How Much Money Do You Need to Be Set for Life?
Ever wondered how much money you’d need to make/win/steal to be set for life? Wonder no more, because we’re going to look at how much money you need for it to be life-changing.
Starting with the basics
Obviously, what counts as a life-changing amount of money is different for different people. It also depends whether you want to live comfortably (all bills paid, a holiday or two a year, days out, dinner dates, gadgets, etc.,) or if you want to live a life of luxury (10-bed house, 5* luxury holidays, hiring venues like Alton Towers, lunch at The Ivy once a week, etc.,).
Let’s look at both lifestyles separately:
How much do you need to make to be COMFORTABLY set for life?
Presuming that 2-adults earning the average salary make enough money to afford a home and to live comfortably in the UK. The average salary per person is £30,420 per year or £60,840 per couple per year. Once HRMC deducts the Tax and NI, you’re left with £24, 327pp or £48,654 per couple per year, which works out at £4,054 per couple per month.
What does that buy you per month?
The following is a rough estimate using an online mortgage & bills calculator.
- Mortgage: £1300 per month buys you a house for £400,000
- Electric & Gas bills: £150
- Food: £500 (Great quality food for a family of 4)
- Broadband, telephone: £60
- House & Car Insurance: £150
- New car: £250
- Water: £50
- Council Tax: £200
- Rainy Day Savings: £200
That leaves you roughly £1194 per month per couple for disposable income. That’s £14,328 per year to spend on holidays, clothes, gadgets, etc. It’s good, but it’s not great. Also, £400,000 buys you a nice 3-bedroom in the South or a large 5-bed up North.
So you’re living relatively comfortably on this salary (especially if you choose to live in a cheaper house), but no one would be able to tell from your spending that you’re well off. Shall we add an extra £30,000-a-year to make you feel properly comfortable and give you a bit of extra luxury?
That gives you £3694 extra per month for your disposable income (£6554 before bills). Not too shabby. That’s enough for some great nights out, a couple of decent holidays, and some nice clothes and shiz.
How much do you need for this lifestyle?
So, how much do you need to win to be set for life with this lifestyle? You need £78,654 (£48,654+£30,000) per year for life to live this relatively extravagant lifestyle…
…but, how much this equates to depends on age:
- A 20-year-old probably has another 60 years to live: £4.7m
- A 30-year-old has another 50 years to live: £4m
- A 40-year-old has another 40 years to live: £3.1m
- A 50-year-old has another 30 years to live: £2.36m
- A 60-year-old has another 20 years to live: £1.57m
- A 70-year-old has another 10 years to live: £787k
- An 80-year-old….wow, I didn’t think this through very kindly.
But actually, you might be pleased to learn that, in the UK, if a person makes it to 80 years old, their life expectancy is another 9 years. That’s because life expectancy changes the longer you live. The above figures I used are life expectancy figures when you’re born.
The figures I gave are only a rough estimate, but if you do live longer than the above suggestions, you’ll still have some spare cash because the figures are worked out on the premise you’ll only be paying your £400k mortgage for 25-years. After 25-years, you’ll have an extra £1300 a month, which you can put towards a pension! You might even decide to save some of that extra £30,000 a year I threw in for you!
How much do you need to make to be set for life in LUXURY?
OK, so some of us are greedy and we want more, more, more! So, what would it take to live a 5* luxury lifestyle? What would you need to include?
What does a luxury lifestyle look like and how much does it cost?
- The house: £6m, you need at least 10-beds, a swimming pool, and a big drive for all your cars.
- Running costs for the house: Country Living estimates £80k per year, including staff
- 4 x Luxury holidays a year for a family of 4 (including a skiing holiday and beach holiday): £300K a year
- Luxury wardrobes for 4, keeping up with the latest trends: £300k
- New top-of-the-range family car each year: £100k
- Expensive dinners and days out: £200k
- Disposable income for everything else: £400k
Total annual cost= £2.1m per year for a family of 4.
How much do you need for this lifestyle?
I’m working out the estimate by annual cost and then adding the £6m for the house afterwards.
- A 20-year-old probably has another 60 years to live: £132m
- A 30-year-old has another 50 years to live: £111m
- A 40-year-old has another 40 years to live: £90m
- A 50-year-old has another 30 years to live: £69m
- A 60-year-old has another 20 years to live: £48m
- A 70-year-old has another 10 years to live: £27m
Which games should you play if you want to be set for life?
If you’re going for the modest lifestyle of a typical way of life just minus employment, you can get it by winning the Lotto, scratchcards, or one of the big slot machine jackpots.
Right, and it’s Friday afternoon, so I’m off to buy a Euromillions ticket.