Saturday, November 13, 2021

How Much Is Enough?

How much money is enough to be happy, to live and to retire? I have heard the quote below many times over the years and it seems to be the thought of most humans regardless of how much you have. 

John D. Rockefeller, the founder of the Standard Oil Company, the first billionaire of the United States of America and once the richest man on Earth was asked by a reporter, “How much money is enough?” He calmly replied, “Just a little bit more”.

I think of how many times over the years that I have thought that the next raise will allow me to save or spend a little more and will make life easier. I quickly adjust to the extra money and it becomes the new normal. I was in the mode of "Just a little bit more". I have read many studies and articles that say more money doesn't affect your happiness once you reach an income of around $75,000 a year. Most of us think that a million dollars or a billion dollars would make us so much happier. I would at least like to give the billionaire lifestyle a try just to see if the studies are right! The studies show that at $75,000 your basic needs are met and you have enough for leisure activities to make you pretty happy. 

One study says that after $75,000 happiness is increased at a smaller degree with increase in income but that you reach peak emotional well-being at $95,000 and peak life satisfaction at $105,000. While much higher than the average income of US citizens it is definitely obtainable for the middle class. Studies also show that the level changes depending on where you are in the world. People of New Zealand need $125,000 for peak happiness while people of the Caribbean only need $35,000. I would guess this also would apply to how you grew up here in the U.S. If you grew up in poverty, I would think that an income of $40,000 would make you happy and that if you grew up in a wealthy family, even an income way over the $105,000 would not make you happy at all. 

As I get older, my thoughts on happiness have changed. I think the younger you are and just starting out in a career and life, the more you think money and material things will make you happier. You look forward to that new furniture, new car, first new house, etc. and it does make you happier for a little while. Then the furniture gets scratched, the car gets up in mileage and the house is not as big as you need and the happiness fades away. As I get older, I find happiness in being with friends and family, sipping coffee on a cool rainy morning, reading a good book, enjoying a vacation. I have read that things we experience are much better for happiness than things we buy or own. I agree with that whole heartedly. So, get out there and "do" rather than "get".

This moving target of "how much is enough" applies to retirement savings. You hear numbers thrown out all the time such as a million dollars, or ten times your salary and many other benchmarks. There is so much information out there in the world on how much you need to retire and how much to withdraw each year. There is information on where to invest and what your portfolio percentages should be. My advice is, if you aren't already retired, is just to follow the old saying "save as much as you can and start as early as you can". Retirement nest eggs are much like the income needed for happiness in that it all depends on multiple factors. There is no perfect number for a satisfying retirement. Some may want a retirement that requires a smaller income and some may want to sail around the world in a new sailboat and require a much larger nest egg.

How much house is enough? The average American home has increased by an average of 1000 feet since 1973 and the living space per person has doubled in size. The average size of a new home today in the US is about 2700 square feet. Today's homes are often referred to as McMansions. For those of us who are retired, we are at the age that we remember smaller childhood homes vs today's larger homes. How in the world did my family (parents and 3 kids) get by with one bathroom back in the day? 

"How much is enough?" can apply to about anything in our lives. It can apply to money, material things, exercise, food, alcohol, etc. All have a limit, that once you exceed can have a detrimental impact rather than a positive impact. I routinely exceed my limit of sugar and carbs and the extra weight will impact me negatively with eventual health problems if I don't drop back down to the "perfect amount" range. 

How much is enough for you? Has your idea of "enough" changed over the years? If retired, did you reach the number that you needed to get to the retirement you dreamed of? Did you obtain a McMansion and later downsize in retirement? Have you exceeded the "perfect amount" range in some aspect of your life that has led to a negative impact?


  1. How much is enough is an interesting concept. When I was young I thought I needed a new outfit (along with shoes) for every occasion. Eventually I figured out that no one cared about my clothes but me, and I started to become more minimalist.

    1. I think most of use did the same thing when we were younger. Most of us wanted the latest shoes and clothes that were popular. Way to go on your minimalist lifestyle!

  2. I remember reading about the 10 times your salary rule when I was thinking about retiring, and it turned out to be irrelevant. Most of my salary was divided between the mortgage payment and savings. Now that we know longer have a mortgage and aren't saving anymore, we need way less money to enjoy retirement. Plus, we're not really into "more stuff."

    1. For some, retirement does result in less costs. Mortgage is a big item and if you can retire without one, you are way ahead when it comes to costs. Other costs that may be eliminated could be parking and commute expenses including downsizing to one car if possible. Thanks for the comment.