Crisp Retirement

A clean path to early retirement and financial freedom through common sense.

You Don’t Need 1 Million Dollars to Retire

You simply don’t need $1 Million to retire! You may have heard that you need this much or even more, but that might not actually be the case. You could want that much, but probably don’t need it. If you spend a lot of money and plan to keep spending as much, you might need $1 Million, but most people can live on much less. Thinking you need this much money may be why people think retirement isn’t feasible, but financial independence or retirement are both very feasible on a lot less.

Here’s why:

You and a spouse can retire with a taxable income of $32K per year by saving just $800,000. This assumes the 4% rule, which says that you can likely withdrawal 4% of your investments and live for quite some time.

Is $32K enough to live on? You bet it is and you can still have fun with that much! If you have a house with no debt, this should be more than enough to cover expenses.

$32K of taxable income should be over $30K after tax. Split $30K per year into monthly amounts – that is $2.5K/month. With no house payments, you can live in luxury with this much! Just check out how fun this budget is:

Total $2500
Housing $600
Insurance/Tax $500
Misc costs $100
Utilities $240
Water $30
Gas $75
Electric $75
Internet/Streaming TV
Health Care
Groceries $300
Cell Phones $100
Transportation $175
Car Insurance $75
Gas $50
Maintenance $50
Other Necessary $130
Hygiene/Grooming $30
Clothing $50
Misc. Necessary $50
Niceties $455
Eating out $100
Alcohol/Coffee $75
Travel $200
Golf $80

That’s just a sample – I would probably spend less on several of these categories and spend more on others. With this budget, you get $455 in niceties. Spend that $455 however your heart desires!

There are several reasons you might be able to retire or be financially independent with even less!

For example – you may have supplemental income. If you plan to collect Social Security in the future, your retirement income could be supplemented – we’ll discuss this a little later. You may also have a pension that supplements your income. Lastly, you could do a side job or part time job to add a little bit of income.

Besides just adding income, you can also be more frugal. Think about spending less on some things like home insurance, groceries, cell phone, clothing, and “niceties”. These could easily remove around $300/month from the budget. Cutting this amount would reduce the amount you’d need to around $705K, again using the 4% rule.

With this amount, you could still have over $350/month for fun stuff just by being a little more frugal! Clearly you don’t need to spend $350 a month on fun activities, but this post isn’t about a completely bare bones retirement!

Keep reading because these may look high and they probably still are!

I ignored social security earlier, but let’s take that into account now. Consider a social security retirement benefit of $1000 – well below the average retirement benefit of about $1300. Also, consider that your spouse takes the 50% benefit option. With both these benefits and the lower budget of $2200/month, you’d only need to cover $700/month with your savings.

To interject here – you or your spouse may die earlier, reducing the combined benefits. Also, social security may decrease in the future. For these reasons, I’m going to assume you’d need to cover $1000/month rather than $700.

Using the 4% rule again, this means you’d want about $335K worth of retirement savings.

What about inflation though?

But that $800K or $705K is a changing target because of inflation, right? Yep – unfortunately, inflation can bite a little bit. Without taking Social Security or pensions into account, here is a table of how much you’d need to save in the future to retire or have financial independence while living on the amounts described (2.5% inflation).

Years Somewhat Frugal More Frugal With Social Security
Today $800K $705K $335K
5 years
$905K $797K $379K
10 years
$1.02M $902K $429K
15 years
$1.16M $1.02M $485K
20 years
$1.31M $1.16M $549K
25 years
$1.48M $1.31M $621K
30 years
$1.68M $1.48M $703K

Even 30 years from now, you may not need $1 Million to retire. These amounts are achievable! You really just need to set your mind and actions to it! Also, this much money won’t seem like as much in the future because your future income should be higher too!

That is a very far cry from an excessive $1 Million or more that many people may think they need!

It seems like a pretty manageable amount to me, but maybe not if you are retiring soon and don’t have any savings. If you’re in that boat, it is probably a good idea to look very strongly at what you’re doing with your money, consider downsizing, and start saving as much as you possibly can!

You can still cut more out of the retirement amounts that I’ve described, but my purpose was to show that you can have a “fun” retirement with much less than $1 Million. When you start cutting a lot deeper, you’ll easily be able to survive, but you will have to watch your spending carefully!

If I haven’t managed to convince you yet, then you’re probably thinking a $30k budget isn’t enough. It really may not be enough to cover everything you currently spend, but changing your spending may be less difficult than you think! Oh and by the way, the more you change your spending now, the earlier you’ll reach financial independence!


There might be a Snake Eating your Nest Egg


Spend less or Earn more?


  1. Arrgo

    This is all very true. In most cases people are their own worst enemy with their money through poor habits and choices. Then they will cry how broke they are. You really dont need as much as you think you do to live a good life and be happy. And with a little effort you can still buy almost everything you want for less. I dont mind spending money, but now i’m much more conscious about the value factor and waiting for a good deal etc. Having some discipline and self control can really go a long way to improving your finances. And once you change your habits for the better, you won’t need as much money to be financially independent.

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