How much money do you need to never work again

how much money do you need to never work again

Experts recommend the 4% rule—saving 25 times what you plan to spend in a year to never work again. However, the exact amount of money you will need to never work again will largely depend on your lifestyle, location, and dependents. 

We all dream of a life free of the stresses of work and money concerns. A life where we can spend our time how we wish without the burden of working for the weekend or toiling to the next paycheck. Many hope for this for themselves during retirement, which in the United States for the average person, occurs at age 64.1 While others may hope to achieve this even earlier. 

We spend hours researching passive income, investment strategies, and how much money you need to never work again because we want to be able to put our working days behind us once and for all. With the state of the economy in recent years, early retirement has increasingly felt like a seemingly elusive goal. And even, in some cases, timely retirement appears to be more out of reach than it was just a few short decades ago. 

If you have a goal to retire comfortably at an early age or attain a passive steady income that could transform your daily life from work-oriented to leisure-oriented, this could still be a reality if you are willing to put in a bit of effort now and reap the rewards later.

Is Early Retirement Less Attainable Than It Used To Be?

Before America fully recovered from the Great Recession of 2007-2009, the country was hit with the enormous economic blow of the COVID-19 pandemic. Understandably so, many Americans are more unsure than ever before as to when they will be able to retire and when they should start planning

The outlook might feel grim for those who were negatively impacted by the financial fallout of the pandemic and the recession before it. Yet, that does not mean that people have given up on their hopes. 

There is even an entire movement surrounding the aspiration of retiring as early as your 50s or even 40s to pursue passion projects or travel. The FIRE movement, which stands for “financial independence, retire early,” focuses its ideology less on the ability to stop working and more on cultivating the financial freedom to choose how, when, where, and for whom you want to work.

Being financially independent enough to never have to work again is a task that could require tremendous effort meaning more work upfront. But those who have already achieved financial independence in this capacity claim the effort to be well worth it, especially if one has ambitions for their life that go beyond the office. 

How to Never Work Again: Calculate the Money You Need

Suppose you would like to better understand how feasible this kind of financial freedom is for you. How exactly do you calculate how much money you legitimately need to never work again? 

Gaining enough wealth to stop working altogether cannot be boiled down to an easy one-size-fits-all calculation. There is no magic number of however many million dollars you can point to as enough for a nest egg; the closest you might be able to get is a rough estimate that may change over time.

The 4% Rule

A standard answer given by personal finance gurus when asked how much money one needs to save to retire is 25 times what you plan to spend in a year. This has been termed the 4% rule because most financial experts say that your withdrawal rate should not be more than 4% of your retirement portfolio per year during your retirement. 

To use this calculation, you need to determine what your average annual spending will be when you are retired. This number can vary greatly from person to person, and also unforeseen circumstances need to be considered in that average number, as well as taxes and healthcare costs that aren’t covered. 

Potential Issues With the 4% Rule

The 4% rule doesn’t necessarily apply as a catch-all as plenty of potential issues could pop up, leading you to a lump sum that isn’t accurate to your possible retirement needs. For example, your annual spending could be far from the average household, or what you expect to spend could change significantly when you are retired. 

In addition to differences in spending patterns, your investment portfolio could differ greatly from investments that work well with the 4% rule. Your asset allocation and market conditions could affect the accuracy of a 4% rule calculation. 

And finally, your retirement length could differ from the assumptions underlying the 4% rule. The 4% rule is built on the belief that your retirement will last 30 years. But this estimation could be way off base if you are retiring early or starting your retirement late.

Using Passive Income to Your Advantage

One of the best ways to gain financial independence and decrease the labor required for your living expenses is to create multiple passive income streams. Passive income allows you to have a steady stream of money coming in with minimal work. Here’s a breakdown of how it works: 

Investment Strategy Estimated Annual ReturnInitial Investment Required Years to Financial Independence*Notes
Index Funds (Stock Market)7%$1,000,00025Assumes a diversified portfolio mirroring the market.
Real Estate (Rental Income)5%$1,500,00030Assumes direct ownership of rental properties with steady rental income.
Small Business Ownership10%$800,00020Assumes owning a moderately successful small business.
Peer-to-Peer Lending4%$2,000,00035Higher risk compared to traditional investments.
Dividend Stocks 6%$1,200,00028Assumes a portfolio of high-dividend-yielding stocks.
E-commerce or Online Business12%$700,00018Assumes successful online business with scalable model.
Bonds and Fixed Income Securities 3%$2,500,00040Lower risk but lower return investment.
Hybrid (Mixed Investments)8%$950,00023Assumes a mix of stocks, bonds, and real estate.
*Years to Financial Independence is an estimate based on the initial investment growing at the estimated annual return rate until it reaches a point where it can sustainably support the individual’s living expenses indefinitely. This is a simplified model and does not account for factors like inflation, tax implications, changes in personal circumstances, or market volatility.
Disclaimer: The information provided in the above chart is for illustrative purposes only and should not be considered as financial advice. Investment returns are estimates and actual results can vary based on market conditions, investment choices, and personal circumstances. It is strongly recommended to consult with a qualified financial advisor before making any investment decisions to ensure they align with your specific financial goals and risk tolerance.

