The “easiest” variable to change is your monthly expenses.
So if I want to live on RM 5K a month, I’d need RM 1.8 million.Īs you can probably tell, the secret to early retirement is keeping your expenses under control, and having lots of investments.ĭepending how you adjust these variables, you can even fast forward your retirement date, for example: Here’s a quick formula to estimate how much investments you need:
“But what if I want a more luxurious life? And since we’ve already factored in inflation, theoretically you could go on like this forever: with a million bucks in the bank, RM 2.9K to spend every month, and never having to set an alarm clock again. You’re living purely on dividends and interest - truly passive income. The interesting thing: if your expenses never exceed RM 2,917 a month, you never touch your capital of RM 1,000,000. Assuming you’re not the type who eats lobsters for lunch, livable income for a lot of people. Your passive income = RM 35,000 per year RM 2,917 per month. Obviously not enough for anyone to retire on.īut let’s say you’ve saved RM 1,000,000 and again get inflation-adjusted returns of 3.5% per year. So for example, if you have RM 100,000 of investments, and get steady returns of 3.5% per year ( EPF-like returns minus inflation), that would mean your passive income = RM 3,500 per year RM 292 per month. Your passive income is more than your expenses How Much Money Do You Actually Need to Retire?
#Simple math early retirement how to
How to get there? Let’s dive into the math.Ģ.
The FIRE movement taught me you could actually FIRE your boss much earlier in life. I always assumed that everyone needs to work till they have white hair and back problems. What really blew my mind about FIRE was philosophically it had never registered in my mind that people could retire young. Do it when you’re in your 30s, and you can get featured on CNBC. Money, the cooler it is, because obviously who wants to say F U to their job only when they’re 60? Get there by 45, and it’s a pretty sweet life. Here’s seven things I think you would benefit from knowing too.įinancial Independence (FI) is this cool concept where you have enough money invested, that you don’t actually need to work anymore.Ī cruder way of calling it is having “F.U. And while I wouldn’t consider myself a FIRE advocate today (I’ll probably never retire myself), I’ve continued to learn from the FIRE movement over the years. From that point onward, I viewed my money and career choices in a totally different light. One MMM article I’ll always remember is “ The Shockingly Simple Math Behind Early Retirement.” “What, I don’t actually have to work until I’m 60? I can have this dream life where I’m still young, and do whatever the fuck I want till I’m gone?” It’s a growing group of enthusiasts all over the world who aspire to retire early, by saving and investing large amounts of their incomes. Money Mustache (MMM) is also widely seen as a leading figure of the Financial Independence Retire Early (FIRE) movement. In quite a few ways, he inspired me to write mine. Since then, he’s raised a son, worked on projects purely out of interest, donated hundreds of thousands to charity, and written a world-famous blog. Financially independent - he would never have to work another day in his life. In 2005, Pete Adeney, a 30-year old engineer retired from his day job.
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