# Passive income - how much is enough?
We often toy with the idea of never having to work ever again, yet to be continuously paid.
> 🌱 [The secret to achieving financial freedom](https://www.undergrowthinvestor.com/taste-financial-freedom/)
That's a notion that is hard to resist. Who can resist free money?
But how much is _enough_?
**The sky is limit** but it's important to set a limit or a goal. This is so you do not overwork yourself or lose motivation mid-way without a clear finishing line in mind.
Here are two ways you can consider to decide how much passive income is enough for you_._
### Statistics and Probability
Not a chapter in your Math textbook, but consider looking up national labour statistics from public resources to set a benchmark.
I'm based in Singapore so, with a quick _Google_ search, I found median salary figures from 2011 to 2021 - about a decade's worth of stats.
This includes [CPF](https://www.mom.gov.sg/employment-practices/central-provident-fund/what-is-cpf) contribution from employers (+17%) **[Ministry of Manpower Singapore](https://stats.mom.gov.sg/Pages/Income-Summary-Table.aspx)**
In the same site, both annualised and cumulative changes (% p.a) are provided but for the sake of simplicity, I will use average % change from 2011 to 2021 - **which is 3.7%**.
> 🌱 Mean ≠ average
Extrapolating the numbers, considering 3.7% increase per year, I got this table which you can stare at - to decide at which year you want to retire, how much in passive income you should receive **and how much your passive income should increase year on year.**
Median salary of Singaporeans extrapolated to 2051
I like my data visualised, so I created a chart just like this with the data above ⬇️
This chart could also double as a guide on how much you _should_ be earning, by comparing your own salary to the national median wage.
Passive or otherwise, ensure your income grows annually to **stay ahead of inflation and price increase in everyday goods and services**.
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I'm targetting to retire by 40 so if I do not achieve a passive income of **$6,756 per month by 2031**, I will need to postpone or adjust my retirement goals!
### Cover only just the basics
If the above scares you, I'm scared too.
The above method is only good if you're looking to **maintain** **your** **current** **standard** **of** **living** into your golden years. If you feel that you could live a simpler life, here's another way to consider;
Cover only basic necessities such as rent and food. What is necessary is very subjective as needs vary from person to person so, for myself, I will employ the **[50/30/20 rule](https://www.forbes.com/advisor/personal-finance/guide-to-50-30-20-budget/) where 50% of your income should be the cap for your NEEDS.** With this approach, as I want to preserve my current lifestyle, I could simply _halve_ the amount projected in the median salary table as shown above.
Back to my personal target of retiring at 40, I would just need $3,378 per month to retire. My 'needs' cover food, shelter and also some luxuries like monthly entertainment subscriptions (like Netflix and Spotify) and travel.
To achieve this, I simply require roughly **$810,700 at a conservative 5% annual dividend yield** for such a payout in the year 2031. Think that's a high amount? Think again, as inflation will inflate everything (salary, costs, share prices and more).
Don't forget, this amount is only relevant if you want to preserve your current lifestyle **NEEDS**. You know yourself best, so set a target amount _just nice_ to to motivate you! It's not a goal if it's easily achievable. Aim for the stars and even if you miss, you'll land on the moon!
### Perspective from the Undergrowth
Feeling nervous?
You should be! It's a very very long climb up for undergrowth investors like ourselves.
But here's the good news, the earlier you start your investment journey, the easier it is to achieve the number you need to retire comfortably.
**[Source](https://www.pinterest.com/pin/360710251410742255/)**
The first leg of this journey is the toughest, but with the power of compounding, it will only get easier as you progress.