How much money do I need to retire?
- Sep 13, 2024
- 2 min read
The short answer is that you need to subtract your estimated annual income sources from your estimated annual expenses and divide the result by 4%.
How to get to these numbers?
How to Get to These Numbers?

Step 1: Estimating Your Retirement Expenses
My number is 120K per month.
Essential Living Costs: Housing, food, transportation, healthcare, insurance, debt, and utilities.
You can check the living expenses in the place where you want to retire or calculate your current expenses.
Lifestyle and Discretionary Spending: Travel, hobbies, entertainment, gifts, and any planned major purchases.
Consider Inflation: Inflation typically increases costs over time, usually around 2-3% annually.
My Estimated Expenses:
I live in Prague, and our current expenses are around 89K per month.
If I factor in 3% inflation over the next 10 years, my expenses are estimated to rise to around 120K per month.
Step 2: Identifying Your Retirement Income Sources
My number is 0 per month.
Pensions: Include any pension income you might receive.
Investment Income: Consider income from rental properties, dividends, or part-time work.
Step 3: Calculating Your Required Retirement Savings
My number is 36M
The 4% Withdrawal Rule is a common guideline that suggests you can withdraw 4% of your retirement savings annually without running out of money for at least 30 years. To determine how much you need, divide your annual expense gap by 0.04.
My Estimated Investment Amount:
Estimated monthly expenses: 120K * 12 months = 1.44M yearly estimated expenses.
1.44M ÷ 0.04 = 36M.
If I want to retire in 10 years without additional income sources, I need to have 36M invested so I can spend 120K per month.
If the number seems overwhelming and unattainable now, focus on smaller steps. Instead of planning for full financial independence, aim to cover your food expenses from your investments.
My next financial goal
My goal now is to pay my mortgage from my investments. Applying Kaizen approach helps divide overwhelming goals into small steps and helps progress, instead of abandoning the goal.

What Should You Invest to Cover Essential Expenses?
