That is the million dollar question right there.

Of course, as a prudent financial consultant I can give you only rough guidelines as personal circumstances differ tremendously.

How much money you need depends on a whole range of factors that are unique to your personal situation, the size of your family, your age, your career path, your debt obligations, your risk tolerance, your asset allocation, your willingness to sock away a large percentage of your current income, your investing skills, and, most importantly, your spending behavior. The more money you spend, the more money you obviously need to earn and save.

When it comes to early retirement and dropping out of the rat race, people often focus too much on the income side of the equation when they should actually look at the expense side. The easiest dollar saved is the dollar you didn’t spend. Living way below your means is the number one ingredient for long-term financial success. Living below your means allows you to skyrocket your personal savings rate and bring you closer to financial freedom, one step at a time.

So, How Much Money Do You Need?

Again, it depends on your goals.

If you are young, single and are willing to do whatever it takes to drop out of the rat race, you could probably pull it off with $10,000, if you are willing to push it and if you are willing to take freelance work or build your own online business. I highly recommend you to read my related article here, titled “How To Retire From The Corporate Rat Race In 6 Months Or Less” that will answer a lot of questions you might have on your mind right now.

If your goal is to never to have work again, a good starting point is to shoot for 25x annual expenses as a target portfolio value. This approach to financial independence assumes that you withdraw 4 percent each year and that the withdrawal rises in lockstep with inflation. 25x annual expenses is not a high number, though, so you may want to take this recommendation with a grain of salt and make adjustments according to your own personal situation.

Say, for instance, that you tend to spend $30,000/year, all in. According to the 25x retirement rule, you should have $750,000 in portfolio assets that can earn a return for you. If you continue to withdraw at a 4 percent rate each year, the portfolio should last you about 30 years, as a rule of thumb.

Ideally, of course, your investment portfolio produces recurring income from a diversified portfolio of high-quality dividend stocks, real estate investments and online businesses in order to mitigate investment risks when you are retired.

What Experts Suggest

A lot of retirement experts suggest to accumulate a retirement nest egg of $1,000,000 which can be used in combination with other sources of income to fund your retirement. Unfortunately, the average American has only about $85,000 in retirement savings, which puts more Americans in a dire situation.

$1,000,000 is not necessarily a bad number to aim for, though. In fact, when it comes to retirement, the more money you have managed to sock away the better.

What’s Your Number?

A good way to start figuring out “your number” would be to use a retirement calculator of a personal finance website.

I would recommend you head over to and use one of their retirement calculators. Play a little bit around with the numbers and inputs (investment return, withdrawal rates etc.) in order for you to see how varying assumptions change the value of your retirement nest egg over time.

Personally, I think single, millennial investors below 35 can retire early with a net worth of around $250,000, assuming they are debt-free, have little to no financial obligations with respect to taking care of parents, children etc., and live in a country with moderate living costs ($1,000-$2,000/month to live a middle class life). If you are the kind of person that likes to splurge and needs a mansion and the newest car, you obviously need a lot more than that.

Account For Higher Expenses Going Forward

Inevitably, your living expenses will increase as you age. You might get married. You might have a child. You might get sick. You might have to travel more.

You can’t plan for things like this and they usually happen to people when they least expect it. Hence, you should also have an emergency fund that covers 6-months worth of expenses.

Furthermore, a prudent approach to retirement planning should also include the possibility of a changing family situation and rising household expenses.

Another factor you need to take into consideration is inflation. Everything gets more expensive over time so your investment portfolio must at least earn the inflation rate. The long-term inflation rate is about 3 percent.

My Own Number

I dropped out of the rat race in my early 30s, as a bachelor with no debt, a Masters degree and about $250,000 in investments, most of which I bought during the financial crisis of 2008-2009. My portfolio of high-quality dividend paying stocks is producing recurring passive dividend income and throws off enough money to finance my lifestyle without me having to work.

Obviously I choose to still do something, I work and grow my blog, for instance, I promote my book, I constantly evaluate new investments and business opportunities. However, I am free to do as I please and I will never ever go back and suffer the abuse in the corporate rat race again.


How much money for early retirement you need depends on so many different factors such as your age, your spending behavior, your family plans, your health, and your risk tolerance. If you are young and single and want to drop out of the rat race fast (and work on your own business), you can do it for a lot less than $250,000.

There is a real retirement and savings crisis in America and more people need to take active steps to prepare for(early) retirement. Saving money and budgeting are two core concepts that need to be applied consistently in order to reach financial freedom and early retirement. You can do it, as long as you save money consistently and carefully track your expenses.

Download your FREE Excel Sheet “Budgeting Made Easy” in order to get you started.