How much is enough? | Annual Incomes and Financial Independence

We were curious: What’s the annual income that would make you feel as though you had ‘made it’?


We posed this very question to our facebook fans and got quite a varied response.

From specific numbers (ranging from $80,000 at the lower end, and $1,000,000 at the upper) through to more philosophical views relating to happiness over money, and time with family over dollars coming in.

What was also interesting is that some people didn’t have a particular figure in mind, or didn’t disclose it.

How much does that mean in relation to financial independence?

Annual Incomes and Financial Independence

Why does this matter?

Well, at last week’s Makeover your Finances session on budgeting and personal cash-flow management we were talking about starting as early as possible to build wealth, in order to give yourself a chance of becoming financial independent at some stage.

‘Financial independence’ meaning having enough wealth to produce an income in order to never have to work again.

And ‘give yourself a chance’ meaning, well, you need an awful lot of capital to do just that.

Of course, the question on everyone’s lips when we start talking about this stuff is ‘how much would I need?’, but the answer really lies in how much income you will need.

We used our quick Online Calculator to work out how much capital you would need to provide differing levels of income (we assumed 6% interest and for 40 years).

To produce:

  • $80K… then you’ll need $1,870,503
  • $100K… then you’ll need $2,338,129
  • $300K… then you’ll need $7,014,386
  • $500K… then you’ll need $11,690,643
  • $1M… then you’ll need $23,381,286

Crazy, huh?

When we asked the question on our facebook page we weren’t talking about retirement, we were just referring to an amount of income you’d like to receive any old time.

But, it’s pretty important to face up to the fact that our generation are going to live longer than our predecessors (probably 40+ years in retirement) and so we’d better start building wealth pronto or we won’t have a hope in hell.

Clearly no-one who responded to our question would be satisfied with the Government Age Pension, which is currently $19,076 for singles and $28,761 for couples.

Yikes! That’d be tough.

But, there’s more to life than money…

…it’s true, and it was pretty clear that our facey friends share this view.

We’re all about the ‘why’ behind money, rather than the actual amount.

So when you think about how much income you would like to have coming in every year, think about why. What is it you actually need, want and desire for your life, and what would it cost each year to fund that kind of lifestyle?

Often times we’ll have a predetermined amount in our minds that we see as a benchmark or a sign of success, and this can be either limiting or unnecessarily high.

What it really comes down to is how much do you need to live the life of your dreams, and when we say the life of your dreams, we mean it.

In a country like Australia, where we have all the opportunities in the world, it’s genuinely possible (if not probable) that we can each achieve our ideal lifestyles.

So dream big, believe in yourself, forget benchmarking yourself against other people or societal norms, and go for it.

Interesting factoid

When researching this post, I discovered that the medium income in Australia is $57,400 (according to ABS, 2011) and if you earn over $150,000 you are in the top 5% of the entire country of taxpayers!


Need some help with your goal setting? Our Financial Coaches LOVE helping members with their goals and working out how to attach money to them. To chat goals with one of the WE team, book in a time for a Free Strategy Session.


Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.