The Ideal Level of Wealth

Since I published The Wealth Ladder three and a half months ago, I’ve had a few readers reach out and ask, “Is there an ideal level of wealth?”

My gut reaction is to say, “Yes, the ideal level of wealth is the amount of money that allows you to live on your own terms.” In The Art of Spending Money, Morgan Housel defines the highest level of wealth as:

You wake up every morning realizing that you can spend your time doing what you want, with whom you want, for as long as you want.

These answers are both technically correct. The ideal level of wealth is dependent on your personal circumstances. It’s based on what you want out of life.

However, the more I think about these responses, the more I find them unsatisfying. If the ideal level of wealth is always based on individual circumstances, then we can’t provide any general guidelines around it. If everyone is special, then no one is. In effect, we’ve maximized precision but minimized usefulness.

But, what if we reversed this? What if instead of giving the perfect answer for everyone, we found a pretty good answer for most people? What if we gave up some specificity to have more practicality? What would the ideal level of wealth look like then?

If we can define it, even approximately, then we’ll have a better idea of when to keep pursuing money and when to stop. And, once we know this, we can get to our ideal level of wealth and then start living the good life.

But, how much does “the good life” actually cost?

How Much Do You Need to Live a Good Life?

While the answer to this question will vary based on your circumstances, let’s assume that you, your spouse, and your two children live in the median priced home in the United States. This won’t cover everyone, but it’s a good base case that we can adjust from.

Using this as a base case, a family of four spends roughly $120,000 per year after taxes to maintain a middle-class lifestyle. Here’s how that breaks down by category, based on data (mostly) from the Consumer Expenditure Survey (Bureau of Labor Statistics) and a few other sources:

Housing: $35,000 ($2,917 per month). As of Q2 2025, the median sale price for homes in the U.S. was $410,800. Putting 20% down, that would leave a mortgage of $328,640. At 6.2% for a 30-year fixed rate loan (the current rate), that’s about $2,013 per month. Add in property tax at 1% per year (of the property value), maintenance at 1% per year, and insurance at 0.5% per year, and that’s another $854 per month (or $10,270 per year). Putting it all together and adding a little wiggle room, a family of four would pay around $2,917 per month, or $35,000 per year, for housing.
Transportation: $20,000 ($1,667 per month). Using the Consumer Expenditure (“CE”) data, a couple with two children spent approximately $18,463 on transportation in 2023. Adjusting for inflation to September 2025, that comes out to around $20,000 per year today.
Food: $17,000 ($1,417 per month). Once again from the CE data, spending on food for a married couple with two children was $15,558 in 2023. If we adjust for inflation that comes out to $16,890, so I rounded up to $17,000 for good measure.
Childcare: $15,000 ($1,250 per month). These costs will vary significantly over time, but the average annual cost of full-time care was around $11,582 per child in 2023, according to Child Care Aware of America. Assuming our hypothetical couple has one younger child (in childcare/daycare) and one slightly older child in after school programs (that may cost around $3,000 per year), then the total annual cost is close to $15,000. Of course, this will vary wildly depending on the type of childcare programs you enroll your children in.
Apparel and Entertainment: $12,000 ($1,000 per month). Using the CE estimates, annual costs for apparel and entertainment for a family of four in 2023 were $3,500 and $6,500, respectively. Add in some inflation and a little wiggle room and you’re at $12,000 per year.
Healthcare: $8,500 ($708 per month). In the U.S., healthcare is mostly covered through employer-sponsored plans, but the cost of copays and other costs were around $7,700 in 2023. Add in some basic inflation and you get $8,500.
Utilities: $6,600 ($550 per month). The CE data states that a couple with two children spent $6,102 on utilities in 2023. Adjusting for inflation (to get to September 2025) and that comes out to $6,600 per year.
Travel: $6,000 ($500 per month). A NerdWallet study found that the average cost for a family of four trip to Disney World for seven nights is around $6,000. Of course, there are cheaper and definitely more expensive ways to vacation annually, but I’m leaving this $6,000 expense as is for now.

Note that the $120,000 is pure consumption and doesn’t account for saving for retirement. This was intentional. We care about living expenses and retirement savings aren’t a living expense, but an expected future living expense.

This aside, you can easily adjust this annual amount based on your own consumption habits. For example, my total spending in the above scenario would probably be closer to $170,000 per year after taxes (or $50,000 more) because my housing and food costs are closer to double these amounts.

For the time being though, let’s stick with our $120,000 annual spending amount. How much wealth is needed to support this much spending? Let’s start at the high-end and then work downward from there.

