CNBC Investment Radar: How Much Money Do You Need to Escape the 9-to-5 Grind?

Many people have asked themselves: "How much money do I actually need to save before I can stop being chained to my job?" Some believe 8 million NT dollars is enough, others think at least 10 million is necessary, and some feel uneasy without 20 million. But is it really enough to just save a certain amount and then stop working? Let's explore various scenarios to understand how much money might actually free your life from work.

1. How much do you spend each month?

To determine how much you need to save to escape work, the first step isn't asking, "Should I save 8 million, 10 million, or 20 million?" Instead, ask: "How much do I actually need each month to live?" Everyone's cost of living is different. Someone living at home with no mortgage might get by on 30,000 NT dollars per month. Someone paying rent, insurance, and family support might need 50,000. If you also want to travel, dine out, and enjoy entertainment, 80,000 to 100,000 NT dollars per month is common. For example, if you need 30,000 NT dollars monthly, that’s 360,000 annually. With 8 million in savings, your portfolio would need to generate about a 4.5% return annually to cover living expenses. With 10 million, the required return drops to about 3.6%. With 20 million, you’d only need about 1.8%. So, the key isn’t just how much you save—it’s how much you actually spend each year.

2. Don’t forget inflation! Enough today doesn’t mean enough tomorrow

After grasping the basics, let’s consider more realistic scenarios. In reality, prices rise, and investment markets don’t grow steadily every year. Spending 360,000 NT dollars annually now doesn’t guarantee the same amount will suffice in 10 or 20 years. Likewise, having 10 million doesn’t mean you can safely withdraw money monthly without risk. Therefore, we must factor in "inflation"—adjusting annual withdrawals to keep pace with rising prices—and also consider extreme cases like "early market crashes that rapidly deplete principal."

Suppose you start with 10 million NT dollars invested in various stock markets, begin monthly withdrawals from year one, and conduct a rolling 40-year backtest to see whether assets can sustain 40 years of withdrawals under different starting months. To combat inflation, annual withdrawal amounts are proportionally adjusted—preserving purchasing power (e.g., if you withdraw 40,000 in year one and inflation is 2% the next year, withdrawals rise to 40,800, and so on). Results show that, across all 40-year rolling periods, the U.S. stock market supports a maximum withdrawal rate of about 6.9% in the worst-case scenario, allowing an initial monthly withdrawal of approximately 57,446 NT dollars. Taiwan’s market allows about 5.7%, or 47,878 NT dollars monthly. U.S. tech stocks allow about 5.3%, or 44,174 NT dollars. Global equities allow about 5.1%, or 42,703 NT dollars.

3. Higher withdrawal rates increase the risk of running out—and differences across markets are significant

What happens if we don’t limit withdrawals to the worst-case maximum, but instead set annual withdrawal rates from 5% to 12%? Rolling 40-year backtests show that higher withdrawal rates increase the probability of depleting principal within 40 years, and different markets can tolerate vastly different withdrawal levels. For example, the historically strong U.S. stock market sees a 9% chance of total depletion at an 8% withdrawal rate, but this jumps to 72% at 10%. The Nasdaq Composite, representing tech growth stocks, has a 16% depletion risk at 6%, but this surges to 51% at 7% and reaches 86% at 8%. Global equities show a similar pattern: increasing the withdrawal rate from 7% to 8% raises the depletion probability from 38% to 78%. In contrast, Taiwan’s stock market shows relatively lower depletion risks in this historical backtest—11% at 8% and 24% at 10%. Even at 12%, the risk is 44%. However, note that the 40-year backtest for Taiwan excludes the long-term correction after the 1990 market peak, so the lower depletion risk may be period-specific and shouldn’t be interpreted as Taiwan’s market inherently tolerating higher withdrawals.

Overall, higher long-term market returns don’t mean you can withdraw without limits. Once withdrawal rates exceed what assets can sustain, the risk of early depletion rises sharply during unfavorable market conditions.

CNBC Investment Strategy

To escape work, ensure your assets have enough staying power

To determine whether you can stop working, don’t just look at whether you have 10 million or 20 million. More importantly, consider your annual spending, withdrawal rate, and where your assets are invested. Higher living expenses naturally require more capital. Higher withdrawal rates—even with long-term stock investments—can lead to early depletion due to market volatility, early downturns, or inflation-driven cost increases. CNBC Buy Fund believes that to reduce work dependency, in addition to building capital, investors should leverage long-term growth opportunities in U.S. equity funds, U.S. tech equity funds, and global equity funds, keep initial withdrawal rates under 5%, and maintain flexibility to dynamically adjust withdrawals in response to market fluctuations—making financial freedom from work more achievable.

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