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 How Much Money Do

I Need to Retire Happy?

 How Much Money Do I Need to Retire Image 

How Much Do I Need to Retire?


(Is Two Million Enough to Retire?)

You can be young without money but you can't be old without it.
— Tennessee Williams

Retirement: No clock, no deadlines, no stress, no money!
— Author Unknown

So you may ask, "How much money do I need to retire"? In other words, "how much should I save for retirement?" Another question people ask themselves: "Is 2 million enough to retire?"

No doubt if you ask five different financial advisers the question "How much do I need to save for retirement?" you will get five different answers.

You will likely also get a lot of yes's and a lot of no's to the question "Have I saved enough for retirement?" if you have saved as much as I have saved for retirement.

Regardless of how much you have saved for retirement, you want to be happy while you are alive because you are a long time dead.

Conventional wisdom in the financial industry says that people need about 80 percent of their pre-retirement income to be comfortable after retiring. Some financial advisors are now raising this to 90 percent, even 110 percent of pre-retirement income.

In my opinion, this is ridiculous. My retirement plan is not based on any such figures.

Columnist Scott Burns of the Dallas Star have been saying for years that the 80 percent figure is idiotic.

It's an absolute fact that as people get older they spend less money.
— Rick Ferri, President of money-management firm
Portfolio Solutions  in Troy, Mich.

Retire Happy Book

In Chapter 1 of How to Retire Happy, Wild, and Free, I give eight good reasons why the large majority of retirees, whether they live in Canada, the U.S., or other Western nations, can live on far less than 80 percent of their pre-retirement income. Indeed, government statistics indicate that retirees live comfortably on 45 percent to 62 percent of their pre-retirement income.

In fact, highly respected Canadian actuary Malcolm Hamilton says the true number is closer to 50 per cent.

Hamilton points out that the investment industry has a vested interest in telling people that they need a high retirement income because the more money people save, the more money the industry makes.

Their estimates of how much retirement income is needed conveniently play down that in retirement, people's expenses are dramatically lower resulting in less required retirement income.

Most retirees have paid off their homes and no longer have children to support. And because retirees don't go to work, they don't spend as much on transportation, lunches, or clothing.

Malcolm Hamilton says, "Most Canadians [and retirees in other countries] seem to be retiring with about 50-percent pre-retirement income and most of them seem quite satisfied with their financial circumstances after they retire." 

Regardless of all the articles out there about how many older Americans and Canadians will have to work in retirement, a recent US study shows that most American retirees are doing okay without a job. Just as important, 85 percent of those surveyed in 2013 liked the word "retirement" itself to describe their current lifestage. The study is summarized in the article What Retirement Crisis?  We Are Doing Just Fine

A recent (2014) study by David M. Blanchett, director of retirement research for Morningstar Investment Management, agrees with what other researchers such as Malcolm Hamilton have been saying for years. Blanchett, writing in an article called Exploring the Retirement Consumption Puzzle published in The Journal of Financial Planning, states that overall expenditures do decrease in retirement and don’t seem to increase throughout retirement at the rate of inflation, even though older people tend to have many expensive medical costs. The overall decrease happens even though some retirees spend a lot of money during the first years of retirement when they do some of the things that they have wanted to do in retirement.

Furthermore, a 2014 study by T. Rowe Price shows that not only are boomers enjoying their golden years, but they are doing it with less money than financial analysts thought possible. Surprisingly, spending less money doesn’t seem to bring less happiness into their lives.

More than half of retirees told the T. Rowe researchers that they are living as well or better than they did when they were working — and nearly two-thirds of retirees like not spending as much in retirement. They find freedom in not having to keep up with their neighbors. Interestingly, the T. Rowe researchers found that baby boomers still working and thinking of retirement exhibited more concern regarding retirement, voicing worries about having to drop their standard of living or running out of money.

Another 2014 retirement study, this one by JPMorgan Chase & Co., found that until Americans hit their latter retirement years, when health care expenses tend to go up, they spend far less than 85 percent of their pre-retirement income. Even 70 percent number of preretirement income is high when averages are studied.  Spending in the US peaks at 45, then declines in every category of consumption except health care. Overall spending (accounting for inflation) falls about 30 percent from age 45 to age 75.  The T. Rowe Price study found that nearly three years into retirement, American retirees are living on an average 66 percent of their pre-retirement income.

You can check out more details of the T. Rowe Price study and the JPMorgan Chase & Co. study at the article Baby Boomers Are Loving Retirement on Less and the Fortune article You May Be Spending Less Than You Think During Retirement.

