In one poker game Recently, I heard one of the saddest things I’ve come across in a while: “$10 million is not enough to retire early.”
Mind you, we were all sitting in San Francisco, an expensive city, but one of its own the cheapest international cities in the world. So I get it, context matters. But I couldn’t shake how truly depressing that statement was.
No one at the nine-person table disagreed. Only one person questioned it before I stepped in and said what apparently needed to be said: $10 million is absolutely enough to retire early.
What struck me even more was that I’m pretty sure most of the people at that table weren’t worth anywhere near $10 million. Which made everyone sadder.
Can you imagine being 200 meters underwater, lungs burning, kicking and clawing your way to the surface, finally breaking into beautiful fresh air, and then declaring that it still isn’t enough? This is a tragedy.
People throw out big numbers without doing the math
Here’s what I think is going on. People hear “$10 million” and that sounds rich. Sounds like a number that buys you freedom. So they anchor in it without ever running the numbers. And because no one around them backs down, the myth just keeps growing. But because people listen too 20 million dollars$50 million and $100+ million, they suddenly think $10 million isn’t enough.
Let me back off.
If you have $10 million in investable assets today, you can park it in Treasury bonds and generate roughly $460,000 a year in essentially risk-free, state-tax-free income.
Can a family of four live comfortably on $460,000 a year while doing nothing to earn it? Of course they can. It would take truly spectacular financial ineptitude not to.
My family has lived happily on less than $460,000 a year since our son was born in 2017. Even after our daughter arrived and both children were enrolled in independent language immersion school that costs $90,000 a year combined after tax, we don’t even need $460,000.
We could live well on $100,000 less and not feel deprived for a single day. That’s still $30,000 a month.
A realistic budget for a family of four
To make this concrete, here’s a realistic annual budget I put together for a FIRE family of four living in an expensive coastal city with $360,000 in passive investment income. That’s a 3.6% safe withdrawal rate for $10 million in investable assets, which is reasonable. Many people who have taken early retirement are reluctant to retire on one 4% or 5% rate.so they can have a bigger buffer.
The two largest line items are $88,000 in private school tuition for two children and $32,000 in unsubsidized health insurance. Yes, those numbers are deceiving. But even with those ripe costs, the math works.
The house is paid off, as it should be for anyone serious about early retirement. There is room for vacations, charity and a comfortable life. If things get tight, you can cut all three and find more affordable tuition. Public schools are fine.
The point is, if you are generating $360,000 a year from passive investments and you never have to show up in an office to earn it, your life is objectively good. And if you ever need more, you can do some tips, get a part-time job, or make money from a hobby. Options don’t disappear just because you haven’t worked full-time.
Fortunately, at today’s risk-free rate of return, $10 million can generate $100,000 more than $360,000. That’s an extra $70,000 after taxes to do with as you please. This is not itching from. This is thriving!
The real problem is wanting more
So why can’t convince a single person in real life to actually FIRE?
It’s not math. The math is easy once you do it. Once again, it’s the desire for more, and more specifically, the desire to keep up with the people around them.
When you live in cities like San Francisco or New York, your peer group consists of tech executives, successful founders, and finance professionals who skew your base for “normal.” of houses get bigger. Cars become more beautiful. Private school waiting lists become more competitive. And suddenly $10 million starts to feel inadequate because you’re comparing yourself to people who are worth more.
Lifestyle inflation is insidious because it doesn’t look like inflation. It just feels like progress. It feels like you’re finally living the life you’ve always deserved. And by the time you realize the goalposts have moved again, you’re committed to a lifestyle that requires you to keep working.
Reaching $10 million should feel like winning
Achieving a net worth of $10 million sets you up almost in the top 1% of American families. The threshold for the top 1% is somewhere between $11 and $13 million depending on the source, so $10 million gets you close.
And yet people with $10 million still tell themselves it’s not enough. Meanwhile, people without $10 million is nodding in agreement. Everyone loses.
Once you reach $10 million, especially if most of it is in investable assets rather than related to main residenceyou don’t need to grind anymore. In bull market years with double-digit percentage returns, money starts working harder than you ever could.
Your $10 million will likely continue to grow
And here’s another thing. Even if you withdraw at 4%, your net worth will likely continue to grow given that historical returns are greater. In 10 years, at an 8% annual return, your $10 million would turn into roughly $21.6 million – more than double – even AFTER pulling in $400,000 a year all the time.
So if you’re lucky enough to reach that level, give yourself permission to enjoy it. FIRE doesn’t mean doing nothing. It means having the freedom to choose what to do with your time. That’s the whole point.
And if $10 million feels out of reach right now, that’s okay too. You can get away with a lot less with the right budget and mindset. Most people already can. They just haven’t done the math.
Do the math.
readers, Why do you think people with less than $10 million believe it’s still not enough to retire early? Have we been so thoroughly brainwashed that a net worth of 2% feels inadequate? And how much of that resentment comes from constantly comparing ourselves to people a rung up the wealth ladder?
For background, I retired in 2012 with about $3 million in net worth, equivalent to roughly $5 million today after adjusting for inflation. At the time it felt more than enough, and it turned out to be, thanks in large part to growing investments and the additional retirement income I earned along the way. What I can tell you from 14 years of experience is this: you will adapt. Financial needs and circumstances change and you will change with them.
Know exactly 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 actually have. Register for Growmy favorite free financial tool. I ran my 401(k) through its investment analyzer and discovered I was quietly paying thousands a year in unnecessary active fund fees.
I switched the majority of the portfolio to ETFs and have saved over $50,000 in fees since then. If you’re walking away from a job you don’t like while shelling out money on hidden fees, that’s a painful combination you can fix today for free.
This is also the last month I will be sending out signed copies of my USA Today bestseller, Millionaire Points. If you’d like a copy, sign up for a free financial review with Empower after you’ve tied up over $100,000 in investable assets. Full details and instructions are at this post.
