How much do you need to retire?

How much do you need to retire?

How much do you need to retire?

How much do you actually need to retire? I have read several articles listing x, y and z expenses that you need to have for retirement. Most of the are adding up to ridiculous amounts of money. In the millions kind of amounts, 10’s of millions! Now, I would love to have 10 million sitting around but unfortunately, I would need to save beyond retirement to have that, or win the lottery (not that lucky I am afraid)!

All this retire early talk is fantastic and I get a little giddy thinking about it, so much so that I usually get up and start pacing every few minutes when I am writing these posts. But let’s get down to the nitty gritty number crunching and deal in hard facts and figures.

My yearly expenses

Currently, I am earning €42,000 a year after tax. I am averaging €2,000/month in expenses including housing (currently renting) and groceries which I outline here. This comes out to be €24,000 a year.

Therefore, I technically need a nest-egg* that will provide €24,000 of passive income each year. I am actually going to round this up to €25,000/year. But how can I be certain that my passive income will stand the test of time? Will it last if I plan to retire nearly 30 years before I am traditionally supposed to?

Drawing down safely

Using the 4% withdrawal rate, and my annual expenses being €25,000/year, my required nest-egg is:
€25,000 divided by 4% = €625,000

Great! I currently have €20,000 so only €605,000 to go. The sooner I get there, the sooner I retire!

How I imagine my retirement with my feet up in front of the FIRE

At my current savings rate of €1,500/month, compounding at 7% in the S&P index tracker, assuming no raises, no extra savings and no significant other who could possibly be convinced to join this FIRE life, I will be able to retire at 45, almost to the day! Plug your numbers here, when can you retire?

Of course, this entire plan revolves around the assumption that after retirement, I will never work or have any other form of income again. From reading the bloggers who have achieved FIRE, this seems to invariably not be the case, be it a hobby the becomes monetized, a blog that brings in cash monies or even getting a different part time job!

I am Steve, the author and owner of Fire-ishwhere I try to share my story and help people towards Financial Independence with small tips and tricks that add up. Follow me on Twitter at @fire_ish and on Pinterest. I am trying to grow my readership so if you enjoyed this post, please share it!

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    I'm 28 and living in Ireland. Only starting my path to Financial Independence, Retire Early or FIRE! Join my progress and please let me know your thoughts, suggestions or general comments!

    3 thoughts on “How much do you need to retire?

    1. First of all best of luck with your journey to FI. One practical thing to consider, in Ireland if you are a single male and have saved via a pension fund then you’ll be taxed 13% or so on a €25k p.a. withdrawal and will take home €21.9k (check out You would need €29,500 p.a. gross to receive €25k net :-/

      1. Good point! I have thought about it and trying to research around the tax on all these things. I was a little scared it was going to be capital gains tax of 33% but 13% is much more manageable. I’ll have a look at that site! Cheers!

        1. There are 2 cases here.

          Case 1: You’ve saved in a pension fund and withdraw a salary (must be 50 or older depending on type of pension). You will not get taxed on capital gains within the pension fund or dividend income within the fund but you will get taxed when you withdraw cash (e.g. 13% quoted above).

          Case 2: You’ve saved in your brokerage account with post tax income and invested this. You will be taxed capital gains tax of 33% on any gains and also 51% tax on dividends income (given your current salary level) but you don’t get charged tax on withdrawals from the fund. Think about it, you can transfer to/from your brokerage account without incurring any taxes right now. It’s no different when you’re early retired.

          Check out my latest blog post on pension savings vs investment savings

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