How Much Do You Need To Retire?

““We are all special cases.”” – Albert Camus (1913-60), La Chute

I had a lunch meeting today in a casual seafood restaurant overlooking the ocean. Caribbean music played quietly in the background. A soft breeze came through the open terrace we were seated on. Somehow, the conversation drifted to retirement.

It is amazing how many people share a single vision of the perfect post-career lifestyle: waking up late, playing golf or tennis, enjoying a nice lunch, and spending the afternoon in much the same way.

Guess what? It’s probably not in your future. Why? Well, even if you work long and hard enough to afford it, you will almost certainly be bored by leisure. (I know you don’t believe me, but I can show you plenty of evidence: testimonials by dozens of businessmen I’ve known who retired, found themselves bored, and went back to work.)

Maybe you will be the exception. Maybe you can walk away from a lifetime of creative, challenging work and be happy to idle away the rest of your life.

I retired when I was 39. I had just sold a $135 million business, and I spent a year and a half “kicking back.” But my version of kicking back required a full-time executive assistant and a large personal office. I was just as busy as ever – had just as many challenges, frustrations, rewards, and disappointments. The big difference was I wasn’t getting paid for it!

Which brings me to the question of money – the second big reason your retirement will probably be different than you imagine.

Living the Fantasy Lifestyle Is Expensive

Even if you find a relatively cheap place to do it in, playing golf or tennis all day and dining at fine restaurants costs a lot of money. And the mandatory first-class travel? As they say in Little Italy, “Fahgedaboutit.”

That kind of living will cost you approximately a quarter million dollars a year.

What Would It Take to Have That Kind of Money?

Let’s see what kind of retirement nest egg you will need to fund a quarter-million-dollar retirement lifestyle.

Assuming your retirement fund can earn 9% a year (which is about equal to the long-term stock market return), you’d need $2.8 million.

If you go for a safer yield, let’s say US Treasuries, your retirement fund would have to be about $4.2 million.

And that’s liquid. I’m not counting the value of your house, your furniture, your collectibles, etc. Since you can’t earn income from those “illiquid” investments, you can’t really count on them for your retirement planning.

To have $2.8 million to $4.2 million liquid, you would probably need to acquire a net worth of about twice that – all other things being equal.

Not too many people are worth between $5 million and $10 million when they retire. Yet many, many fantasize about a retirement lifestyle that requires that kind of net worth.

If Your Current Financial Situation Is Meager, Don’t Despair

Accumulating wealth is just another goal . . . like learning to ski or play the piano. It will take you time (1,000 hours to become competent at it and 5,000 hours to master it), but you can definitely do it. And I’ll be happy to help you along the way.

In the meantime, there are ways to bring the target a little closer. The best way – by far – is to find a retirement paradise that is less expensive than the USA. If you can enjoy living in some other part of the world, you can definitely get that great retirement lifestyle for a lot less money.

The Good News Is This: There Are Places Where Living Well Doesn’t Cost As Much Money

My own retirement Eden is a beautiful hillside property overlooking the Pacific Ocean in Nicaragua.

Don’t shake your head at Nicaragua. It’s a great country, beautiful and full of potential. The “instability” that existed 10 and 20 years ago is gone. It is a little-known gem . . . and that is why I like it.

I am about to start construction on a retirement casa there . . . on top of a hill above a dramatic, pink beach along the Pacific Ocean.

The community is private. My ownership entitles me to the beach club and many other amenities. It’s a short drive to Granada, a very old and very charming city where I can dine at nice restaurants, dance in the town square and visit local art galleries.

I plan to spend long weekends there, sitting on my porch, the Pacific Ocean stretched out below me, finishing my latest (massively successful) Hollywood screenplay.

My cost? For the land, I paid $22,000. I’m going to pay another $48,000 to build a two-bedroom home, complete with a huge open-air living room and a built-in pool.

Water and food are dirt-cheap, and I can hire a housekeeper for $5 a day. A gardener and a handyman are equally inexpensive.

This property is a 20-minute copter ride from the capital city, which is a two-hour hop from Miami. It is available via a highway (now being rebuilt) and is considered right in the middle of the country’s next real-estate market.

I may finance the house over five or 10 years. Done that way, it will cost me about the same as a car lease. Or I may pay cash as I go. It’s that reasonable.

Whether I sell it for a profit in five years or hold on to it and move there some day, I can’t say. But it’s nice to know that it’s there for me . . . now and when I really want to escape.

(By the way, if you are interested in becoming my neighbor in Nicaragua, take a look at or call Barbara Perriello at1-800-926-6575 to arrange a tour of the area.)

I began today’s message by suggesting that retirement – at least in the traditional sense – may be an illusion. I meant to tell you what I plan to do instead of retiring. How I plan to enjoy the benefits of the retirement dream without the risks and hassles. But I got carried away talking about my Nicaragua beach-side cottage. So on Monday, I’ll get back to the main point: how to spend the rest of your life living really well, without the hassles and stress of a full-time job.