Personal Finance

Many people say that $8-10 million is the perfect number for early retirement but I'll always have the desire to work - when should I pull back?

Christy Bieber

Published: January 23, 2025 7:19 pm

Retiring early requires saving up a generous nest egg to support yourself — but how big does that nest egg really need to be?

This is an issue a Reddit user is currently pondering. The Redditor is hoping to pursue a lifestyle called FIRE, which stands for Financial Independence, Retire Early. He believes many people targeting early retirement aim to save $8 to $10 million. However, he’s not sure setting that goal makes sense for him because he plans to “retire” but to continue working in some capacity.

So, the big question is, what number should he target if he believes his financial independence will involve doing work that brings in at least $50,000 annually?  Should he incorporate this planned future income into his retirement projections, or should he aim for the $7 to $8 million goal despite the fact he is not planning on permanently giving up his job any time soon? 

You need to make a personalized plan for early retirement

To get more context about whether the Reddit user’s plan is good, it’s helpful to take a deeper dive into his financial numbers.

The original poster (OP) is 35 years old, and he believes he’ll be in good shape if he saves $7 million. He’s married, doesn’t have kids yet but might have them in the future, and expects to hit his $7 million target at 42. Once he has his goal number and is “financially independent,” he wants to work part-time as a teacher and advisor. He thinks this will be fun and he expects his part-time work will earn him a minimum of $50,000 per year. 

The good thing is that he acknowledges having kids will change his financial trajectory, so he won’t be caught off guard by the financial earthquake that’s going to hit his life if he decides to have a baby. However, where he’s making a mistake is in focusing on what others typically save while making decisions about his own pull-back date. Specifically, he mentioned that he sees others talking about that $8 to $10 million target but thinks he won’t need that since he’ll have his $50K in income coming from the fun jobs he’s doing. 

The thing is, it doesn’t matter at all if most people want $7 or $8 or $10 million. That will not impact whether the OP can save less due to his plan to work. What matters is whether his actual income can cover his spending needs — regardless of where that income comes from.

The OP needs to do the math to figure out how much money $7 million would bring him. At a safe 3.7% withdrawal rate, it should provide $259k in annual income. So, if he can live on that amount, he’s in good shape and he can move forward with pulling back from work. 

Should you take all income sources into account?

The other big issue the OP is grappling with is whether to count the income he thinks he can earn as a reliable source of income in retirement when deciding if he’s ready to quit his job. That’s a little trickier to address. If the OP reasonably believes he can make $50K for the foreseeable future, then it makes sense to take that into consideration when deciding whether to partly retire once he has $7 million. 

However, he does need to think about the fact that this job may not last forever, though. He may become too old to work someday, or job opportunities could dry up. So, he should work with a financial advisor to ensure his retirement investment income can support him for life before he decides to give up his current work opportunities. 

His advisor can help him to better assess the long-term impact of his choice and can work with him to ensure that giving up his job for a slower pace life doesn’t lead to financial regret.