How much money do you need to stop working now? When I ask my customers this question, the answers vary from one million to tens of millions of euros. There's no single answer. It all depends on your financial needs.
1. First step: estimate your current and future expenses.
When you stop working, some expenses will decrease .... and others will increase.
The good news is that if your income drops, you'll normally pay less tax. Similarly, when you're no longer an employee, certain social security contributions are no longer due (unemployment insurance, for example). You can even move to a region where the cost of living is lower. You'll also have more time to do things yourself.
But you'll also have new needs: more time = more leisure, which is rarely free. And don't forget: the older you get, the more comfort you need, and the things you can do yourself are increasingly rare. And don't forget that some insurances are still essential (and compulsory), and you won't have an employer to pay half of them! Finally, take inflation into account.
2. Second step: make sure your income from assets is sufficient to cover your current and future expenses.
Ideally, your assets should be substantial enough to enable you to live off the income they generate: rent, interest, dividends, etc. Don't forget that some income can vary - starting with dividends from your shares. Don't forget that some income can vary - starting with dividends from your shares. But also the income you receive from renting out your apartment (work to be carried out from time to time, for example). Another source of constant, guaranteed income, with no need for additional work or investment: life insurance. If you're 45 and have €350,000 in life insurance, you'll receive a monthly annuity of €1,000 for life, adjusted for inflation every year.
You can also choose to dip into your capital (selling your shares as you go along, for example, or selling an apartment): it will then provide you with less and less income as it runs out. So you take the risk of living longer than you can afford! Not a very comfortable situation.
Good news: from the age of 67, you'll have an additional source of income, the statutory pension. If you've worked in Germany for 20 years and earned an average of €100,000 a year, you'll be entitled to around €1,300 gross per month from Deutsche Rentenversicherung.
More and more French people want to stop working while they're still young and in good health. And it's not just a dream for the elite! To discuss your options and define a personalized action plan together, click here.
