Calculators are cool. I have a TI-83 that sits on my desk. When I was in high school, I remember all the math problems I solved with it, and I’m still amazed at how well it worked. Maybe I could have reached financial independence at 14 instead of 30 if it had been an early retirement calculator. There isn’t a calculator that can give me the answers I need to achieve financial independence at such a young age.
After seeing the crazy response to my early retirement strategy, I want to share tools that can help you get there quicker. My hope is that you will be able to achieve your goals with these resources.
Early Retirement Calculator
You can use this calculator to figure out the following:
- I don’t know if I have enough money to retire. I’m going to save now so that I have enough when the time comes.
- Is it possible that I will retire when I want? I am confident that with careful planning and smart decision-making, I will be able to retire when I want.
- I don’t know if I have enough money to retire at 40, 50, or 65. Ensuring financial security for the future is an important step in retirement planning.
- How much money will I need to retire early?
skip down to see how to use the calculator
You’re 5.76% on track to your goal of retiring at 45
You will need about: $1,150,000.00
You will have about: $66,283.96
How to Use the Early Retirement Calculator
Here is an explanation of each variable in the early retirement calculator, if you don’t know what you should be using.
1. Current Age
If you don’t know then guess
2. Target Retirement Age
If you set it at anything you want, it will tell you if you are on track to hit it. It is a great tool for setting and achieving goals, as it helps you stay motivated and accountable throughout the process. Are you on track to retire at 65? You can achieve your goal of retiring at 65 if you start planning for retirement early. It is possible that you will retire when you want to. It’s important to make sure you save enough and invest wisely to reach your retirement goals. If that’s you then congratulations, you’ve reached retirement freedom.
3. Current Retirement Savings
Put all of your money into your retirement accounts.
4. Ongoing Contributions
You can stop contributing if you know how much money you are going to contribute until your retirement age. This can be difficult to estimate, but a simple way to do it is to divide your monthly salary by your savings rate. If you want to reach your financial targets, your savings rate should be adjusted over time. I saved 82% of my income one, but it was super tough. My savings rate is usually between 40% and 45% every month. You can use this calculator to see if you can retire early. I will be building a daily calculator soon, and I like to break my saving goals into daily goals. I will be able to reach my saving goals in a timely manner thanks to this.
5. Expected Retirement Annual Expenses
Put how much money you expect to spend annually once you retire but in today’s dollars because the calculator adjusts it to what you will need back on the inflation rate you entered. Social Security or pensions are additional sources of income you may receive during retirement. The more you plan to spend, the more money you need to save. It is important to factor in inflation when budgeting for retirement expenses. It is a huge difference. It is a life-changing change for those who make it. I will need $50,000 a year to live the lifestyle I want to live. I’m trying to save money and invest wisely to reach that goal. To find your number check out how much money is enough.
6. Investment Return
The annual rate growth rate is what you expect for your investments. I always use 5% or 6%, which is a very conservative return over a 10-year period. The average historical returns of the stock market are higher than this return percentage, but I believe it is a prudent approach to long-term investing. The total market index fund has returned 7% over the past 10 years. Over the past decade, this type of investment has provided investors with a reliable and low-risk way to benefit from the growth of the US stock market. It is worth testing how different rates affect your outcome. It’s a good idea to experiment with different rates. It is difficult to get an annual rate of return of 8% over a long period of time, and you will need a pretty aggressive portfolio to achieve that. It is important to remember that there are significant risks associated with a more aggressive portfolio, so make sure to carefully weigh the potential returns against the possible losses before making any investment decisions. It is a personal choice how much risk you are willing to take to reach your early retirement goals, but in my opinion, it is not worth investing in risky investments to do so. Ideally, it’s best to keep your retirement savings in relatively safe investments while also planning for the long-term to ensure financial security in your later years. Don’t play the lottery – invest using a proven diversified strategy like the coffeehouse portfolio to achieve positive long-term gains.
7. Inflation Rate
When things are more expensive, the dollar that you make today will have less purchasing power next year. The value of money decreases over time because of inflation. You are actually losing money if you leave money in a saving account. It’s important to invest your money in order to maximize returns and make the most of your money. Inflation is measured using the consumer price index (which tracks the average cost of commonly used goods) and typically goes up between 1-3% each year. One of the keys to successful investing is that you want your investments to compound faster than inflation. You want to make sure that your investments are generating a higher rate of return than inflation. I would recommend using 3% for this calculator. This will help you get an accurate calculation of the result.
8. Tax Rate At Retirement (Expected)
This affects how much money you need to retire early. Understanding how long you expect to live is one of the most important factors in determining how much money you need for retirement. There is no way to predict what tax rates will be in 5, 10, 20, or 30 years, but the belief is that your tax rate will likely be lower when you retire. I use 20% or 25% to be safe. I don’t think we’ll be taxed more than 25% when we’re not making a lot of money. It is important to plan and be aware of all the tax brackets. A lot of crazy things could happen, but I think this is a safe range. I hope nothing happens outside of this range.
9. Safe Withdrawal Rate
When you reach your retirement age, this is the percentage of money you will start withdrawing. It is important to consider the tax implications of withdrawing this amount of money from your retirement accounts at your target retirement age. It is assumed that 4% is a good safe bet. There is no one-size-fits-all solution when it comes to choosing a rate of return. You rarely want your safe withdrawal rate to be higher than your investment growth rate (because you want your money to keep growing!) If you keep working past your target retirement age and have some additional funds, your withdrawal rate will likely be reduced.
When Can You Retire?
The calculator can read the future. This calculator can predict what will happen in the future. Not really. But it hopefully can help you understand how things like saving rate will impact when you can retire. A lot of the variables that you can control in a retirement calculator are missing. Who knows what the tax rate will be in retirement. It is important to plan ahead so that you are prepared for any changes in the future. It’s difficult to plan for early retirement. It is difficult to calculate the exact amount of money you will need in order to make it through an extended retirement period, making early retirement planning even more challenging. The best way to increase your chances of financial independence is to use an early retirement calculator to test different scenarios. You can find the best strategy to help you reach financial independence by testing these scenarios.
Learn How to Retire Early
Let me know what you discover when you check out this craziness. To learn how to retire early check out my international bestselling book Financial Freedom: A I cover everything you need to know to reach financial independence in the book “Proven Path To All The Money You Will Ever Need”. You’ll learn the exact strategies and steps that I used to get to financial freedom, so you can take the same proven path and start living your dreams today!
Let me know what you think. I’m looking forward to hearing what you have to say. Here are some of the best free online financial calculators.