#31 How much money do you really need to retire?
The answer might surprise you
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What retirement means
In our previous essay we talked about owning your calendar. It’s a simple idea: having control over your time, not letting someone else dictate it. One way to get there is by building enough financial security to walk away from anything that doesn't align with your values or interests. That’s retirement, at its core. Not a rocking chair on a porch, but freedom to choose.
The key of this definition is the word “enough”, which means something different to everyone. Harvard Business School asked 2,000 millionaires how much money they needed to feel satisfied. The most common answer? Twice what I have. If your number keeps changing, you’ll never reach it.
So, what’s the real number? Let’s find out.
How much do I need to retire? Escaping the hamster wheel
Ask around, and you’ll hear all sorts of guesses. A million euros. Five million. Ten. But how do you know your real number? If your target is always double what you have, you’re running on a hamster wheel. You need a fixed number and that’s where the 4% Rule comes in.
The 4% Rule: A simple formula for financial freedom
Your "retirement number" is the amount of invested assets (stocks, real estate, etc.) that allows you to stop working full-time. The 4% Rule makes it easy: You need 25 times your annual expenses in invested assets. In other words, if you get a steady 4% return from your investments each year, that should be enough to pay for everything you need.
As you can see in the table below, If your monthly expenses are €5,000 per month (€60,000 per year), you need €1.5 million to retire. Curious to find out yours?
Here is a breakdown of how much do you need to retire depending on your monthly expenses and expected annual return on invested assets:
Sounds like a lot? You can reduce your "retirement number" dramatically by increasing your income or reducing your expenses. If you're young, you'll likely continue doing some kind of work anyway. There are many ways to generate income, including freelance work, investments, or rental properties among many more.
Going back to the example from above, by having an income of 2000€/month your retirement number would go down from 1.5M€ to 900.000€. (it basically goes down 300.000€ every 1000€ of monthly income). The same applies to expenses. A small reduction of 1000€ will lower your retirement number by 300.000€.
Key Takeaways
Know your number. Use this template to calculate yours!
Your number is flexible. A small income or expense reduction can cut it in half.
Decide what’s enough. Once you define it, don’t keep moving the goalpost.
Enjoy the journey. Financial freedom is a gradual shift, not an overnight event.
Many wealthy people never reach real freedom. They get trapped maintaining their status, assets, or businesses. The more they earn, the more they spend. This is what some call the ego tax. How many times have I heard “Just five more years, and I’m done,”. Except they’re never done. The key is resisting lifestyle inflation and not letting expenses rise just because income does.
True financial independence isn’t about how much you have. It’s about knowing how much is enough.
Final thought: Freedom, commitment, and the life you want
Financial independence is not about avoiding responsibility but about choosing the right commitments. Endless free time or total flexibility sounds nice in the beginning, but it won’t make you happy. Meaning comes from purposeful work, deep relationships, and engaging challenges. The key is not to escape obligations but to design a life where your commitments align with what truly matters to you. Money is just a tool to make that possible.
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