# Here’s how much money you need to save to retire on a beach and play golf all day by age 40

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Stop spending, and start seriously saving.
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Flickr/lorilove

Retiring early depends on one essential variable: your lifestyle.

How much you spend today – and how much you expect to spend in retirement – dictates how much you need to save before you can live your best life on a beach or golf course somewhere far away from the office.

Whether your dream is to retire in your 20s, 30s, 40s, or 50s, there are plenty of successful examples for you to follow. But anyone who has managed to retire early knows the magic formula means having enough saved up so that you can live off your investment returns each year, without actually touching your savings.

There’s a simple way to calculate how much you’ll need to have saved up before you can retire. Take your desired annual retirement income, and divide it by 4% (the maximum amount you will withdraw from your savings each year to pay for your living expenses in retirement).

For example:

\$50,000 ÷ 4% = \$1,250,000 \$60,000 ÷ 4% = \$1,500,000 \$100,000 ÷ 4% = \$2,500,000

Then, you have an idea of how much money you need to save to create enough returns to finance your retirement lifestyle. To live on \$50,000 a year, you can see, you’d need savings of \$1.25 million. Take a look at the chart below to see how much you need for retirement income ranging from \$40,000 a year to \$250,000 a year.

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