Dividend Stocks 

Dividend stocks, which regularly distribute a portion of the company’s earnings to investors, are an excellent avenue for passive income. Investing in dividend stocks typically have less returns risk than growth stocks and will diversify your portfolio by adding in different mixes of investment. 

Rental Properties

Investing in rental properties could set you up with long-term passive income that lasts you into retirement. Although you need to be positive you can manage the upkeep for long-term rental properties before deciding to earn money in this way, as there is a decent amount of costs and labor involved. 

If you’re not sure that investing in long-term properties is for you, you can try your hand at short-term rentals like renting out a room or using a platform like Airbnb. 

Peer-to-Peer Lending

Another passive income option is peer-to-peer lending. This involves a bit more risk but can result in substantial growth through the interest you charge. 

Several online platforms, like Lending Club and Prosper, match investors with borrowers who want an alternative to a traditional bank loan.

Best Tips for Saving for Retirement

Saving for retirement can seem like an incredibly intimidating task. Still, it can feel miraculously more manageable if you break it down into bite-sized adjustments you can apply to your daily life. 

There is a wealth of information out there about how to best go about retirement planning, far more than we can fit into one article. However, we can offer a few of the most common tips agreed upon by most experts.

No matter what age you are when you start your retirement planning, these strategies for wealth-building are recommended by most financial planners to ensure you have enough savings for a nest egg that will have you living comfortably when you hit retirement age:

Eliminate Your Debt

According to every financial professional you ask, it is a non-negotiable requirement that you pay off all of your debt before entering into retirement. And the sooner you pay off your debt before retiring, the better, as any of the money you put towards your debt can be rerouted to build on your savings. 

When you are early in the process of saving enough money for retirement, it’s essential to equally invest your efforts in both saving and paying off your debt. Your debt should not comprise the money you set aside for retirement spending. 

However, you should prioritize your high-interest debt, like bad credit online loans, over everything else, such as payday loans and cash advance loans. As the longer you take to pay it off, the more money it costs you. Once those have been taken care of, you can equally divide the money you save for retirement and spend, minimizing debt.

Adjust Your Current Budget

Having a comfortable retirement savings with ample annual spending money requires a fair amount of sacrifice in your current financial life. This is especially true if you wish to retire early. 

Contributing more money towards your savings and your investment portfolio means adjusting your current living expenses to spend more frugally so as to save more. You can get creative with how you cut down the money you spend on monthly expenses on transportation, household utilities, food, and housing costs. 

You can also put more money aside by increasing your income through side hustles or high-return investments. You could even do this through various forms of passive income, some of which you could keep going once you stop working in retirement. 

Invest Wisely

Investment income could be the thing that makes all the difference in your quality of life in retirement. Investing in the stock market can be intimidating for most people. Still, if you start early enough, you can take your time to get comfortable with the stock market to better understand how you might want to use it to your advantage for wealth building. 

Once you feel more familiar with the stock market, you can begin to buy stocks in greater quantities and make moves to develop a portfolio large enough to provide you with enough money to never have to work again. 

Take Advantage of Any Workplace Plan or Match

If your workplace offers any kind of retirement plan or company match on contribution, you should save as much as the amount the company is willing to put forth. 

To get the most out of your plan, contribute as much money as you are allowed to your 401(k) or 403(b). Taking advantage of your company match makes it possible to double your contribution without added money or effort. 

Use Retirement Savings Tax Credits

When filing your income taxes, be sure to claim retirement savings tax credits. If you are a lower- or middle-income taxpayer, you can claim up to 50% of your retirement plan contributions as a tax credit. 

The current income limits for this tax credit are $51,000 for heads of households and $34,000 for single filers and married couples filing individually. 

Open a Roth IRA

If you qualify, open up a Roth IRA and put as much money as you are able towards that every year. This will maximize your savings as contributions to a Roth IRA grow entirely tax-free, and the growth is exempt from capital gains tax. 

