CNNMoney.com recently posed that question among a random sample of people and financial advisors. Most people based their answer on an overarching objective of having enough money so that they would not have to work. Individuals said that would require anywhere from a couple thousand dollars a month to a billion dollars. Advisors put the range at between two and twelve million in savings.
One very important point came at the end of the piece: “Some people can make a million a year, but be spending a million and a half. They are not rich.”
While “rich” can certainly be defined in non-financial terms (great relationships, health, etc.), I agree that the strictly financial definition of rich is being free from the necessity of paid work. Even though I enjoy what I do and never want to fully retire, the reality is that health issues prevent many older people from earning income. So, it’s wise to work toward the goal of having enough money in savings and investments to provide for our needs in our later years. How much of a nest egg that would require depends on your spending habits, which brings up questions about needs vs. wants. For more on that, read the next article. But before you do, I’d like to know how much money you would need in order to feel rich?
Thanks for all the comments, everyone.
Andy, reminds me of the famous John Wesley quote about making and giving all you can.
My wife and I sometimes have fun thinking about this. We usually feel like we’d need about $2 million to not have to work. But then we talk about all the people in ministry we’d want to support. We realize we’d want a lot more money! Then the conversation starts going the other way- how long can we work and make money to help support the mission of Christ?
I feel that to have enough would be to have all my debts and my childrens debts paid for. Have insurance auto and health, have food in the cupboard, and gas in my cars. If I was to put a money amount on top of that I feel that Paul has nailed it with $750,000 that is drawing interest.
About 30X our current gross income would make us feel rich. That would be enough to draw about 120% of our present salary with little risk. No, our lifestyle would not adjust up, we’re ready to downsize.
With a house that is paid for, kids through college and an adequate pension, $750,000 drawing interest and dividends would make me feel rich.
Two million in savings.