One of the biggest issues surrounding retirement is the fact that inflation means that it is becoming more difficult to amass enough money to live on once you retire. It used to be that many people would do their best to save up $1 million for retirement. Now, though, experts and others are saying that $2 million is far more likely to be the “magic” number.

But do you really need a huge nest egg for a successful retirement? Perhaps not.

How Much Do You Really Need?

One of the first questions to ask yourself is how much you will really need during retirement. If you amass $1 million, and follow the 4% rule of withdrawal from your retirement account, that is $40,000 a year, or right around $3,333 a month. Think about your expenses and what you need. If you live modestly, and if you have paid off all of your debt by the time you retire, will you really need that much?

If you think that you can get by on less, a huge nest egg won’t be necessary. And, really, if you can pay off your home, and live completely debt free, and reduce your bills, you should be able to get by on much less.

Cultivating Monthly Income

Of course, you might decide that you need to live on more. Depending on your goals for retirement, and what you want to do with your money, a nest egg of $1 million, and following the 4% withdrawal rule, isn’t enough. And besides, what if you’re afraid that you won’t be able to build up so much before you retire. Does this mean that your retirement is doomed?

Not necessarily. You can actually cultivate income options for your retirement. Instead of worrying about building up a huge pile of cash, you can cultivate revenue streams that can continue providing you with the monthly income you require during retirement:

  • Part time job: Some people truly enjoy working, and like having a job. It’s possible to have an enjoyable working retirement doing what you love, whether it’s teaching a few classes as an adjunct, leading local tours, or writing professionally.
  • Investment income: There are also ways to make money without actively earning it. Consider passive income sources. Create an income portfolio. Instead of building up a huge nest egg, you can build up your income holdings to the point where you have a steady revenue stream from your investments.
  • Online income: It takes a long time to monetize a web site. However, if you work at it, you can build up traffic to the point where you make a solid, monthly income. Other sources of online income can include courses you develop, as well as ebooks.
  • Creativity: If you are creative, you can make money online. Even you aren’t a best ┬áselling author, you can sell your own electronic books on the Kindle, and on your own web site. Technology also makes it possible for you to record and sell your own music. Many people also take photos that can be used on stock sites, and earn royalties when others use their work. [Also see: 4 Creative Business Ideas]

Sure, you can still work on your nest egg. But you can supplement by focusing on building income, rather than trying to amass a large amount of money. Instead, think about what you will need each month, and work on cultivating divers revenue streams.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.