How Much Do I Need to Retire at 40? A Complete Guide

The Short Answer

To retire at 40, you need 25-30 times your annual expenses invested. At $4,000/month spending, that's $1.2-1.44 million. At $6,000/month, it's $1.8-2.16 million.

The range depends on how much safety margin you want. The lower end (25x) uses the standard 4% withdrawal rate. The higher end (30x) accounts for the extra decades your money needs to last.

Why Retiring at 40 Requires More Than Traditional Retirement

Traditional retirement at 65 means funding 25-30 years. Retiring at 40 means funding 50-60 years. That's twice as long, which creates two specific challenges:

Challenge 1: Longer exposure to market risk

Over 50+ years, you'll almost certainly experience multiple severe bear markets. Sequence of returns risk — the danger of a market crash early in retirement — has more time to compound against you.

Challenge 2: No Social Security for 22+ years

Social Security doesn't kick in until 62 at the earliest. That's 22 years of covering all expenses from your portfolio alone. Traditional retirees only need their portfolio to fully support them for a few years before Social Security supplements it.

The good news: historical data shows that a 3.5% withdrawal rate (approximately 29x expenses) has survived every 50-year period in U.S. market history. And you have a massive advantage over 65-year-old retirees: you can earn money if needed.

Your Number by Spending Level

Here are the targets for retiring at 40 using both the standard 25x (4%) and the more conservative 29x (3.5%) multipliers:

$3,000/month ($36,000/year)

Standard target: $900,000

Conservative target: $1,044,000

This is Lean FIRE. Requires intentional living — smaller housing, limited travel, cooking most meals. Very achievable in low-cost-of-living areas or abroad.

$4,500/month ($54,000/year)

Standard target: $1,350,000

Conservative target: $1,566,000

Comfortable middle ground. Covers a modest mortgage or rent, groceries, a car, health insurance, and room for entertainment and occasional travel.

$6,000/month ($72,000/year)

Standard target: $1,800,000

Conservative target: $2,088,000

Comfortable lifestyle without major trade-offs. Nice housing, regular travel, dining out, and no day-to-day budgeting stress.

$8,000/month ($96,000/year)

Standard target: $2,400,000

Conservative target: $2,784,000

Fat FIRE. Premium lifestyle with significant cushion. This typically requires a high income (top 10-20%) combined with a high savings rate for 15-18 years.

The Savings Rate You Need

Retiring at 40 means roughly 18 working years (22 to 40). What savings rate do you need?

Starting from zero at age 22 with 7% real returns:

• 45% savings rate: Retire at approximately 42
• 50% savings rate: Retire at approximately 40
• 55% savings rate: Retire at approximately 38
• 60% savings rate: Retire at approximately 36

A 50% savings rate is the sweet spot for age-40 retirement. On an $80,000 salary, that means living on about $40,000 and investing $40,000. On a $120,000 salary, living on $60,000 and investing $60,000.

If you start later — say 28 instead of 22 — you need a higher rate to compensate for the lost compounding years. Starting at 28 with a 55-60% savings rate still gets you to 40.

The Healthcare Question

Health insurance is the #1 practical concern for anyone retiring at 40. You're 25 years away from Medicare eligibility at 65.

What it costs

Without employer coverage, budget $350-600/month for an individual or $900-1,600/month for a family through ACA marketplace plans. These costs should be included in your monthly expenses before calculating your FIRE number.

The subsidy advantage

ACA subsidies are based on income, not wealth. A 40-year-old retiree with $1.5 million invested but only $50,000 in annual withdrawals qualifies for significant subsidies — potentially reducing premiums to $200-400/month.

By managing which accounts you withdraw from (Roth withdrawals don't count as income), you can keep your MAGI low and maximize subsidies. This is standard practice in the early retirement community.

The Coast FIRE Bridge

Here's a powerful option most people overlook: you might not need to work at full intensity until 40.

Coast FIRE is the point where your existing investments, with zero additional contributions, will grow to your FIRE number by a target age. For example, $500,000 at age 32 grows to approximately $1,350,000 by age 45 at 7% returns — without saving another dollar.

This means you could save aggressively until 32, then switch to a lower-paying job you enjoy, work part-time, or start a passion project. You still "retire" at 40-45, but the intense saving phase only lasts 10 years instead of 18.

What Retiring at 40 Actually Looks Like

Most people who retire at 40 don't stop working entirely. They stop doing work they don't choose. Common paths include:

• Passion projects: Writing, art, music, open-source software — things that may or may not generate income
• Consulting or freelancing: 10-20 hours/week on their own terms, often earning more per hour than their old job
• Startups: Building a business with no financial pressure to succeed
• Volunteering: Meaningful work without the paycheck requirement
• Parenting: Full-time presence for young children during their most formative years

Financial independence at 40 doesn't mean doing nothing. It means doing anything.

Calculate Your Path

Calculate your Quit Number to see exactly how much you need and when you'll get there. If 40 isn't realistic yet, the calculator shows you what is — maybe it's 43, or 47. Knowing the real number, whatever it is, puts you years ahead of people who never run the math.