In a poker game recently, I heard one of the saddest things I've come across in a long time: “$10 million is not enough to retire early.”
Mind you, we were all living in San Francisco, an expensive city, but also one of the cheapest cities in the world. So I get it, context matters. But I couldn't shake how sad those words really were.
No one at the nine-person table disagrees. Only one person had ever asked it before I went in and said what needed to be said: $10 million is enough for early retirement.
What really struck me was that I'm sure most of the people at that table didn't deserve anywhere near $10 million. Which made everything sad.
Can you imagine being 200 meters underwater, lungs on fire, kicking and punching your way to the surface, finally breaking out into good fresh air, and still saying it's not enough? Lokho kuyinhlekelele.
People Throw Big Numbers Without Doing the Math
Here's what I think is happening. People hear “$10 million” and it sounds rich. It sounds like a number that buys you freedom. So they stick to it without using numbers. And because no one around them backs it up, the legend keeps growing. But because they also hear people with $20 million, $50 million, and $100+ million, they suddenly think $10 million isn't enough.
If you had $10 million in investable assets today, you could park it in Treasury bills and generate about $460,000 a year in risk-free, federally tax-free income.
Can a family of four live comfortably on $460,000 a year while doing absolutely nothing to earn it? Yebo babengakwazi. It would take a surprising amount of financial failure not to.
My family has lived happily on well under $460,000 a year since our son was born in 2017. Even after our daughter arrives and both children are enrolled in a private language immersion school costing $90,000 a year combined after taxes, we don't need anywhere near $460,000.
We could be fine with $100,000 less and not feel deprived for a day. That's still $30,000 a month.
A Realistic Budget for the Fiery Family of Four
To put this into concrete, here's a realistic annual budget I put together for a FIRE family of four living in an expensive beach town with $360,000 in investment income. That's a safe withdrawal rate of 3.6% on $10 million in investable assets, which makes sense. Many people who have retired early are always reluctant to withdraw even 4% or 5%, in order to have a large buffer.
The two biggest line items are $88,000 in private tuition for two children and $32,000 in unfunded health insurance. Yes, those numbers are shocking. But even if those costs are baked in, the math works.
A home is paid for, as it should be for anyone who is serious about early retirement. There is a place to rest, charities, and a comfortable life. If the going gets tough, you can decide on all three and find an affordable school. Public schools are fine.
The point is, if you're generating $360,000 a year in passive investments and you don't have to show up to the office to earn it, your life is obviously good. And if you ever need more, you can do consulting, take on a part-time job, or make money from a hobby. Options don't disappear because you stop working full time.
Fortunately, at today's risk-free rate of return, $10 million would generate $100,000 more than $360,000. That's an extra ~$70,000 after taxes to do with as you wish. Lokho akukona. Kuyachuma lokho!
The real problem is the desire for more
So why can't I convince one person in real life to LEAVE?
Akuzona izibalo. The math is easy once you do it. Again, it is the desire to expand, and especially, the desire to keep up with the people around them.
Uma uhlala emadolobheni afana ne-San Francisco noma i-New York, iqembu lontanga lakho liqukethe abaphathi bezobuchwepheshe, abasunguli abaphumelelayo, nochwepheshe bezezimali, abaguqula isisekelo sakho sibe “esivamile.” Izindlu ziba zinkulu. Izimoto ziba zinhle. Waiting lists for private schools are becoming more competitive. And suddenly $10 million starts to feel inadequate because you're comparing yourself to the most important people.
The inflationary lifestyle is tricky because it is not sensitive to inflation. It feels like progress. It feels like you're finally living the life you deserve. And by the time you realize the goalposts have moved again, you've committed yourself to a lifestyle that requires you to keep working.
Reaching $10 Million Should Feel Like a Victory
Reaching a net worth of $10 million puts you in about the top 1% of American households. The threshold for the top 1% is between $11 and $13 million depending on the source, so $10 million gets you close.
However, people who have ten million dollars still think that it is not enough. Okwamanje, abantu outside $10 million nods to compromise. Everyone loses.
Once you reach $10 million, especially if most of it is in investment properties rather than tied up in your primary residence, you don't have to grind anymore. In years of a bull market with double the rate of return, money starts working harder than ever.
Your $10 Million Will Probably Keep Growing
Nansi enye into. Even if you withdraw at 4%, your net worth will continue to grow if historical returns are large. In 10 years, at an annual return of 8%, $10 million will turn into about $21.6 million – more than double – even after withdrawing $400,000 per year throughout.
So if you are lucky enough to reach that level, give yourself permission to enjoy it. FIRE does not mean doing nothing. It means having the freedom to choose what you do with your time. Yilokho iphuzu lonke.
And if $10 million feels out of reach right now, that's okay too. You can retire on very little with the right budget and mindset. Most people already know it. Abakazenzi izibalo.
why do you think people under $10 million believe it's not enough to retire early? Have we been brainwashed to the point that the top 2% doesn't sound like enough? And how much of that dissatisfaction comes from constantly comparing ourselves to people above us on the wealth ladder?
I retired in 2012 with about $3 million, which is about $5 million today after adjusting for inflation. At the time it felt like more than enough, and it turned out to be, mostly because of the investment growth and additional retirement income I was getting along the way. What I can tell you from 14 years of experience is this: you will fix it. Financial needs and circumstances change, and so will you.
Know Where You Stand Financially
If you're debating whether $10 million is enough to retire on, the first step is to know exactly what you really have. Sign up Empowermy favorite free financial tool. I ran my 401(k) through an investment analyst and discovered that I was quietly paying thousands a year in unnecessary fees to active funds.
I switched most of the portfolio to ETFs and have saved over $50,000 in fees since then. If you're grinding away at a job you don't like while bleeding money from hidden funds, that's a painful combination that you can fix today for free.
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