How much money do I need to live entirely off dividends? Here's how to figure out the lowest amount you need to make it work

Just as retiring comfortably means different things to different people, it also presents almost unlimited financial scenarios: taking out a reverse mortgage, selling off possessions, moving to a place where the cost of living is cheap. (If you’re counting on Powerball, well, good luck with that.) Add to that list a sometimes overlooked option: living on investment dividends.

The question is, can it really be done if you’re not in the top tier of wealthy people?

To be sure, the debate over “how much money is enough” is endless and broad.

And so much depends on the kind of life you plan to lead in retirement. However, there are a few guidelines that can help you zero in on the perfect savings balance for you. Consider taking these three steps as you make an active stab at passive income.

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Step 1: Define what wealth means to you

There’s no perfect number, right? A person who’s paid off their modest mortgage and grows their own veggies in a small town may feel far more at ease than the city dweller who still has a raft of high monthly expenses that forgot to read the retirement memo.

With your desired lifestyle, thinking about whether passive dividends will do the trick is indeed all about the numbers. Major banks and institutions like Knight Frank use seven digits to define their ideal customers.

According to its 2022 Wealth Report, a person with $1 million in investable assets qualifies as high-net worth, while someone with $30 million or more is considered ultra-high net worth.

What’s more, if you earn more than $570,000 a year or have more than $11.1 million in assets you’re “richer” than 99% of Americans. But that’s where “location, location, location” comes in. A million dollars in Midtown Manhattan isn’t the same as a million in Mumbai.