How much is enough to retire?

There are many factors at play, of which the biggest is your age.

When we are young, < 50 yo, $1M is certainly not enough to consider retirement, when we are old >70 yo, $1M should be more than adequate for a single person.

Lets take the case of 2 couples both having a life expectancy of 85 years. One is a young couple at 40, and the other couple is 60 yo. Say both couples need an annual expense of $100k (for ease of calculation and comparison) in retirement. $100k pa is $8.3k pm.

For the young couple to retire at 47, they will have 38 years in retirement. With an annual expense of $100k, they will minimally need $3.8M. With inflation of 3% pa, they will need >$4M to support their retirement till 85 yo.

For the older couple, supposing they retire at 62. They will have 23 years in retirement. Of which they will $2.3M to support their $100k pa retirement lifestyle.

Here in lies the paradox. The earlier / younger you retire, the more you need to save for retirement but the less you tend to save / accumulate. The older you retire, the less you need in retirement, but the more you tend to save / accumulate.

My personal view is retiring at 60 is optimal. This will give you the opportunity to reap some of the benefits of the golden period of accelerated savings from the age of 50.

Our personal experience testifies to this. Before the age of 50, we were saving < $150k pa. From 50 yo onwards, we saw our savings climbing steadily year on year crossing $200k pa at 51 yo to $400k last at 56.

The last 6 years savings were critical to building up the bulk of our nest egg. If we work till 60, the contribution from the savings from 50 to 60 yo period would form 50% of our entire lifetime of savings!

This golden period of accelerated savings is not something to be missed!