When Is Enough Money Enough? A Simple Step-by-Step Guide

The less-well-known problem hits people on the higher end of financial success — not knowing when enough is enough.

One Surprising Problem

If you’re a successful professional (or on your way to becoming one), you’re probably working far more than is healthy for you. You may not be taking the time to be with your family, taking vacations and recharging, working out, or simply taking some well-deserved down time.

After thinking about it for a while, here’s how I define when enough money will be enough for me: it’ll be when I can live on what I’ve accumulated, no matter how long my retirement is, without eating into the principal.

My Definition of Having Enough Money

How to Calculate the Dollar Amount of Your Personal “Enough” Point

Here’s my simple, step-by-step guide on calculating the above point in actual dollars:

The simplest way to estimate your retirement budget is to take 100% of your current net income, and subtract what you set aside for savings.

Step 1. Estimate your retirement budget total

Step 2. Subtract expected income that’s not from your portfolio

Any income you expect to get in retirement that doesn’t come from your portfolio means that you don’t need to set aside as much.

Step 3. Add back enough to account for taxes

The exact amount will depend on where you live in retirement, and your personal mix of income sources in retirement.

You create a backup plan for making a bit of money in retirement just in case your investments underperform to the point that they don’t make 4% above inflation.

Step 4. Multiply by 25