How much money is enough money? I guess this comes down to your definition of rich. And like many other things in life, wealth is all relative.
I like the following equation:
Enough=that amount of money which allows you to live in a lifestyle you enjoy while working when you choose to work in a way that you enjoy
I also love this one: Rich is when you don’t have to set an alarm clock. While I LOVE not setting my alarm clock, this one is too vague for me. Only you can define “enough” for you!
Maybe “enough” is when you feel confident that you will be able to maintain your current lifestyle, or a better one, throughout your life. Speaking of which, have you looked at those numbers lately to see if you are on track for your definition of enough wealth?
Did you know that if you are:
50 years old with an annual income of $100,000, to retire at age 65, with 100% of your current income level, you will need a total of $2.7 million or $1.7 million in today’s dollars to retire at 65 years old.
This retirement calculation is based on living until age 90, which is a long time, but who would want to be unprepared? This equation assumes no other income, such as social security, but it’s also pre-tax “income”. While many retirement models (for lack of a better word) assume that you’ll need less money when you are retired, I certainly don’t know of anyone who wants to be poorer upon retirement.
Take 10 minutes now to decide how much enough is for you. If you happen to be married, this is a great conversation; it may be better over a glass of wine. Have your computer handy and you can do your own calculation at http://cgi.money.cnn.com/tools/saveyoung/index.html
Step One in the Financial Woman process to grow money is to figure out what you want; this is the essence of your personal “enough” definition. Do this first, then you can create financial goals to get it!