​How much money is enough?

How much you need to earn, save and invest to afford your immediate expenses and 25+ years of unemployment during your old age is fairly simple to calculate.
Use the formulas we provide in the calculator below to get a rough estimate of your requirements. The numbers are based on a retirement age of 60, which is when doctors say the infirmities of old age begin to assert themselves and our biological capacity to compete for high incomes begins to diminish.

After making the calculation, it should become clear why it is necessary to learn how to produce annual incomes between $400k and $4m with the strategic knowledge we offer.
To calculate your Capital-at-Work Requirement, you need to (#1) know the Standard of Living you require or desire to live a good life throughout your retirement, or old age. This is the amount of annual income your investments need to generate for you and your spouse to afford the goods and services required every day for 25 years. The minimum is $120,000.

(#2) Multiply your Standard of Living by 25. This is the average number of years of retirement for which your capital must produce income. The result is the amount of money you need to have saved in passive investments now to afford your Standard of Living, if you were to retire today.

The actual Capital-at-Work you will need to maintain your Standard of Living throughout your retirement depends on the number of years remaining until you reach age 60. You have to adjust for inflation.

To (#3) account for 3% annual inflation, choose the multiplier that most closely matches your current age. Use the multiplier to calculate (#4) your Capital-at-Work Required by Age 60.


​Now calculate your Savings Gap – the difference between what you have and what you need.

(#5) Subtract your current Capital-at-Work, or savings, NOT including equity in your home or the value of your business, from your Capital-at-Work Required by Age 60.

This is the amount of (#6) additional money you need to save and invest by age 60 to maintain your Standard of Living (entered in step 1) and avoid going broke during 25+ years of old age.

Your Space of Possibilities is the number of years you have remaining to earn, save and invest enough money to bridge your Savings Gap before you reach age 60.

To calculate your Space of Possibilities, simply subtract your current age from 60.

Why is knowing this important?

There are 5 practical reasons why you require a certain amount of money before and after you retire.  Failing to earn, save and invest enough produces real, negative consequences to your and your family.
  1. ​Your fundamental human concerns are permanent. You will always need to eat. You always need medical care and telephone services available, even when you are not using them, and you always need transportation, housing, rest, play and social time.
    ​
  2. Prices for the goods and services you and your spouse require every day are set in the marketplace without regard for age or circumstances. If you don't have enough money to pay for them, you and your spouse will find yourselves forced to live without them, which you might not be able to do.

  3. Average inflation is 3% annually. You must expect prices to go up by that amount annually, which means your income must go up by that amount annually, too, or you won't be able to afford the goods and services you need.

  4. Average stock market returns are 8% annually. This is the maximum amount of growth you can plan for to help grow your savings over time.
    ​
  5. The maximum amount of money you can withdraw for income from passively invested savings when you retire is 4%.  This means, every $1m you save and invest will produce $40k in annual income.