How Much Money Do You Need to Retire, and What Variables Need to Be Considered?

How much money do you need to retire, and what variables need to be considered?

Any useful links that can help determine a dollar figure?

I have thought that if you have enough money invested, and it pays a sufficient return to cover all living expenses, you can retire at any age.
As long as income sufficiently surpasses expenses.
But I would like to hear about variables that are wise to consider.

Thank you everyone.


  • +3

    Depends on what age you're retiring at.

    • +4

      if you have enough money invested, and it pays a sufficient return, can't you retire at any age?

      • +1

        Yes, but define "enough money". That amount is variable based on age.

        • +34

          OP - All you need to work out is how much you spend per year.

          Here is mine, this is what i downloaded off my bank CC in excel format. Does not include rent/mortgage payments

          Subscription (Netflix, Disney) 274
          Food 10218
          Alcohol 1050
          Dogs (Dog Food, Vets, medication) 4458
          Gift 8556
          Eating out 3563
          Clothes 1052
          Entertainment (Movies, Bball) 385
          Energy(Internet, Water, Gas, Elec) 5934
          Insurance (Health, Cars) 3270
          Transport (Car, Rego, Train, Fuel) 7362
          Health 5688
          Reno (Bunnings / Mitre 10) 19562
          Holidays 774
          total 72146

          So, using 4% rule (withdrawal rate from investments to cover expenses), i need 72146 / 0.04 = $1.8m
          I did not include rent/mortgage payments… but on the flip side i spend 20k on renos last year.

          • +36

            @hothed: $8k on gifts 😂

            • +3

              @brendanm: Probably should have called it "other", its a bit of a dumping ground. I've just reviewed the data and there is 3k for mattress and frame in there..

              • +10

                @hothed: Also including $20k of renovations in there is stupid, unless you plan to renovate every year for the rest of your life.

                • @brendanm: As stated, I haven't included rent/mortgage repayments, which adds 2600/month, or an extra 30k/yr onto the calculations.
                  I'm not planning to have the house paid off when I retire am financially independant at optimistically at 45 or pessemistially 50.

                  • +4

                    @hothed: The it would have made more sense to exclude the reno costs, and include mortgage costs.

            • @brendanm: Could just be political “donations”.

            • +7

              @brendanm: Ive got a birthday coming up…

            • @brendanm: We all know what those gifts are lol

            • +1

              @brendanm: Sponsoring those lovely young lasses on OnlyFans is classed as "gifts"

            • @brendanm: Cheap side chick at $8k…

          • @hothed: You need to factor in general inflation on goods and services and hyperinflation on services like insurances (health, car, home, etc) as a minimum.

          • +1

            @hothed: that 4% rule is a bit old, and is using historical data about stock returns.

            The current expectation is that you have to go down lower - like a 3% or even a 2% withdrawal rate.

          • +2

            @hothed: I don't know how old you currently are, but as you get older, more health issues start to creep in, thus spending more money in that area

          • +6

            @hothed: 72k in a year?

            Am I living like a peasant or are other peoples expectations too high?

            Surprised I'm the only reply shocked by your reply.

            • +1

              @Mysterious: Others have already pointed out that they included "gifts" at $8k and "renos" at $20k which shouldnt be there or at least be spread out over a number of years.

            • @Mysterious: You're just a pleb

              • +2

                @KLoNe: Just curious, how many people can afford to spend $72k a year after tax? Not many. I think it's a bit unrealistic. I think the expectations of people living in western society are far too high. You can very easily get by on $30k a year as a retiree assuming you have no mortgage or rent commitments.

          • @hothed: Did you only put a weekly figure for alcohol?

          • @hothed: That's waaaaaayy more than my annual salary.

            • +1

              @squall3031: I forgot to mention these costs are for a couple (and 2 dogs!). We have two incomes to support this (and the additional 31.2k/yr mortgage that was not included).

              I just made this post as an example of how to split up your costs and an easy way to download your costs into excel to sort them for those reading.

