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Bryce Holdaway Blog post by Bryce Holdaway

Revealed: How Much You Need To Retire in ONE SIMPLE FORMULA

What I want to talk about today is the concept of retirement and, more specifically, how much do you need to have a passive income that will support the lifestyle you really want in retirement?

Because most people, I wonder if they’ve thought this through. I’ve spoken to hundreds and hundreds of people, and they often talk to me about how they want to be rich—they want to be financially free and wealthy. But very few of them have thought about what that means to them and their circumstances— to be free of the need to go to work, and how they’ll get their time back to get the experiences they’d always hoped to have time to do.

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So I want to talk about a rule of thumb today, and it’s the Rule of 25.

Now, let’s assume that you want to have $1,000 a week of passive income. So that’s $52,000, let’s just round it to $50,000, a year of passive income. Well, if you multiply 50 by 25, it comes to $1.25 million. So if you have $1.25 million worth of income-producing assets outside of the family home, returning you about 4% per annum, which will give you your $50,000 passive income that you’re after.

Now, I hear what you’re saying, $50,000 isn’t enough.

What if it’s $2,000 per week you need, or let’s round it to $100,000? Well, let’s do the maths again. 100 times 25 is $2.5 million. $2.5 million worth of income-producing assets outside of the family home is what you need, returning 4% per annum to give you that passive income of $100,000.

Armed with that information, my invitation to you is, do you know your number?


If you don’t, you should make it a priority to work it out. The way you do it is very simple. Because the main categories of the costs we have under our households, can roughly be grouped into four categories.

The first one…. is the bill payments we have.

The telephone bill, keep the lights on, the rates—the costs that will always come; they’re fixed; they happen, just in your desire to have a roof over your head, and drive your car and answer your phone. They’re the costs that come on an ongoing basis, usually a monthly basis. So they are your bill payments.

The second category is your discretionary spending.

And as the term sounds, it’s where you have the discretion to spend on whatever you like. The lattes, your smashed avocado, your dinner reservations on Friday night, the holiday that you want to go on. That’s your discretionary spending.

[Recomended reading: Cash Flow Management | The Essential Element in Property Investment]

Then there’s a third category; effectively the investment costs.

So how much does it cost to hold your property portfolio? How much does it cost to hold your share portfolio? Whatever the investment class you’re in. How much does it cost each year to hold that?

The fourth one, of course, is the loan payments.

The biggest on being the family home; the principle place of residence. But how much are you paying on other loans? See if it’s a personal loan, a credit card, or store debt.


These are your four categories. But if we fast forward to retirement, think that through.

If we successfully paid off our home, and we have no other non-productive debt, we shouldn’t have any more loan payments. It should be zero. And if you’ve built the portfolio so that it’s self-sustaining—so that it’s not taking any money out of your pocket to service the portfolio—you can also eliminate that one. So the third and the fourth categories no longer apply, either.

All that actually leaves is your bill payments and your discretionary spending. So all you really need to do is work out those two—total the two together—and  it will come to the number you will need in retirement to live as you do today.

Now, of course, I know a lot people think….Well I work hard, I want to have a little more for retirement to take an extra holiday, and that’s fine.

But what if you find out that those two costs combined will cost you $80,000, and you want to go on an extra holiday?

You might want to round it up to $100,000. Or, you know, you might have $60,000 but you need to add an extra $15,000, and it becomes $75,000. But what is very, very critical is you need to know that number. Because whatever that number is, you multiply it by 25 and that’ll give you the income-producing assets you need, outside of the family home, for you to be in a position to live like that.

[Recommended case study: How to Earn $2,500 a Week By Building A Property Portfolio]


So my message is very, very clear.

You might be surprised how easy it is for you to visualise the amount of money you need to build during the accumulation phase of your career in order to retire on the income you desire. I might not know your exact number; but what I do know is, it is very, very critical in this whole process that you must plan. We must know what that number is, and reverse-engineer it, so we know what we need to do today, what the next step is, to move towards our goal.

So remember the rule of 25—as soon as you work out exactly how much your bills and your discretionary spending total, you will know what it is you’re aiming for.



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