What is your number? Part 1

So I have been doing a little thinking as of late, and I was curious how much is enough to retire. I have always been the nerdy type running numbers in my head on a plethora of different scenarios. Some of them require a whole shit tonne of money, others not so much.

I always hear of the general 4% rule, which dictates that you will withdraw 4% of your money from a savings account typically in vanguard funds. So if you could add up a years worth of expenses times that number by 20 and that is how much you will need to retire today.

Example if you have 25,000 in expenses/year you will need 625,000 to retire properly. Now you might have to factor in small changes that will happen in your life, but you can always re-do the math. If you pay off your car, your yearly expenses might drop to 22,000 or if you pay off your house it might drop to 10,000. Making this not so linear of a thing and you will have to delve down and do the math.

I think there is actually even better ways of doing this, especially if you live up here in canada we have a thing called TFSA Tax Free Savings Account and I am getting a rate of 5% paid out monthly without taxes on it which if my expenses/year were hypothetically 25,000 I would only need 500,000 in retirement, which is a bargain compared to the 650,000 and that is only a 1% difference.

Always a fun time talking about retirement, and this is barely even scratching the surface.