ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Retire Early, Live Off Interest or Returns, and Save for Retirement

Updated on September 30, 2018

The term rich is defined as “having wealth or great possessions; abundantly supplied with resources, means, or funds”. But exactly how much is rich- $1million? $5 million? $10 million? ….or so much money as enough to live purely off the interest.

Outlined below is how a normal working person such as you and I can enter that so called “mega-rich” class and start living off the interest.

Jumping straight to the final figures required:

  • Average yearly income is $45,000 GROSS income. (As in before tax)
  • Capital required to begin living off interest or returns to match this income is $1.7m

For the details workings of these figures, please see the step by step explanation below.

For a normal gross income, deduction tax will give you net income. However, for gross income, deductions of both tax and inflation must be done to find your net interest income.

The average long term return of US shares invested in a broadly diversified index has yielded 8-9% per annum throughout the course of the market.

As of writing, tax for gross income of $45,000 or less is 15%. Thus, in a simplified calculation, average income earners will receive a net income of just under $40,000.

Now to the calculations. We require capital to receive a net interest or net return to match that $40,000 figure discussed previously. With an average return of 9%, we would then need to consider the impact of tax and inflation.

A 9% return less tax would suggest approximately 7.65% return net of tax. Furthermore, at the current economic client of extremely low inflation rates being hovering around the 2% mark, we can conservatively estimate that a net return of 5.65% may be expected in the long term net of tax and inflation.

With the requirement of $45,000 gross income and an estimated return of 5.65%, these figures would therefore suggest that one should have a nest egg of approximately $800,000 to fully retire and be entirely financially independent at a comfort level similar to your usual working person.

The biggest problem now is building up a nest egg up to $800,000 in order to retire. This figure may seem a lot to start with, but the statistics show it is more achievable than we may first presume it to be. As reported by CNNB here, just last year the United States added a further 700,000 new millionaire households. Thus, even as a average income earner, we will be able to retire and live off interest with just $800,000 and be financially independent. If that is the requirement for most people to assume that you are "mega-rich", then we too would be classified as another “mega-rich”.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)