See how easy it is

If your 31 I guess simple and naive answers are best. The following is a quote from a blog by two 30 somethings who “retired” and travel the world on $40,000, or maybe not exactly.


Now, the skeptical people in the crowd will probably want to know “What kind of witchcraft/sorcery is this? Tell me EXACTLY how this whole thing works”. And kudos to you for that healthy dose of skepticism. As an engineer, I’m a HUGE skeptic too. So allow me to explain:

If you build a portfolio big enough to safely withdraw 4% investment income each year to cover your living expenses, you are essentially “financially independent” and no longer need to work. This is called “The 4% Rule“.

How big is that portfolio? To figure it out, simply take your living expenses (eg $40K/year) and multiple that by 25 (because dividing by 4%  is the same as multiplying by 25). So $40,000 X 25 = $1,000,000.

So if your expenses are $40K/year, once your portfolio reaches $1 million, you can retire and live off 4% of the investment income per year for the rest of your life.

But… if you’re flexible enough that you can live on less than $40K or if you’re planning to work part-time or a side gig after “retiring” from the 9 to 5, you can do it MUCH faster with way less.”


These folks seem to think dividends are virtually guaranteed, (and apparently tax-free) even in bad economic times dividends will fund their lifestyles. Good luck with that.

A couple each earning minimum wage makes $30,160. Poverty for two people is $17,420. Thirty-seven percent of all American households earn under $50,000 per year and yet a couple can travel the world and live on only $40,000 the rest of their lives. I wonder if they have considered with no earned income there will be virtually Social Security (in this example the couple is from Canada.)

Aren’t you envious? All you have to do is earn big salaries, live super frugally, no kids, save massive amounts and accumulate $1,000,000.

Makes you wonder why so many low middle income American families struggle from paycheck to paycheck when they could me hiking in the Alps.

Read more on this discussion in my article on MarketWatch


  1. Makes me want to get all my money away so that I can hike the Alps. (I wonder how they afford the cold weather gear. You usually don’t find that clothing at the thrift shop.) I know there are places in the US that you can live a lot cheaper than in the Northeast, but I often question that lifestyle. My utilities and taxes for my modest house would eat a quarter of that $40k. I also don’t want to eat rice and beans for the rest of my life.
    Also, they all seem to have side hustles to earn money.

    For those who want to try that lifestyle, good for them. I worked another 20 years and didn’t given up a thing.


    1. DWAYNE – I retired at 50, with a small military pension less than $15,000 per year. That has grown to $21,000 and with SS my retirement income is now 37,560. I live in Montana with cheap utilities, and no sales tax, my wife and i are able to save $12,000 per year. We spent the last 6 months traveling 10,000 miles through 18 states staying with family in OK, TX and GA. We eat out at least once per week and purchase anything that we want. But at 65 there are not really many wants. I just paid cash for a new $500 turntable, as I have over 300 LPs that i have purchased at yard sales, thrift stores and scored some new records when the local Hastings store closed. I now have more income than I ever had while working low wage jobs. Life is good and it is great to see my account balances go up each month.


      1. .

        I was a single mom. During my 30+ years of working full-time, I only made it to $40,000 towards the end of my career. With God’s blessings and my wonderful Depression era parents who taught me how to live well on a small budget and save for the future, I was able to buy a modest house, move to a nicer house [which is now totally paid off] and retire comfortably at age 55. My nest egg has continued to grow since retirement.


    2. .
      “” I know there are places in the US that you can live a lot cheaper than in the Northeast, but I often question that lifestyle. “”

      By the grace of God I am a native Texan [my family forefathers fought in the Texas War of Independence] and I would not want to live anywhere else. Texas has no state income tax, is business-friendly [fewer regulations than in liberal states] and allows anyone who is smart and willing to work the opportunity to advance and be successful.

      Btw… after New York, California and Florida…. Texas is number 4 with the most billionaires. Texas also has more than 650,000 millionaire households. More importantly, that money buys more here in Texas.


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