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The Wall Street Journal reports a study by “the Princeton economist Angus Deaton and famed psychologist Daniel Kahneman”, which states:
As people earn more money, their day-to-day happiness rises. Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.
Let’s assume you want to retire in 20 years on the equivalent of $75k p.a. – after adjusting for inflation (roughly double your required income every 20 years) and applying the Rule of 20 (equates to a 5% p.a. drawdown on your money), this means:
Your Optimal Happiness Number = $3,000,000
None of my readers are chasing less – otherwise, why would you be reading a blog called How To Make $7 Million In 7 Years (?) – but, the point of the study has been taken by the press and the pf blogging community to mean that it’s pointless to chase more than $3 million … seemingly making my uniquely positioned blog redundant by half 🙁
Well, it’s quite interesting because there’s a second part to the study that the media and most other bloggers are conveniently ignoring:
That doesn’t mean wealthy and ultrawealthy are equally happy. More money does boost people’s life assessment, all the way up the income ladder. People who earned $160,000 a year, for instance, reported more overall satisfaction than people earning $120,000, and so on.
“Giving people more income beyond 75K is not going to do much for their daily mood … but it is going to make them feel they have a better life,” Mr. Deaton told the Associated Press.
I don’t know about you, but I like to be happy ($75k p.a. happy) and have a better life ($250k p.a. better life)!
How about you?