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Do You Need Two Million Dollars to Retire?

Do You Need Two Million Dollars to Retire?

By Billy and Akaisha Kaderli

Billy and I like to keep informed about the topic of retirement from the perspective of money managers and those in the financial fields.

Many of these pieces proclaim that you must save enough in your investments to throw off 80% of your current annual salary so that you can afford a comfortable life away from a job. Lots of them will say that you need $2 million in investments and woe to the person who thinks they can do it on less!

Approximately 10% of households in the U.S. have a net worth of one million dollars or more. We don’t think it’s realistic to expect the remaining 90% to meet this $2 million dollar mark, especially if they have not achieved their first million.

As you know, we have almost three decades of world travel and financial independence behind us. And while everyone’s idea of a perfect lifestyle sans paycheck is different, for almost-30-years, we have kept our annual spending around $30,000 or less.

The Secret: Living Within Your Means

In all of our years of retirement and travel, we cannot recall one retiree who regrets their decision to retire. In fact, most have told us that they wished they had done it sooner.

The Society of Actuaries (SOA) recently conducted 62 in-depth interviews of retired individuals across both the U.S. and Canada. These people were not wealthy and had done little to no financial planning. But the vast majority of them shared that they had adapted to their situation and live within their means. Meaning, they have basically adjusted their spending to the amount of money they have coming in every month.

So basically, it’s really that simple and this is why we say if you want to know about retirement, ask retirees!

It Doesn’t Have to be Complicated

In our books and in our articles about finance, we say over and over that there are four categories of highest spending in any household. We personally have made adjustments in all four of these categories and have therefore reaped the benefits of having done so.

The financial guys and gals will have you tap dance all over the place with investment products, and a certain financial goal you must achieve. They will press upon you the seriousness of this decision to leave your job for a couple of decades of jobless living. We say it doesn’t really have to be that complicated, but it’s very important to pay attention to these four categories.

Do You Need Two Million Dollars to Retire?

Listen Up

Housing is THE most expensive category for you to manage. 

It’s not just the house itself, it’s the maintenance, the property taxes, the insurance, and any updating you might want to do to a place where you are going to be living for years down the road.

If you want to rebuild that boat dock to the lake where your boat is parked during the summer, that takes money. If you are tired of the style of faucets, sinks, tile and tub areas of your bathroom and want to upgrade, that is a large expense. Now that you are retired and want a more modern kitchen, more counter space, better lighting, prettier cabinet covers – Cha-Ching! You are hearing the cash register tallying up the cost.

If you have a hot tub, an extensive garden, or if you want to build a deck to connect the house to the garden, or put in a koi pond… Well, you get the idea.

I understand that for some people, their home is their castle, and those homes are gorgeous and a comfortable place to stay. All we are suggesting is that homes will never say no to having money poured into them.

If you want to travel or to snowbird part time, then you will find yourself paying twice for housing – the one you have left in your first location, and the hotel or the vacation home in which you will spend part of the year.

If you are not vigilant, this one category will suck the life out of your retirement. We just want you to know that you have a choice.

Here are a few:

Downsizing in retirement is not a bad thing. Relocating to a state or country with less taxation is smart. You could move to an Active Adult Community where you might choose to own the land or lease it instead. A variety of social activities are offered in these communities and the maintenance of your front yard is taken care of in your lifestyle fees.

When you travel, try house sitting. Or take advantage of better pricing for apartments or hotels that rent for the month and include utilities, WiFi, and a maid. Airbnb is often less than a hotel room and you can live like a local instead of a tourist.

Do you know how much your home (including the taxes, insurance, and utilities) costs you per day? It is a figure that might startle you.

Transportation is the second highest category of expense. 

Now we realize that especially in the States, it is a bit more challenging to wrap your mind around the idea of not owning a car, or just having one for your household instead of three.

According to the latest AAA’s report on car ownership, in 2017, the average new-car payment was $504. This was only the interest on the loan, not the car payment itself. If you drive 15,000 miles a year, you need to add $200 to that figure a month, plus the amount of payment, averaging about $8,500 – $10,000 a year. So even if your vehicle is paid off, you are still paying for maintenance, parking, licensing, insurance, washing, and fuel. On average, that is $2,400+ per vehicle, per year.

Also in the category of transportation, if you decide you want to fly to an island for a vacation, you must add in the cost of the flight… and any boat trips you might take, and any taxis from the airport to your hotel, and the price of a car rental for the week or two that you will be vacationing.

It all adds up and it’s all a part of this category!

In your daily life, you might consider becoming car-free as an option, paring down to one vehicle, or riding a bicycle, walking, using public transport as often as you can, using a golf cart, utilizing Uber, or paying a friend to take you somewhere like your weekly grocery visit. These options are far cheaper than the amounts you see listed above.


Ah yes. Taxes can be sneaky things. It’s not just your income tax. It’s the tax you pay on your phone bill, gasoline, soda, alcohol or tobacco you use, and the hotels.

You can arrange your portfolio so that your monthly income is taxed at the capital gains rate. This is less than the income tax rate. You could consider giving up soda, alcohol, tobacco or any of the other items that are taxed separately. Or you might consider moving to a state that taxes you less.

This is a good area to examine in your annual expenses. It could be a large leak in the control of your finances that you are not aware of.

Do You Need Two Million Dollars to Retire?

Food, Dining, and Entertainment.

Track your current expenses. The amount you pay in this section of your annual spending will become clear to you. Are you counting that twice-weekly latte at Starbucks? How many times a week do you eat out? What do you do to entertain yourself? Sail? Play golf? Take several vacations a year?

We are not saying you can’t have fun or enjoy that macchiato or vintage wine. We are simply espousing awareness. If you knew what you were laying out for entertainment, does it make the happiness-to-money-ratio for you?

Summing it Up

We prefer to collect experiences, not things.

We have a great life, and it’s understandable that our style is not for everyone. If you focused on the above areas of spending and modified them, you could find “extra money” for your retirement.

When you track your spending, all of this becomes crystal clear to you – where your money goes and why.

Grab control of your finances! It will bring about a confidence and security for you that is priceless.

About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism, and world travel. With the wealth of information they share on their award-winning website, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on

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