              To work out your FI number, you need to use a forecast, and track against your forecast with actuals (project mangement 101). I have tried to assist by providing my actuals from last year. There are lots of variables that change year in year out.

              The actuals dont take into account lumpy expenses. Eg. Baby, big holiday, replace fridges/other appliances, home maintenance, car replacement/major service, home purchase, etc

              And to those asking, I will always include reno costs in MY FI number, as I like to renovate things. I've spent 15k in the last month on the house (not included in the above) on carpet(3.5k) blinds (4k), floors (7.5k). Doesnt include the 6k of aircons i bought a few months ago either. But that is relevant for me, and might not be relevant to you.

              I haven't posted everything. I have an excel sheet that tracks my income expenses and investments.

      • +5

        You are correct. Age doesn’t enter in unless you rely on drawing down capital
        You need to understand your appetite for risk and factor in variable rates of return.
        There are a few forums about on early retirement.
        ‘Enough’ by John Naish is also worth a read.
        If you have enough to go early, consider it retiring from other peoples priorities to develop your own interests, rather that years of bumming around ( itself a worthy ambition IMHO)
        More power to you. 💪
        I retired a couple of years ago, but if I had my knowledge now and my time again I would have retired far sooner…. 😊

        • +4

          What is it that you know now, that would prompt / enable you to retire earlier?

          • +9

            @freakatronic: 3 things. First is that apart from some key purchases to set up for the longer run (vehicle, solar and battery) we find we don’t burn through money as fast as we thought.
            Second. My wife was upset to see our account shrink spectacularly about this time last year. She started really looking at the stock market and after a while started trading. Slowly went through almost day trading blue chips and now has settled to an easy system of buy, hold and occasionally sell. Has slowed up to avoid paying tax.And is learning all the time.
            She had time to do this because we retired together, would not be so likely to happen if we were still working.
            Third. I had prostate cancer, got on to it early and it is now pretty well resolved. But it definitely brings home that our time on this wonderful place is limited, not to be wasted on other people’s business if you can avoid it.😁
            The real take home is that if you can stop putting your energies into someone else’s interests, you may find your own interests that can support you quite well. If you can decide what is enough to let you do this you are on the way.

            • +4

              @saltypete: Thank you very much for taking the time to write such an illuminating answer. Best of health to you.

  • +9

    How long is a piece of string? Depends on your debts, mortgage, expenses, lifestyle, standard of living, desires, holidays etc… Do you want to retire and live self sufficiently on your own farm completely off the grid or have a jetset lifestyle exploring the world and all it has to offer?

  • +20

    25x annual expenses invested at 8% per year with a withdrawal rate of 4%.

  • +5

    Google FIRE and you’ll see plenty of links about ditching the rate race early and living sustainably. Noble sentiments but I’m just too glued to my creature comforts to go early.

    • +2

      And if you have any lifestyle changes, you are stuffed. And if you need to work again it will be more difficult to get a decent job with a 10 year gap…

      • +6

        I guess you could say there's potential to get burnt

        • +1

          why is nobody up voting this guy XD

  • +45

    The dude with $45m in crypto can't retire because he doesn't want to pay CGT.

    Just sayin'

    • Apparently taking a margin loan is the answer to that one, and it is a 1% non recourse (if crypto crashes they take your coins, sell it and even if they lose money you get to walk without responsibility)

      • +1

        what does this mean?
        Margin loan and 1% non recourse?
        "even if they lose money you get to walk without responsibility"?

        • +1

          We are taking about a guy on here who believes they can retire with their bitcoin.

          They take out margin loan to avoid CGT. The interest rate is apparently 1% and if bitcoin tanks the lenders can't ask them to pay the difference (non recourse) if bitcoin sold cannot pay back the loan. That is dumber than lending to the government at 1.5% for 10 years but apparently there is people out there.

