How much passive income does one really need to retire early and live a comfortable life? I don’t know about other people, but surely I can find the answer to that question for myself and my family of three. In the process, hopefully I can provide some guidance for finding your own.

How comfortable?

First, it’s important to remind ourselves that comfort is relative and highly subjective. There are many factors at play and this is a whole nother topic on its own. Specifically when it comes to how much passive income you need to retire early, the decisions for where and how to live translate into numbers representing expenses in a budget table. Usually people prioritize what is important in their life and create their living environment based on that. It’s perfectly alright if you haven’t created yours yet, though. Budget for your current lifestyle, and re-calculate if your living situation changes dramatically.

At this point in time, as far as my family is concerned, a comfortable living environment means a small-to-medium sized home with two bedrooms. Preferably, it would be situated in a nice quiet neighborhood, within a good public school district. It would also be within a 45-minute commute to the office and a similar distance from the closest international airport.

A house by a pond to retire early at and live off of passive income alone.

I wouldn’t mind retiring here one day

Calculating living expenses

To find out how much passive income my family would need to cover living expenses once we retire, first we’d need to identify and estimate these expenses. Luckily, we have been using to automate tracking of our spending and budgeting over the last several years.

Graph showing monthly spending over the last year on my Mint account.

Monthly spending over the last year on my Mint account

Taking a look at the historical monthly data on Mint for the last year, it seems that our average combined spend between my wife’s and my account is about $5,000/mo ($3,000 of which goes to pay for rent and utilities). It’s important to consider that the above number is from 2020 which was a year we basically just stayed at home. Therefore, a more realistic figure would probably be closer to $6,000/mo.

Additional Future Expenses

In addition to the data above, I’ve put together the following table to try to estimate other expected future expenses.

Table of estimated expected future expenses to help create a budget in order to retire early and live comfortably on passive income.

Table of estimated expected future expenses

There is probably more that should be in this table. Plus, I’m sure at least a few of these numbers will change as our son grows. To be on the safe side, I’m adding a buffer for miscellaneous or unforeseen expenses. With that, I’m allocating a total of $4,500 per month in addition to our historical spending gathered from Mint. Then the grand total becomes:

$6,000 (historical) + $4,500 (future expenses) = $10,500 in monthly expenses

To be able to cover the monthly expenses calculated above, we’d need to generate somewhere in the neighborhood of $15,000–$17,000 per month in passive income because of taxes.

Current passive income

Now that I have roughly estimated my family’s expected living expenses number, the next step is to see how much we’re currently earning in passive income every month. Unlucky for us, that’s a mighty quick calculation that shows the following:

Table showing my family's current passive income is not enough to retire early and live comfortably.

Table showing my family’s current passive income

A hundred and twenty dollars per month! Before taxes!!!


I foresee having to keep a close eye on our expenses and budget if both my wife and I were to retire and live the FIRE (financial independence, retire early) life on passive income alone. Since I’d rather our family not be under financial stress, I’m aiming and budgeting for a bit more than what would likely be enough to live comfortably off of.

Not working a full-time job we’d have to keep life interesting so we don’t get bored too quickly. Adding a few extra trips per year to explore the US national parks for example would be great! I’m trying to start planning for retirement early, so hopefully we’re more financially and mentally prepared to enjoy life when the time actually comes.

To get there, we would need to somehow increase our passive monthly income to approximately $15,000–$17,000 per month. But how do we reach that number in the next five years? I’ll try to answer that question in my next blog post.

— Finance Squirrel

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