Calculate How Much You Need to Save
Once the Kaderlis got the idea to retire early, Billy started crunching the numbers to see how much money they needed to invest to make it happen. “If you want to know how much money you need to maintain your lifestyle today, you need to figure out how much you’re spending and multiply it by 25,” he said.
They figured they could live on $20,000 a year. Multiplied by 25, that meant they would need to have $500,000 saved. Billy figured that amount would allow them to withdraw 4 percent annually — $20,000 — while the rest remained invested, continuing to grow and provide enough income for several decades.