How Much Money is Enough?
How Much Money is Enough?
By Retire Before Dad
How much money is enough to retire or change careers? As my wealth has increased, I've found that net worth is an imperfect measure of enough. A few years ago, somebody asked how much money is enough for me to retire. I used a back of the napkin estimation based on the financial independence number and answered. This was 2015-ish. At the time, I thought the number would be more than enough to live comfortably for the rest of our lives, fund our three children’s college educations, and still travel in retirement.
But sometime in Q4 2019, our family’s net worth (minus home equity) surpassed the number, and since then, we’ve left it in the dust thanks to the Covid-19 dip and recovery rally. According to the 2015 RBD, I could stop working my full-time job today. Yet here I am, with no immediate plans to leave my career. As my wealth has grown, I’ve found that net worth alone is an imperfect indicator of enough.
Enough for What?
It’s hard to determine how much money is enough if you haven’t defined your objective. Enough varies based on many factors, including your life stage, financial needs, and desired outcomes. How much money is enough to:
Retire at age 55 and never work again?
Retire at 50 and work part-time in retirement until age 65?
Quit your day job to become an entrepreneur?
Leave your high-paying career for a lower-paying, more meaningful opportunity?
Retire with enough to leave an inheritance for your family?
Figuring out precisely what you want is essential, so you’re pursuing the right outcome. The ideal outcome is not always clear. My goal since 2003 is to retire and never work again at age 55, so I can travel six months out of the year. I was 27, single, and living with my parents when I set that goal.
Eighteen years later, my reality has changed. Kids, future college costs, new interests, and a greater sense of purpose have changed how I think about a traditional retirement. Working at the same corporate job for the next ten years and retiring at age 55 to travel may not be the optimal route. I’m now looking at hybrid models, where I potentially “retire” from my lifelong career to pursue more exciting work.
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