Financial Independence (28.6x Your Annual Spending): $3.5M. Assuming you never wanted to work again, you would need about 28.6x your annual spending to cover your costs indefinitely [$120,000 * 28.6 ~ $3,500,000]. This 28.6 comes from the Kitces research showing that the 3.5% Rule is the safe withdrawal rate for a 40-year time horizon and beyond. This research suggests that if you can make it 40 years while withdrawing 3.5% per year, then you’ll likely make it 50 years (or more).
- Note: Multiplying our annual spending by 28.6 (to get the required amount) is mathematically equivalent to dividing our annual spending by 3.5%. So, $120,000 divided by 0.035 is the same as $120,000 multiplied by 28.6 (to get to $3.5M).
- Lastly, this assumes that your income is derived from liquid assets and is after taxes. This is unlikely to be the case for most people. To adjust for this, multiply the total amount needed by 1.25 (+25%) to act as a tax buffer. So, $3.5M would be closer to $4.5M if a good chunk of this money was in qualified accounts.
Coast FIRE (Varies by Age): $1M-$2M. Instead of never working again, with Coast FIRE you save up a certain amount for retirement, then stop saving money after that. However, you will need to continue working to support yourself until you reach your retirement. Coast FIRE is easier to reach than financial independence because you don’t need to save as much to secure your financial future.
- For example, if you need $3.5M in assets by the time you’re 65, then we can back out how much you’d need today to get there. Below are these amounts by age (assuming a 3.5% annual real return on your money thereafter):
  - Age 30 = $1,049,919
  - Age 40 = $1,481,014
  - Age 50 = $2,089,117

You can see this visually in the chart below (for ages 20-65):

As you can see, the amount of wealth needed to live a “good life” is much lower when we continue working (versus never having to work again). Of course, Coast FIRE is riskier than financial independence since you still need to earn an income to support your lifestyle indefinitely. However, Coast FIRE also provides more flexibility and is more realistic for the typical person. Most people don’t want to sit around doing nothing all day. Don’t get me wrong, it’s fun and relaxing for a week or two, but I’ve written about the problems it can lead to.

Whether your goal is Coast FIRE or full financial independence, the ideal level of wealth in the U.S. is in the low-to-mid range of Level 4 ($1M-$10M), or $2M-$5M. I know this is a lot of money and many people will never reach it, but that’s why it’s an ideal. It’s something to strive for. It’s enough where you don’t have to worry about money anymore, but not so much that it becomes a burden or warps your identity.

And, yes, it can warp your identity. Great wealth can influence who you trust, what motivates you, your stress levels, and even how you raise your children. As Felix Dennis wrote in How to Get Rich:

Still, let me repeat it one more time. Becoming rich does not guarantee happiness. In fact, it is almost certain to impose the opposite condition—if not from the stresses and strains of protecting wealth, then from the guilt that inevitably accompanies its arrival.

This is coming from a man who was worth $750M at the time.

This is a “problem” few of us will ever have. Most of us face the opposite one—not having enough. But if Level 4 seems out of the question for you, don’t worry. Because there’s another path to the good life that’s quite a bit cheaper.

A Cheaper Path to the Good Life

So far, when discussing the “ideal” level of wealth, I’ve assumed that you live in a medium-cost-of-living area in the U.S. However, if you were to move to a cheaper area in the U.S. or outside of the U.S., your ideal level of wealth would be much lower.

For example, many countries in Europe have free (or low-cost) education, healthcare, and other social services. Yes, their citizens often pay more tax for these services, but this arrangement effectively lowers the bar for the ideal level of wealth. Ultimately, you need less when your society provides more.

Because of this, I truly believe you can live a very fulfilling life in Level 3 ($100k-$1M) of The Wealth Ladder, whether in a cheaper part of the U.S. or abroad. Is it possible to have a fulfilling life in Level 2 ($10k-$100k) or Level 1 (

However, most people would not call Level 1–2 the ideal level of wealth for a host of reasons. Fewer financial resources mean more risk. More risk that you can’t afford necessary healthcare. More risk that you can’t support yourself or your family. More risk that you don’t live up to your potential. And so forth.

We shouldn’t be obsessed with money, but we can’t deny its importance either. It impacts where we live, what we eat, who we date, what we enjoy, who we befriend, what we work on, and much more.

While the ideal level of wealth allows you to live life on your own terms, don’t forget that those terms are never free.

Thank you for reading.

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This is post 476. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data

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