Plus I'd rather keep that lighter and enjoyable rather than making it another job. Pure retirement sounds incredibly boring-I've seen firsthand with older relatives. Men especially need things to do and just playing golf everyday or whatever old guys do sounds like it get old fast. And how many home improvement projects can yo do??? Eventually you run out of that too. I have an older cousin in his 70's who's totally retired and sometimes he literally just walks around his property picking up sticks that have blown down.
Blackdragon 2020-11-09 20:02:57
I’m 51 and even at 51 I might still change my mind or have to delay how soon it happens.Actually I think at 51 you've probably decided what you want. I'm 48 and I can't view myself as radically changing my financial goals at this point. But yeah, you never know for sure.
Men especially need things to do and just playing golf everyday or whatever old guys do sounds like it get old fast. And how many home improvement projects can yo do??? Eventually you run out of that too. I have an older cousin in his 70’s who’s totally retired and sometimes he literally just walks around his property picking up sticks that have blown down.Nothing will turn a man into a beta faster than retirement.
Mark C Brooks 2020-11-09 21:25:09
I have to admit that I don't look at this site that often but I thought that this was a very good, and accurate post. I'm 65 now and retired at the age of 57. I retired with a couple of million dollars. As Caleb says, you're really going to need that much. To be honest, a million is good, but it's amazing how fast the money goes when you're having fun. Caleb suggests an income of 75k a year. I think that's pretty close. But if you're living in someplace like Thailand or Vietnam and you want young beautiful girlfriends (who actually like you), occasional vacations in Europe, and a little bit of hedge money, you'll want more like 90k a year. When I was living in SEA I saw a lot of young guys doing the "teaching English as a second language" thing or trying to do some kind of online trading or programming type jobs. It doesn't work. They never made enough money and always bailed out. To retire young and have enough money to live the rest of your life in relative peace and happiness, you need to come up with a real plan that works. (Caleb says that "retiring" is bullshit - but I would beg to differ. The past 7 years since I retired have been pure bliss.)
Blackdragon 2020-11-10 09:04:24
Caleb says that “retiring” is bullshit – but I would beg to differ. The past 7 years since I retired have been pure bliss.How do you spend your typical day/week?
AlphaOmega 2020-11-12 02:51:28
At least for now. If you’re under the age of 35 you’ll probably change your mind about that later.Getting close to that age and can definitely feel that very much. Renting a normal apartment is getting increasingly annoying for me as opposed to large apartment/house. Being able to save up few hundred - about a thousand a month into savings accounts / investment (depending on how much I travel) as opposed to several thousands a month into those makes me feel not very secure in current social-political-economic climate. Not being able to do full on regular sugar daddy means I have to waste a lot of time and energy on normal dating which doesn't really fit with me at this age and stage in my life for FBs. Etc, etc As for retirnment, my idea is dating 3 women simultaneously on a serious / semi-serious level. Traveling a lot, managing my investments, writing books.
Bob 2020-11-12 09:29:05
Not being able to do full on regular sugar daddy means I have to waste a lot of time and energy on normal dating which doesn’t really fit with me at this age and stage in my life for FBs. Etc, etcWhat do you mean? You are in early thirties and you want to do suggar daddy game? I assume it's best age for dating women, you are in your prime.
AlphaOmega 2020-11-12 10:24:27
I assume it’s best age for dating women, you are in your prime.friends with benefits isnt dating as such, those are much easier on sugar dating besides at this age you can do it cheap and often free still it costs money over all but saves a lot of time
johnnybegood 2020-11-13 13:31:05
I'd argue some of these numbers are off-- Yes it would be nice to have $2 million But at $75,000 it would take you 26 years to burn through it all with no returns (not including inflation). It depends on your target retirement date and expected death date, and what you may want to leave to your heirs/ charity. I'd also argue that if you are currently making $75,000 --- you would also be currently saving a great deal of that to reach $2 million at some point in life. Your expenses aren't $75,000. So you would need less in retirement. Depending on if you have tIRA or roth you may not even have much of a tax burden in retirement (backdoor roths, etc). Of course you could argue that you want to spend even more money in retirement than during your working years. In that case, yes, you do need to save more, and make more.
Blackdragon 2020-11-13 14:36:15
I’d argue some of these numbers are off–They aren't. Watch.
Yes it would be nice to have $2 million But at $75,000 it would take you 26 years to burn through it all with no returnsNot what I'm recommending. I'm recommending you live off the interest only (4%), not spend the principal. Spending the principal would be stupid.
I’d also argue that if you are currently making $75,000 — you would also be currently saving a great deal of that to reach $2 million at some point in life.Damn right. That's the point of my article. Guys don't realize how much they need to start making and putting away. Soon.
Your expenses aren’t $75,000. So you would need less in retirement.Likely incorrect. I addressed that in the article.
Of course you could argue that you want to spend even more money in retirement than during your working years.Bingo. That will be most men.
AlphaOmega 2020-11-14 03:15:24
Something to say about your numbers is it depends where you plan to live, for example
If I made $1,400 a month, I’d shoot myself in the head. I’ve never made $1,400 a month.I agree that in most of the west its not possible to even survive on this money. At least not for me. If I dont travel at all, cook all the time and dont have any unexpected expenses, dont buy new clothes I would prob still be short on money with that and thats assuming its after tax not before. If its before tax it probably barely covers the rent in most places. But in many countries you can live reasonably well on this money if you dont travel much. These days I probably need somethig close to 2000 a month (net) in the west to cover unexpectee or rare expenses but without travelling and without saving up anything. With that I can be comfortable but not too much - no sugar dating, no fancy restaurants or maybe rarely. But in many eastern europe / central asia countries I could have comparable lifestyle with half that so at 2000 a month it easily covers non luxy travel. It is popular and has been becoming more so to retire somewhere cheaper. Makes no sense to stay in expensive city or country when you dont need to meet clients / go to work there anymore unless you have some attachment to that place.
Blackdragon 2020-11-14 10:52:31
Something to say about your numbers is it depends where you plan to liveCorrect. That's a big factor.
in many countries you can live reasonably well on this money if you dont travel much.Nope. Not for me. Even if I lived in the Philippines or other super cheap country AND never traveled I would STILL shoot myself in the fucking head if I only made $1400 a month. Yuck. But like I said, all men are different. The objective is to know exactly what will make YOU happy.
AlphaOmega 2020-11-15 01:30:37
. Even if I lived in the Philippines or other super cheap country AND never traveled I would STILL shoot myself in the fucking head if I only made $1400 a month.I wonder then if you spend thousands each months on new electronics / luxury goods? Because everything else scales so in some countries 1400 is like 3000 or 4000 in usa. Of course like mentioned you wont be able to travel much or do sugar dating. Though perhaps 3000-4000 in usa is still not enough for you.
Blackdragon 2020-11-15 10:50:25
I wonder then if you spend thousands each months on new electronics / luxury goods?Nope. Never.
M 2020-11-15 19:11:44
Hey Caleb, hope you are fine. Since this is related to money... any thoughts about "The Great Reset"? Or you don't believe in any of that sh*t and the plan would still be the same?
Blackdragon 2020-11-15 21:01:47
any thoughts about “The Great Reset”?The great reset is real, expected, and standard stuff that should surprise absolutely no one. The elites will keep moving society to the left as I've been saying for 20+ years, and will use any crisis to further this, just like the neocons used 9/11 to further their big-government agenda. These are the kinds of rulers you get when you vote for Democrats and Republicans for 100 years. Get your Alpha Male 2.0 lifestyle going as fast as you can so you won't be affected by this garbage. And stop voting for people like Biden and Trump.