How much do you need to be “Set for Life”?
According to various surveys referenced on my site, you probably feel you need a fair bit invested to be “set for life”.
So, I wondered, what is that for you?
How much do you need to be “Set for Life”?
How much is enough?
We’re all told to save, invest and stay invested for the long-term.
Easy to say, hard to do of course but sound advice all the same.
Assuming you devised a retirement income plan and stuck to it, most of us will reach a point whereby we want to spend what we’ve worked so hard for – in retirement during our asset decumulation years.
Many years ago, I wrote about our goal to own a million dollar + investment portfolio not because it’s a nice round investment number (although it is) but because at the time we believed the income derived from this portfolio value (excluding workplace pension values; excluding government benefits paid to us in the form of CPP and OAS) should be enough to cover most expenses with some part-time work.
You can refer to those comments in a post I wrote 7 years ago here.
According to these references on my site, some Canadians believe they will need this much:
Do you need $1 million to retire?
Do you need $1.54 million to retire?
Do you need $1.7 million to retire?
Can you retire with $1 million in your RRSPs? A free case study for anyone close to age 65.
Do you need $1.54 million? That’s the recent BMO study data from early 2025. (Source: G&M)
And also from a few years ago on my site, during the end of the pandemic cycle from 2023, I referenced another BMO study “…found that Canadians believe they will need $1.7 million to retire, up 20 per cent from 2020 ($1.4 million).”
Some of things could be true and none of these things could be true for you and your family…
I continue to believe it all depends on what you intend to spend and when. I’ll link to my free retirement income planning playbook at the end of this post for your free income planning reference.
How much do you need to be “Set for Life”?
Part of the inspiration for this post arrived from Of Dollars and Data:
This subject…
“…started a firestorm on financial Twitter. Some people argued that $2M at 23 was clearly not enough to be “set for life”, while others claimed that it was. So, which is it?
The answer is…it depends. Unfortunately, financial debates like this are incredibly nuanced and are based on what kind of assumptions you make. As the saying goes, “The devil is in the details.”
I can’t imagine having $2M invested at 23 (I might have had $230 invested at this age!) but I could imagine owning a $2M investment portfolio at 53 would be very, very, very good for most!!
(understatement).
So, for some quick fun, I ran some very simple and rough projections in FIRECalc – how “set for life” you could be with $2M investment portfolio assuming no debt.
This also assumes no government benefits (although some like Canada Pension Plan (CPP) and Old Age Secuirty (OAS) would apply to most Canadians as they age) and this assumes you wanted to start spending about $75,000 per year from that portfolio and never look back.
How “set for life” would you be?
It varies of course. These are just simulations. But generally speaking, the odds of being “set for life” are in your favour of course.
The younger you are the more chance for epic disaster with a 70-year investing and spending timeline vs. generational wealth, although the latter could absolutely happen! That portfolio could grow into the tens of millions even with a lifetime of spending due to very favourable, compoudning returns.
The older you are, there is a higher possibillity you are indeed “set for life” but your wealth won’t grow as much because time is just not on your side.
Notes:
- Don’t try to follow any individual line in the charts below – that’s not the point. The objective below is presenting the information in a snappy visual so you can see the forest from the individual trees/lines. The “success rate” with $2M invested at any age is very, very good. It’s a LOT of money, people.
- Your spending is adjusted for inflation. Used U.S. CPI inflation for spending default.
- Used same portfolio mix for all age scenarios below: 75% stocks / 25% fixed income.
- Of course life moves in all sorts of spending lines. I’m sure you might spend more or spend a bit less in any given year to make your portfolio last and besides, this monte carlo stuff assumes you just keep spending from your portfolio aligned to inflation. You don’t make any variations which is highly unlikely over 30, 40, let alone 70-years of spending.
- Basically this a test using the “4% rule” since 1871.
Source: FIRECalc on my Helpful Sites page.
Age 23 – with a 70 year timeline:
Age 33 – with a 60 year timeline:
Age 43 – with a 50 year timeline:
Age 53 – with a 40 year timeline:
Age 63, well, no problem….not point in showing; you get the idea, especially if just OAS is factored in on top. You’re fine folks. 🙂
How much you need to retire or spend in your lifetime will vary widely and of course be as individual as you are. There is no set amount and no desired age for that amount. “It depends”.
While I would not rely on any of these guidelines for your detailed long-term planning (I would get a comprehensive financial plan done or some low-cost financial projections done), some rules of retirement income planning thumb are quick jumping off points for you:
- You might be spending 60-70% of your final working salary to start retirement.
- You should have saved up/invested at least x10 times your final annual salary to start retirement with.
- Take your annual retirement expenses and multiply them by 25 / Rule of 25 to see if you have enough.
- Take your annual retirement expenses, multiply them by 1.5 for ample buffer, then multiply that by 20 to arrive at your “enough number”. (e.g., $75,000 per year x 1.5 x 20).
- Take your portfolio value today and use the “4% rule”: assume you withdraw 4% of your portfolio every year, adjusted for higher inflation every year, and that should last 30 years to avoid running out of money based on historical data with a 50/50 stock/bond portfolio.
In Nick’s post:
“Having $2M at 23 seems like the ultimate form of career freedom, but having $2M at 45 doesn’t. But it’s exactly the opposite. The older person has less time to consume their resources, so they should have more career freedom, all else equal. Of course, if that 45 year-old has a family to support and much higher costs, then all else isn’t equal, but you see my point.”
In closing, I personally believe $2M is a bundle of money at any age – my goodness.
That amount of money would likely open up many financial possibilities that most folks would largely dream about.
How much do you need to be “Set for Life”? Need Help?
To help you out:
Here are the steps I took and what you can consider too: My Free Playbook to Retirement Income Planning:
I’ve produced dozens of free retirement income case studies here too:
I run low-cost projections here for all DIY investors at any age.
Happy saving and investing.
Mark
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’ve reached financial independence. Now, I share my lessons learned for free on this site. Find out what I did and how I reached financial independence to tailor your own path. Join the newsletter read by thousands.
