How Much Money Is ‘Enough’?

I recently read an interesting article that proposed a simple thought experiment. It poses, “How much money would you have to be paid, right here and now, to retire today and never receive another dollar of income (from any source) for the rest of your life? The catch this time is that whoever among the five players writes the lowest amount on the check will be paid that sum. The other four players will get nothing.”

It is a question that I have actually being thinking of quite a bit recently, as we are currently reworking the budget to accommodate rising property taxes and new savings goals.

We currently have a household gross income just over $50,000, as I work and my boyfriend is currently going back to school full-time. We’re better off the many, but the cost of living has been consistently outpacing my increase in income by 2-3% each year.

Last year, we had $43,000 remaining after state and federal taxes. After our aggressive contributions to savings and retirement accounts, we were working with $29,965. Running the numbers, and excluding retirement contributions, we are living relatively comfortably on under $30,000 per year.

$2,497 per month covers property taxes and HOA, appliance repairs, and tuition, utilities and bottom-tier internet, bulk toilet paper packs and discounted foods, medical treatment, car maintenance and fuel, PC video games and weekend road trips, and everything in between. We are comically frugal by necessity, using every trick in the book to secure the best value possible. Yet, we don’t feel any sense of lack.

I recently saw an article about a couple who make $350,000 a year and were just getting by, and it just blows my mind that a family with seven times my income could be struggling. The article suggests that “The country’s 10 percent really do feel strapped, and really don’t understand how much better they have it than the 90 percent below them.”

Having once been a broke college student, I honesty can’t imagine ever shaking the frugal-by-necessity mindset. Once you’ve learned how to effectively cut corners and stretch a dollar, it is a challenge to go back.

I personally think that budgeting should revolve around values. My boyfriend and I jointly prioritize health, experiences, and saving for the future. We’ve both had past health challenges, so we splurge on organic foods, vitamin and mineral supplements, and regular medical checkups. Quality time is a shared love language, so we try to incorporate novel experiences into our lives, sometimes at a nominal cost. Finally, we both hope to retire early, stay at home if we choose to have children, and take advantage of future anti-aging technologies. We have built up a substantial fuck-off fund, as well as a FOMO fund.

We saved aggressively to be able to afford to sleep on a Tempur-Pedic mattress, cook with stainless steel pots, and backpack with the highest-quality gear. The sacrifice is that we watch shows on a small 15-year-old television, wear hand-me-down clothing, and chose not to replace the water-damaged furniture in the living room (that we don’t use). It doesn’t feel like a sacrifice, though, because we have been so intentional with our purchases and lack thereof.

Ideally, it would nice to have some extra cash to perform some much-needed home renovations or travel out-of-state. However, it feels quite empowering to realize even our household income were not to increase much, we would be okay. $30,000 per year affords us the opportunity live a great life in alignment with our priorities and values.

How much money would you have to be paid, right here and now, to retire today and never receive another dollar of income (from any source) for the rest of your life?

With the average life expectancy of a female living in the US being 81 years old, that means I have approximately 49 years left. While $30,000 per year is doable, the budget is a bit tight so I would ideally bump that number to $35,000 annually. Calculating that out, if I were to receive $1,715,000, I would be able to retire and life a semi-comfortable life. $40,000 would permit seemingly endless freedom and luxury. I have a sneaking suspicion that even that number is a fair amount lower than the average response.

What the question does not account for is inflation and cost-of-living changes, which are huge factors. The amount of money in circulation has skyrocketed in recent years and the cost of housing and groceries continue to rise. Given the rapid deflation of fiat currency value, I worry that–unless adjusted for current market value–the number above won’t begin to come close to what I need to survive.

Semantics aside, I found this to be a fantastic thought exercise. It can be easy to get caught in the wheel of consumerism and dream about that large house, luxury car, or exotic vacation. This thought experiment forces us to cut away the natural impulse to aim for the stars (if you do that, you’ll bid too high and get nothing). When it comes down to it, most of us don’t really need as much as we think we need to feel secure and satisfied with our lives.

24 thoughts on “How Much Money Is ‘Enough’?

Add yours

  1. Less is more. Less quantity, more quality of life. Many folks have been caught up in the glitz and glammer of escapist entertainment, consumerism, and a life of ease/complacency. Folks are most alive being whole/one with mother Jord rather than stuck up in the ruch and frenzy of the modern world.

    Liked by 4 people

  2. Great post! My wife and I determined how much money we would need to retire assuming a 6% rate of return in retirement.

    Through saving, investing, and living frugally for two and a half decades, we accumulated the target goal. However, that was in 2012 when safe and guaranteed returns were less than 1.5% in the U.S.