          • @netjock: that's interesting. but where can he take a loan at a 1% interest rate?
            and then… yeah it's hard to see how he would not be exposed to a massive risk if bitcoin crashed

            • +1

              @kracken: Back to your question. The FIRE people believe it is 25x and 4% draw down.

              If you look at historical share market gains around 7% (dividends plus capital growth) if you need $35k then you need $500k of shares. If you have more I'd look to spend it down to below the pension assets test amount by the time you reach 80, no use holding onto a lot of money.

              For younger people <40yo I'd highly doubt the existence of the pension in the current form given the trends.

              • @netjock: but ma defined benefits. They can't take me imaginary money.

          • +1

            @netjock: Certainly no major bank is going to give him a non recourse loan. Don't know who is going to give him 1% either.

            Someone might do it if he truly has 45mln in BTC assets, but the LVR will be like 20% tops. The margin call undertaking will also be tight, so if BTC falls 40-50% they'll liquidate everything and take what they need (plus expenses) and he'll be stuck with a nice CGT bill and be out of the game when it rockets up again by 20% the next day lol.

            • @serpserpserp: Will he have to pay CGT if the bank liquidates his bitcoin though?

              • @cheng2008:

                Will he have to pay CGT if the bank liquidates his bitcoin though?

                Doesn't matter who sells it, a gain is a gain. In this scenario he just might have a smaller bill because BTC has tanked 40-50%. Assume he bought a very long time ago though.

            • @serpserpserp: Agree. You know people are talking bull when they believe they can find enough people with rocks in their head to give 1% gross rates.

              But they will try as long as they can to keep this crypto business going.

              One of the best is "bitcoin decentralises finance, gives access and empowers the poor". Poor people can't even afford a computer but some how they can afford bitcoin just not the computer to access those coins.

            • @serpserpserp: There are crypto lending platforms. No bank is going to give you a loan against Bitcoin.

              It's still early days, but people are doing this

              • @NMC:

                No bank is going to give you a loan against Bitcoin.

                I think you might find a bank to do it. (someone will give it a go) However the LVR will be so low and the fees so high and the T&Cs so restrictive it might not be worth the hassle.

                I think most banks view it as somewhat a foreign currency that is hugely volatile and in times of market stress highly illiquid. Unlike a foreign currency there is no regulation either. So from their perspective it can be hard to get their head around it being a "growth asset".

    • +6

      'Twould truly suck to only retire with $22.5m.

      • +3

        It's not even that assuming they have held them for over a year.

        Top tax rate 47%
        50% CGT discount = 23.5%

        Assuming 45 was all gains they'll be left with a cool: $34,425,000

        Actually more given tax free threshold, and brackets

        • hey deme do you have a link or reference for this?
          do you mean that capital gains tax is half of the top income tax rate, if you hold assets for longer than a year?
          I would like to read more about this

          • @kracken: That has been the CGT rule for a long long time. many a time I have had to hold onto some shares a little longer than I wanted to get them over the 12 month line before dumping them.

            • +1

              @gromit: Some people seem to have it in their head that they will get taxed roughly 50% of the gross sale value of their investment. I don't know where they get this idea from.

        • Plenty of ways to avoid CGT with Crypto. 45mil guy can't be that dumb. His post was just meaningless gloating.

          • @zeggie: wasn't it a thread about his "acquaintane" saying he had 45 mill? and complained about not getting any proof to back it up?

    • Says that person actually has $45m released capital gain. When they do their tax this financial year, do they have to paid 48% in one go ? I know a dude at work own 15k from ATO and he refuse to paid it at once, instead he let's ATO kept his tax return yearly.

  • +9

    The variable: how often you are checking ozbargain

  • +16

    It is about working smarter and being comfortable with less. I don't think I will ever retire completely, I like having a little bit of work to keep my brain active and give me purpose. But I resent the idea of a 9 to 5 or having a boss. I make a very modest income working online, investing what I can and enjoying life. Time is the most valuable resource we have and I don't need the latest iPhone or 60k+ car. If you spend and invest wisely you can live a good life without working too hard.