NOTE: See The Retirement Quotes Cafe Website for great retirement quotations, some of  which have been placed on this webpage: 

Actual Retirement Income
of American Retirees
Following, according to a recent U.S. Census, is the total retirement income for American households age 65 and older:
•  Under $5,000 (2.4 percent)
• $5,000 to $9,999 (7.7 percent)
• $10,000 to $14,999 (13.3 percent)
• $15,000 to $19,999 (11.4 percent)
• $20,000 to $24,999 (9.3 percent)
• $25,000 to $34,999 (15 percent)
• $35,000 to $49,999 (13.7 percent)
• $50,000 to $74,999 (11.9 percent)
• $75,000 to $99,999 (6 percent)
• $100,000 and over (9.3 percent)
According to these statistics, about 24.4 percent of American retirees have a retirement income less that $15,000. Interestingly 44 percent of these retirees have a retirement income of less than $25,000 and 59 percent have a retirement income of less than $35,000 per year.
On the other hand, about 15 percent have incomes greater than $75,000.

Also Check out: Why you will likely need less in Retirement where you will find the following figures for why Americans spend less in retirement.

Household Incomes and Expenditures

According to Age Group


25-34 years old

35-44 years old

45-54 years old

55-64 years old

65-74 years old


Pretax Income







Average yearly expenditures







Meals at home







Meals outside the home







Housing Exps.







Clothing and services







Car Expenses & Other Transp.







Health care














Books, reading














Pensions and Social Security







Personal taxes








The Key to an Adequate Retirement Income

The key to a happy retirement is to have enough money to live on, but not enough to worry about.
— Unknown Wise Person

Being happy in retirement is part of retirement planning and at least 80 percent of being happy in retirement is based on non-monetary factors.

As for the monetary factors, you have to take 100 percent responsibility for your finances. Even 98 or 99 percent won't suffice.

Whatever you do, don't count on the government or any economists for help. The financial crisis was created by their voodoo economics and pie-in-the-sky ideas. This was a recipe for how not to retire rich.

Go back to the basics if you want to have a retirement without money worries. The key is to spend less than you earn from your investments. If this doesn't work for you, ensure that you earn more from your investments than you spend.

Of course the ideal retirement plan is to retire rich but die broke!

I semi-retired when I was 32 years old and had a net worth of minus $30,000 (due to my student loans).

I have now been semi-retired for over 30 years and am well-off financially (even after having lost about $50,000 in the stock market) simply because I have taken 100 percent for my finances, expecting absolutely no help from governments or economists.

If you would like a carefree retirement, I would advise that you do the same.

The median income for Americans 65 and over was just $18,208 in 2008 — a quarter of them had incomes under $11,139, according to Patrick Purcell, an expert on older workers and pensions with the Congressional Research Service.

The average Social Security recipient age 65 and over receives just $12,437 in annual benefits, he said, and among individuals 65 and older who received income from financial assets, half received less than $1,542 last year.

How Much Do I Need to Retire?

"When to Retire" and "How Much Do I Need to Retire"

 According to the Financial Industry

"When can I retire?" is a another way of putting the stating the question "How much money do I need to retire?"

As a general rule, according to many in the financial industry, if your retirement savings are roughly 25 times larger than your projected withdrawal from your retirement portfolio in your first year, you are in great shape to retire (indeed, you are in better shape than most retirees).

The "25 times" Rule of Thumb

for How Much Do I Need to Retire

Here’s an example of the "25 times" rule:

Your total first-year expenses (including taxes) $60,000
Less income from Social Security or CPP ($12,000)
Less other income (part-time job, royalties, etc.) ($25,000)
Amount your savings must provide 1st year $23,000
Retirement Savings Needed $23,000 x 25 = $575,000

This simple rule of thumb is based on the assumption that your retirement will last 30 years. No doubt your situation will vary based on your lifestyle and how long you intend to work. For example, if you're planning to retire early and be retired for more that is than 30 years, your retirement savings should be larger.

Life Expectancy

One of the key elements of retirement planning is how long you will live.

Log on to Living to 100 to get your estimate.

Also see Retirement Calculators on the How to Retire Happy Website


 How Much Money to Retire Image  

  "When to Retire" and "How Much Do I Need to Retire"

According to Thomas Stanley and William Danko

The authors of The Millionaire Next Door, Thomas Stanley and William Danko, recommend the following formula to determine if you are accumulating wealth at the rate you should be if you want a financially comfortable retirement.

Take your pretax income and multiply it by your age; then divide by 10 to get your expected net worth.