    As result, we moved to a country in South America where we have been receiving 7.5% and 9.5% on two large CDs at different institutions. Since this exceeds our targeted rate of return, we’re able to save between $2,500 and $3,000 a month while living the lifestyle we want in retirement.

    I congratulate you on your financial commitment and savvy!

    Liked by 1 person

    1. Congratulations on setting yourself up for a secure retirement! It sounds like yours and your wife’s commitment and perseverance really paid off. 🙂 Thanks for stopping by and sharing your story! 🙂

      Like

  3. I wanted to say 5mil, because I think that number might give me a rather comfortable life, but after I read the bit about only the lowest number getting the money, I lowered it down to 2. It’s interesting to see that is pretty much the number you came up with. I would spend a chunk of it on a house that I wouldn’t have to worry about paying the mortgage for for the next million years. The rest, I would use sparingly. Nothing too crazy, but still in ways that I would enjoy life. You’re right – inflation might mess up those plans, which is why a part of the money would also need to be invested. The sad part is not there are people who have a lot more than 2 mil and either spend it on useless things or find it to be “not enough” and others will never have that amount…

    Liked by 2 people

    1. It’s so interesting when you add the caveat… if it was just any number, I would also choose closer to 5mil, more for the financial security that extra spending money. I have known many people making six-figures that would ask me to borrow (making 1/3 of their income!) because they had the fanciest cars, TV, clothes, vacations, etc. I truly wish personal finance were taught at home or in school, because so many people don’t have the slightest concept of money management. Thanks so much for sharing your thoughts!

      Liked by 2 people

  4. What an interesting question and a fascinating concept! My first thought right away was ONE MILLION DOLLARS! LOL but that’s also bc I’m a “just – in – case”… I’m always hoping for the best but expecting the worst! What if someone in my family falls ill, what if the housing market bursts again, what if what if what if…. I will need to think about this harder!! 🤔🤔🤔

    Liked by 2 people

    1. It really is a tricky question, yet so interesting to think about. I am exactly the same–always hoping for the best but expecting the worst! There are so many unknowns.. I want to be ready for anything, but not greedy.

      Liked by 2 people

  5. Interesting question, although I think it can not be answered. Simply because we have no idea what will happen tomorrow. What if the money stop excising? What if we go back to natural sources trading potatoes for rise? What if bitcoin takes over? Or something else… And we got our millions in the ‘bank’… haha, we would be so screwed 😀 But from this perception…I guess I would be fine with 6 millions aside 😀 (just in case someone’s sharing)

    Liked by 1 person

    1. I am actually in complete agreement with you. Fiat currencies across the globe are increasing unstable, if not already failing, so I could see a future of bartering goods and trading digital currency… a world in which the money in the bank would be near-worthless (such as in Venezuela’s 99.6% devaluation of the Bolivar). Great points! I’m personally hoping that bitcoin takes off, if only for the fact that there is a limited quantity which will hopefully make it a stable store of value. 🙂

      Liked by 1 person

      1. Hopefully not! If you’re at all interested in bitcoin, now is the time to do some research because it’s starting to take off. With large entities buying in, it’s becoming more secure and less volatile. It’s still a risk, but increasingly less so. I not trying to sell you on something you don’t want 😅 but I’m happy to answer questions or share resources I’ve found to be helpful. 😁

        Liked by 1 person

      2. This is an insightful information. Thank you for that 🙏🏿😁
        Even if you’re selling, it is fine. If nobody sells nobody will be able to buy, right ?

        Here, I’m selling tea 😁

        Anyone else? Let us know what you sell 🙌🏿

        Like

  6. I love that you put some thought into the question posed. How much money is ‘enough’ is a practical and bare question. I do not think a set number can be given, what with prices changing as rapidly as they do, but how you spend the money you do have makes a big difference in how much you value what you have and how you live.

    Liked by 1 person

    1. I completely agree with your sentiments–how we spend money makes a big difference in how much you value what you have and how you live. Even if the numbers are off (which they surely are, given changing prices), it’s a helpful exercise to consider values and priorities. Thanks for sharing your thoughts, Jaya! 🙂

      Liked by 1 person

  7. Love this post! So thoughtful. I came up with a number, but then I thought… what if the house gets destroyed? What if we get sick and have huge medical expenses? It’s hard to stop thinking so much about the what-ifs, and live in the now!

    Liked by 2 people

    1. Yes, you’re absolutely right! It’s hard to come up with an exact number because we never know how circumstances may change. Even if not completely accurate, it’s still an interesting exercise. 🙂

      Like

  8. I definitely agree. A humbling experience like this builds up the defence to say no to temptations. When I was away at school I really learned the value of managing and working with a smaller piece of the pie than usual. It’s definitely psychologically testing!

    Liked by 2 people

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