How much money do you need to never have to work again?

Ten million?

One-hundred million?

One billion?

The numbers we need are smaller than you might imagine, the math behind it is shockingly simple, and if you can manage to live a little frugally, you may be quite surprised at just how little you need.

Growing up in our consumer-centric world, you'll be forgiven for not knowing your "magic number". I certainly started as a product of consumerism. I squandered and spent through my early 30s because the model of financial success installed and instilled since I was a child – IS WRONG.

The problem is manifold: We don't learn how to properly save. We don't learn about healthy relationships with money. We don't properly learn the value of investing and compounding interest. Most tragically, the model of financial success we do learn is based on hugely unlikely windfalls: lotteries, inheritances, lucky investments, or wildly serendipitous ventures.

We don't learn how to properly save.

Sure, we're told to save; but never how much in total, how much from each payroll, or what we should do with the money we've saved, or even WHY we're saving! The advice I received growing up was always along the lines of "you just never know", "for a rainy day", or " just in case" because that was the advice my parents, grandparents, and their parents probably received. But we're in a new age now, I'll tell you the secret, I'll tell you WHY:

So you don't have to work.

At some point you'll either be infirm or unable to work and will retire anyway. Instead, if you sort it out in your 20s and 30s, you may be able to retire in your 40s when you can more thoroughly enjoy the fruits of your labor than you might be able in your 60s to 80s.

We don't learn about healthy relationships with money.

From a young age we're bombarded with ads, sales pitches, subtle and overt marketing cleverly and insidiously designed to contort our perception of reality and encourage us to spend our money. The system works partially by making you feel like you're already successful, near-regardless of your income level, and that you have money to spend – and then getting you to spend it; often through adult peer pressure. Contradictorily, the other half of the message is that by having certain things (and this includes experiences, destinations, and travel) or a surplus of them, you will put your success on display and more wealth and prosperity will practically fall in your lap, as though you don't have enough already. It's a dishonest manipulation of the "fake it until you make it" concept for developing self-confidence.

Our cultures teach us that spending our incomes is the secret to happiness instead of teaching us to live within our means. And to be clear "living within our means" does not mean to live impoverished. I will not deny that having things and enjoying experiences is nice. But having things when one really cannot afford them engenders tremendous anxiety, whether you're conscious of it or not.

In short: You don't become a millionaire by spending all your money.

We don't properly learn the value of investing and compounding interest.

If we do manage to save, many of us are directed to "invest" in "stocks" and/or "bonds" without receiving the rest of the message: how much to invest, why to invest, and in which instruments to invest.

Investment messages most-often received results in better deals for the stockbrokers (them) than the stockholder (you): buy stocks as often as you can so you can get in on the ground floor of the next Facebook, Google, or other huge IPO, which is a perfect segue to:

Hugely unlikely windfalls

Once you know to look for how our world seems to fetishize sudden windfalls and lump sums of money, you'll recognize it everywhere. "Windfall porn" is a good name for it. Retail companies encourage you to spend tax refund checks (interest-free loans you give the government), state governments hold public lotteries, and television shows highlight stories of people encountering such sudden influxes of cash.

Bitcoin "mooned" and made millionaires overnight, and cemented for another generation the possibility of making fortunes off a fortunate investment. Before that it was the dot-com boom, and so-forth into the financial history of the world.

Now we arrive at the crux of this post: how much money –exactly– to never have to work again?

The really great news is that it's not billions, nor hundreds of millions. It's not even tens of millions:

The answer is $1,475,000, for the average US household.


At the time of this writing, the median US household income is ~$59,000. Discounting households with poor debt or spending management, this means withdrawing 4% (aka a "safe withdrawal rate") annually on a $1,475,000 diversified investment (an index fund) should usually provide said households with the $59,000 of income they're already receiving. This is how much money the average household would need invested at a nominal rate of return (usually given as 10%) in order to (1) provide for the household expenses, (2) be able to suffer a few years of bad markets, and (3) be at parity with inflation. All this without ever having to change their lifestyle.

Be keen to notice that you'll only withdrawal 4% per year while earning 10% per year on your investment. This is an important technique as it permits your principal to grow, and as it does, so too will the amounts you withdrawal which keeps you ahead of inflation.

Let's do some math:

Median US HH Income;
The amount you want as "income"
The "Magic Number"
$59k is 4% of what number?
( 59,000 / 0.04 )

Note to math-haters: Love to learn it when dollar signs are involved.

Obviously, $1.5M is no small feat, nor is the effort required to earn that kind of money in the first place, but that's not the point of this post; I can't do the hard work for you. The point of this post is to show that you have much more influence on your own prosperity by saving your way to early retirement. With "only" $1.5M, you'll be incredibly comfortable, and not because you'll live directly off the principal. Congratulations, you are no longer burdened with thinking you need to have hundreds of millions just so you don't have to work!

Granted, imagining one's self having a million dollars instantly conjures images of yachts, new cars, and daily dining out. Unfortunately the reality is different. That first million merely sets the stage for you to never have to work. If you do aspire to have multiple millions, you'll have to keep working, investing, or starting or growing a business. However, having the "safety net" of not having to work is a powerful liberator and force multiplier. I've touched on it in a previous post. And as for "saving your way" to a million dollars, Peter Adeney explains it in detail in his post The Shockingly Simple Math Behind Early Retirement via

Wrapping it up.

It's ok to feel apprehensive when thinking about saving or earning $1,000,000. It's a lot of money. But everything great in this world was built a little bit at a time. It's natural for us to be ignorant of the simple passage of time required for some successes. We've grown deeply accustomed to instant results, much like how quickly this post loaded in your web browser. Patience pays.

Finally, to be truly comfortable, getting yourself to a place where you can have, more or less, double the median household income coming from your investments is your goal because you now basically have the freedom to do what you please. This is what we're really pursuing when we seek the harbor of "being a millionaire".

That works out to withdrawing 4% per year on $3,000,000 of investments, or $120,000 per year.

Header image by Fabian Blank via Unsplash

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