    • +6

      " If you spend and invest wisely you can live a good life without working too hard." that's good to hear. very encouraging.

    • What do you do with all your free time?

      • +1

        You don't know how to enjoy life in your free time?

      • +4

        I hate these sorts of comments. Too many people talk about how they'd be bored without a job. Good for you. You like your job. Not everyone does.

        • +3

          I like my job, but I don't understand it either. If I could retire today I would, I haven't been bored since I was about 5 years old

    • What do you invest in and how wise have you been in monetary terms?

  • +3

    A home of any sort and about $500,000 in cash/assets when you're about 65.

    That is what you need.

    • +1

      So pretty much anyone who owns a detached house in a major city could retire if they just moved into a cheaper house?

      • -1


        Because going from say a 2mln house to a 1.3mln house (keeping in mind stamp duty and other costs) is going to be a big lifestyle downgrade if you want to move into a detached house again. Probably need to move quite far away from your get something comparable.

        If you are ok with some townhouse/unit/apartment probably fine.

        • I think the problem with this line of thinking, assumes your needs are the same. You probably bought that 2mln house to be close to work/city. That may no longer be a priority, so you could get a comparable house.

          Plus, not everyone wants to maintain a yard and a garden, so as people get older, apartments sometimes become more attractive.

  • +4

    Depends if you are going to sit back and listen to talk back radio or play the pokies all the time in retirement.

  • +2

    If you have a budget lifestyle, you could retire with little at any age.

    If you have a champagne lifestyle, then you might need just a little more.

    Do what makes you happy, if you want to quit work so you can live your budget life without restrictions, by all means, go for it.

    If you want a luxury lifestyle, then work till your 65 or whatever retirement age is, and hopefully, you still have the energy to live your own life on your terms.

  • +1

    Barefoot suggest $400,000 for a couple or $250,000 single with fully paid house.

    • So a 22 year old with that could retire?

    • +16

      That's if you retire at 67 and can get the age pension

      • -15

        Pension bludgers.

        • +6

          They paid taxes for potentially 49 years and have been promised it all their lives so let em have it.

          • +2

            @serpserpserp: The taxes most people retiring today have paid wouldn't have even covered the cost of the services they received from the government while they were working.

            • +4

              @arescarti42: What's your point? Taxes are not an investment fund.

            • +2

              @arescarti42: People's perception of them paying more than they take is pretty normal.

              That is probably why the government should keep a hypothetical ledger for everyone and let them have access to it so they know where their money goes.

              It is common knowledge something like the top 20% of tax payers actually pay 50% of all tax revenue the government takes, everyone else is a net taker.

              I am not against taxing the rich but if you tax them enough they will leave and you'll end up having to raise the taxes on those poor people who wanted to tax the rich more in the first place.

            • @arescarti42: $20,000 on Tax x 40 year career = $800,000. Are you sure? Not to mention higher earners will be paying a lot more and covering those younger.

          • @serpserpserp: Its delusional to think the average person taxes, pays for the pension

            • @Baghern:

              Its delusional to think the average person taxes, pays for the pension

              Good thing I never said I thought that.

        • People who didn't get the joke which is basically you have dole bludgers therefore on the flip side you have…

        • Average worker pays 1.2 - 1.5 million dollars in tax over their lifetime.

          Do you think old folks get that much back in pension?

          • +1

            @Whomastadon: I think the point was, when you consider the services they got through their lifetime as well school, university, roads, hospitals, standing army, police force,etc. To say nothign of them usually requiring more of these services later in life.

            I'm not sure the persons claim above is true that most workers get back more than they give. But its not inconceivable.

            • @modiika: You know most people would like to get every cent back plus some more.

          • @Whomastadon: Depends which old folks you're talking about. Ex prime ministers get that back 10 fold.

            • @Mr Haj:

              Depends which old folks you're talking about. Ex prime ministers get that back 10 fold.

              Lucky there only 6 of them.

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