Adding any kind of IRA account to your personal finance toolkit could make a difference in your net worth once you hit retirement age.

A Comfortable Retirement Is Worth the Effort

Realizing how much money you need to never work again can be intimidating to say the least. It might feel like a far-off goal that will be a struggle to reach. But, as with most things in life, acquiring however much money you need to retire is all about consistency and discipline. 

If you watch what you spend and focus on building long-term wealth, you should find yourself in good shape when the time comes for your retirement. Financial freedom can be a reality in your life if only you are willing to put in the effort to get it. 

FAQ: How to Never Work Again

What role does starting a business on my own  play in achieving financial independence?

Starting your own business can be a significant step towards financial independence. It allows you to be your own boss and potentially create a profitable business. With the right business ideas and execution, your business can provide residual income, contributing to your financial success.

How can I estimate the yearly income needed from investments to never work again?

To estimate the yearly income needed, first calculate your annual expenses, including any additional costs you anticipate in retirement. Then, using a safe withdrawal rate (commonly 3-4%), determine the investment amount needed to generate this income annually. For example, if you need $40,000 per year, you may require an investment portfolio of around $1 million to $1.33 million.

Are mutual funds a good option for building wealth to retire early?

Mutual funds can be an effective way to diversify your investments and reduce risk. They offer exposure to a variety of assets, which can be crucial for long-term wealth accumulation. However, it’s important to consider fees and choose funds that align with your risk tolerance and retirement goals.

Can passive real estate investments contribute significantly to retirement savings?

Yes, passive real estate investments, such as real estate investment trusts (REITs) or crowdfunding platforms, can provide a steady stream of income and capital appreciation. These investments can be less hands-on than traditional real estate ownership, making them a viable option for those seeking to accumulate wealth without the complexities of direct property management.

How effective is a high-interest savings account in helping me reach financial independence?

While a high-interest savings account is a safe place to park your money, the returns are typically lower than other investment vehicles. For long-term goals like financial independence, higher-yield investments may be more effective. However, such accounts are excellent for building an emergency fund or saving for short-term goals.

What are some innovative ideas that could help me retire early?

Innovative business ideas often involve solving a unique problem or tapping into emerging markets. Consider technology-based solutions, eco-friendly products, or services catering to niche markets. The key is to identify a demand and offer a solution that’s not only profitable but also scalable.

How can I balance the need to save money with the desire to spend money now?

Achieving a balance requires creating a budget that allocates funds for both savings and discretionary spending. Prioritize saving a portion of your income for retirement, but also allow room for reasonable spending on current needs and wants. This approach helps maintain a sustainable and enjoyable lifestyle while working towards financial goals.

What strategies can I use to ensure my business provides residual income?

To create a business that provides residual income, focus on scalable and repeatable revenue models. This could include subscription services, digital products, or leveraging automation. The goal is to build a system where the business generates income with minimal ongoing effort.

Can being my own boss accelerate my journey to financial independence?

Being your own boss can potentially accelerate financial independence if your business is successful. It offers the flexibility to direct your efforts towards highly profitable ventures and make decisions that align with your financial goals. However, it also comes with risks and requires careful planning and management.

What are some tips for young entrepreneurs aiming for early financial success?

For young entrepreneurs, it’s important to focus on learning and adapting quickly. Invest in self-education, network with mentors, and be open to pivoting your business model as needed. Manage finances wisely, reinvest profits back into the business, and always keep an eye on long-term financial objectives.

Key Takeaways With CreditNinja

Most people want to retire from the workforce early, and with some smart money management that may be possible for you too. Knowing how much really depends on how you want to live when you retire and is an important factor to think about. To learn more about retirement savings, investing, budgeting, and finances in general, check out CreditNinja’s blogs.


  1. The Average US Retirement Age: Where Do You Stack Up? | Yahoo Finance
  2. The 4% Rule: How Much Money Do You Need to Never Work Again? | Money the Simple Way
  3. How Much Money Do You Need To Never Work Again? | Life Outside the Maze
Read More
how to get rid of late payments on credit report
You can only get rid of late payments on a credit report if there was a credit reporting error or fraud—which can be done through…
missed payment for car repo
While missing just one payment may not do severe damage to you as long as you are able to contact your lender and cover the…
struggle meals
Looking for the best struggle meals available? Sometimes eating healthy when you are on a budget seems like an impossible task. Instead of getting extra…
Credit Score Simulator Paying off Debt
A credit score simulator is a tool that can show you an estimate of the impact of your actions on your credit, actions such as…

Quick And Easy Personal Loans Up To $2500*