According to Stanley and Danko, if your actual net worth is greater than your expected net worth, you should have a comfortable retirement.

Of course, like most formulas, this one has at least one shortcoming. If you are 65, your income is $10 a year, and your net worth is $1000, the formula indicates that you are heading toward a comfortable retirement. Good luck!

If you want to retire happy regardless of your income, then you should read  How to Retire Happy, Wild, and Free 
"It [retirement] was absolutely boring. You can't go and say, 'I'm retired now. That's it!' It won't take long and you're really gone for good and someone throws the last shovel of dirt on a coffin with
your name on it. That's the moment you're really retiring — when you die."
— Ozzy Osbourne
What Sort of Legacy Will You Leave to Your Children and Grandchildren?

Will Any of These Be Your Retirement Story?

  • Retired at 60 and vegetated until he died at 68! 
  • Retired at 65 and watched 10 hours of TV every day for the rest of her extremely boring life! 
  • Took early retirement and lost all her retirement savings at the casino because she didn't know what else to do with her time! 
  • Retired early, got extremely bored, and then tried to return to his old job that he hated, couldn't get it back, found a job that he hated even more, and had to retire again because of poor health! 

It Doesn't Have to Be That Way!


The World's Best Retirement Book 

Retirement Plan Book Image can change your life forever.

Make the most important investment that you can  make for your retirement right now:

  Purchase How to Retire Happy, Wild, and Free  Today: Logo    How to Retire Happy on


Here are some quotes about money to help you answer these three retirement income questions:

  1. "How much money do I need to retire?"  
  2. "How much should I save for retirement?"  
  3. "Is 2 million enough to retire?" 


Quotes Relating to "How Much Should I Save for

Retirement" and "How Much Money Do I Need to Retire"

This may come as a shock to some, but if you really want to get rich,
the first thing you need to learn is how to spend money — or NOT spend it — as the case may be. And what with national consumer debt and bankruptcy numbers reaching ball time highs in the U.S. in 2008, it's apparent that there's more than just a little foolish spending going on.
— Rosalind Gardner

By the time I have money to burn, my fire will have burnt out.
— Author Unknown

Most people will never be able to retire and maintain even a hotdogs-for-dinner standard of living.
— Timothy Ferris, author of The 4-Hour Workweek

My retirement investments are diversified. Blue lottery tickets, yellow lottery tickets, green lottery tickets, red lottery tickets ...
— from Glasbergen cartoon

A gold watch is the most appropriate gift for retirement, as its recipients have given up so many of their golden hours in a lifetime of service.
— Harry Mahtar

The sports car and sailboat are investments for my retirement. I'm using them to attract a woman who supports me in my old age.
— Glasbergen talking to financial consultant


"How Much Money Do I Need to Retire" Resources 

1. Retirement Income Resources on the Retirement Cafe

2. Retirement and Money on The Money Café: This website gives you free financial advice on how to make money, how to save money for retirement, and how to spend your retirement savings wisely. If you follow the advice on The Money Cafe website, you will have a happy retirement — both financially and psychologically

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A gold watch is the most appropriate gift for retirement, as its recipients have given up so many of their golden hours in a lifetime of service.
— Harry Mahtar

The requirements for successful retirements
are, of course, simple to map out: Begin saving earlier in life, set aside larger
percentages of your pay, invest wisely in low-cost funds, avoid debt, pay off
your mortgage, defer Social Security to boost payouts, and work past traditional
retirement age to make sure you don't run out of money. Stay healthy, too, so your medical expenses don't eat you alive.
We might as well complete this fairy tale by advising you to make sure you find a job with a traditional pension, and
to only work for employers with AAA credit
ratings and great health insurance.
— from US NEWS

Sometimes it's important to work for that
pot of gold. But other times it's essential to take time off and to make sure that your most important decision in the day simply
consists of choosing which color to slide
down on the rainbow.
— Douglas Pagels  

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How to Retire Happy on


How to Retire Happy, Wild, and Free on


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Everyone needs a reason to put their shoes on in the morning [when they retire]. If you put on the slippers, you'll end up
dragging your feet all day.
— Norma Fagan


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 The Joy of Not Working on 

Whatever the challenge of a new age, in the end what really counts is not the years in our lives but the life in our years. It is not about longevity, but the depth of life. Long ago I learned that age does not wither the mind if people remain positive. No one is too old to set another goal or to dream a new dream. It is a mind game. As Churchill suggested, "The empires of the future are the empires of the mind."
— Singapore Retiree Jennie Chau



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