When can you retire?
See how long your current savings rate takes to reach financial independence.
What is the 4% rule for retirement?
The 4% rule says you can safely withdraw 4% of your retirement portfolio in year one, then adjust that dollar amount for inflation each year afterward, with high probability of not running out of money over a 30-year retirement. It comes from the 1994 Trinity Study and means your retirement number is roughly 25× your annual expenses: spend $40,000/year, you need $1,000,000.
How much do you need to retire?
Multiply your annual expenses by 25. Spend $40,000/year? You need $1,000,000. Spend $80,000? $2,000,000. For early retirement (40+ years), use 28-33× to add safety margin against sequence-of-returns risk.
The "start early" advantage
The single biggest factor in retirement wealth is time. Someone who invests $300/month from age 25 to 35 (then stops) will have more at 65 than someone who invests $300/month from 35 to 65. Compound interest rewards early starters disproportionately.
Recommended reading
- The Simple Path to Wealth by JL Collins
- Your Money or Your Life by Vicki Robin
- The Millionaire Next Door by Thomas J. Stanley