WorthMorrow

Financial Freedom Calculator

This calculator estimates the investment balance that could cover a chosen level of yearly spending, and how long it might take to reach it from your current savings. It is for people exploring financial independence, and it is a planning aid, not advice.

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Educational estimates, not advice. Results depend on the assumptions you enter and are not predictions or personalised financial, investment, tax or legal advice. Read the financial disclaimer.

Calculator

Financial independence target

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Estimated time to target

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Estimated age at target

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You today

Your target

The share of the balance you assume you can draw each year. Lower is more cautious.
An assumption, not a forecast.

Progress toward the target

  • Reached: –
  • Remaining: –

How the calculation works

The target is your yearly spending divided by the withdrawal rate. The time to target is found by adding your monthly savings to the balance each month and applying the monthly equivalent of your expected annual return until the balance reaches the target (capped at 100 years).

Target = annual spending ÷ withdrawal rate

At a 4% rate, the target is 25 times yearly spending.

Key assumptions

  • The withdrawal rate is an assumption. No rate is safe in every market; lower rates leave more margin.
  • Returns are constant; real returns vary, and poor returns early in retirement matter most.
  • Spending and savings stay constant. Inflation, taxes, pensions and other income are not modelled.
  • Results are shown in today’s money only if your return input is a real (after-inflation) return.

Worked example

Age 30, invested assets 50,000, saving 2,500 a month, target spending 60,000 a year, 4% withdrawal rate, 7% expected annual return (figures in US dollars):

  • Target = 60,000 ÷ 0.04 = 1,500,000
  • Estimated time to target: 20.3 years (about age 50)
  • Progress today: 3.3% of the target

How to interpret the result

Treat the target as a scale, not a finish line. If the estimated time is long, the most powerful inputs to test are yearly spending (it changes both the target and the savings needed) and monthly savings. The result is sensitive to the return and the withdrawal rate, so try cautious values as well as hopeful ones.

Common mistakes

  • Using today’s spending without allowing for changes such as healthcare or children.
  • Entering a nominal return while treating the target as inflation-adjusted.
  • Assuming a very low withdrawal rate is risk-free, or a high one is safe.
  • Forgetting taxes and fees on withdrawals.