Written by Have you ever Googled, “How much do I need to retire?” If so, you’ve probably seen the number $1.7 million. That’s what most Americans say they need—but is that really true for you?
Let’s talk about what it actually takes to retire comfortably, based on your personal income streams and lifestyle. Because when you understand where your money will come from, you might not need as much as you think.
Why the $1.7 Million Myth Isn’t Your Truth
Everyone’s situation is different. Maybe you want to travel the world or maybe you want to spend quiet days with grandkids. Maybe you own rental property. Maybe you’re thinking about starting a small business. All of those things change how much you need to retire.
So let’s break down how to figure out your retirement number using the 7 income streams the IRS recognizes.
Start with Earned Income (Then Plan to Replace It)
Most of us begin with earned income—your paycheck. But retirement means replacing that paycheck. To do that, you’ll need to take what you earn today and invest it in income-producing assets:
- Real estate
- Stock market
- Business ownership
From these three asset classes, the IRS identifies seven types of income:
- Earned income
- Profit from a business
- Rental income
- Interest income
- Dividend income
- Royalty income
- Capital gains
And here’s a wild stat: 65% of self-made millionaires have at least three income streams. So let’s explore what it takes to build your own.
1. Rental Income from Real Estate
One of the best perks of real estate is leverage. Say you want to buy a $200,000 rental home. You don’t need the full amount—just a 20% down payment ($40,000). That property could bring in $2,000/month in rent.
Let’s say you do this three times. That’s $120,000 invested and $6,000/month in rental income. Add $2,000/month from Social Security, and boom—you’re at $8,000/month or about $100,000/year.
Plus, you can raise rent with inflation. And if you manage the properties smartly—or hire someone—you can maintain steady, passive income.
2. Profit from a Business
Have a skill people will pay for? That’s a business.
Let’s say you launch a simple t-shirt company for $20,000–$50,000. Sell shirts at $100 each? You only need to sell 83/month to hit $100K/year.
Or maybe you start a coaching program at $1,000 per client. Just 9 clients a month gets you the same $100K. If you have a premium service at $10,000? One client a month does it.
It’s not about price—it’s about value. Think of it like buying a Lamborghini for $10,000. It’s a steal because the value is so high.
3. Royalty Income
This is income you earn from an idea—without doing the day-to-day work. Think music royalties, books, or product licensing.
Example: the guy who invented the Super Soaker didn’t start a company. He licensed it. Now he’s made $70 million.
You could write a book, release music, or license a design—and if priced well, a $10 item just needs 830 monthly sales to hit $100K/year. It scales as you add products.
4. Interest Income
This is the safest form of income—think savings accounts, CDs, or government bonds. But the returns are low.
- A 2% yield means you’d need $5 million saved to earn $100,000/year
- A 4% yield drops that to $2.5 million
Safe? Yes. Efficient? Not always.
5. Dividend Income
Dividends let you live off the income from your investments—without selling them. Some pay 2%, others (like REITs) pay 8–10%.
- 2% yield = $5M needed
- 4% yield = $2.5M needed
- 8% yield = $1.25M needed
Watch for dividend traps though. Check:
- Payout ratio (keep it under 75%)
- Years of dividend history
- Consistency
Dividend Kings and Aristocrats (10+ years of payouts) are often safer bets.
6. Capital Gains
If you own something for over a year and then sell it, you earn capital gains. Think selling a rental property, stock, or business.
Example: You buy a home for $200K, sell for $500K = $300K gain. You can reinvest that money in a business, dividend stocks, or another property.
This isn’t recurring income like dividends or rent, but it gives you a lump sum to move into another stream.
7. Investment Income Strategy
Some retirees live off only the income their investments produce—rental income, dividends, interest, business profit—never touching the principal.
That’s how you build legacy wealth. And it shows you don’t have to hit $1.7M saved. You just need a smart strategy across multiple streams.
So… How Much Do You Really Need?
If you’re using:
- Only interest income: $5M+ may be needed
- Dividend income: $1–2.5M
- Real estate: potentially $120K if leveraged well
- Business or royalties: $20–50K to launch
It depends on where your income is coming from. If you’re just relying on the stock market, yes—you might need $1.7M. But if your money is working across income streams, you can retire on much less.
Let’s Make It Real for You
If your wheels are turning and you’re wondering how you can make this work, I want to invite you to our Worry-Free Wednesday live session.
Every Wednesday, I break down the five hidden risks of retirement and the three frameworks I use to help people retire with peace of mind.
You’ll discover:
- How to avoid running out of money
- How to manage healthcare costs
- How to create a lifestyle you love
–> Register here: https://obsidianwisdom.com/op/risk/
Let’s build your Wealthy Retirement together.
Until next time. Wisdom over Worry.
Dre Griggs
Image from: Freepik.com