A free and interactive FIRE calculator to quickly determine how soon you can achieve financial independence and early retirement by living on the yield of your retirement investments and savings for the rest of your life. To achieve financial independence to retire early (FIRE), you need to earn as much as you can, as soon as you can, and invest all that you can in the investments with the greatest ROI (return on investment). Lower expenses (living more frugally) in retirement will allow earlier retirement.
The Early Retirement Calculator
The Early Retirement Calculator is a helpful tool for the FIRE (Financial Independence Retire Early) community to use. It provides FIRE community members with impactful analyses designed to make the journey to early retirement easier.
The FIRE movement calculator is designed to take the manual calculations away from those destined to be financially independent. The calculator allows you to run different scenarios and truly understand how much you need to put away every year to retire earlier than the normal age of 65.
The goal for early retirement is to save and invest as much as possible in a relatively short period of time. This includes increasing your income and cutting down on your living expenses to allow for saving larger amounts every month.
The idea is simple: The more you save, the earlier you can retire.
The difficult part is answering all the questions that follow: What is the total amount I need to save? How do I know this will cover my living expenses? What amount do I need to invest per year?
Using our Early Retirement Calculator, you can comfortably answer all these questions and more.
Using the FIRE Movement Calculator
The Early Retirement Calculator shows you in how many years you can retire, given your current income, living expenses, savings, investments, and debts.
The Input section is where you need to add your current information. The calculator uses this information to determine the number of years until you can retire. It is important to provide accurate information in this section in order to get an accurate indication of the number of years until you can retire.
If you want to shorten the number of years to early retirement, you can explore ways to lower your cost of living and increase your income. By changing the inpus, you can easily see the effect it will have on your years to retirement.
Take some time and gather all the information asked. The Early Retirement Calculator has been set up with the goal to provide you with quick and accurate analysis, the only thing you need to do is input your numbers into the relevant boxes.
Understanding Your Results: Years Until You Can Retire
To determine how fast you will reach your point for a comfortable retirement, refer to the What-If Adjustments. The inputs include Savings and Asset Rate of Return, Taxable Savings Contributions Annually, and Inflation Rate.
The driving force to reach the large sum of money required is determined by how much you put away each year (the Taxable Savings Contributions Annually). The higher this amount, the earlier you’ll reach FIRE (or financial independence and early retirement).
Adding to the amount of savings is the rate of return you’re getting from your savings and investments. A better rate of return on your adjustments will get you to retirement sooner.
As time goes by, the cost of living keeps increasing, which is also called inflation. Your rate of return should be greater than the inflation rate. By doing so, your money keeps growing ahead of the cost of living.
Using Your Early Retirement Income
The Asset Yield at Retirement shows the income that your total saved amount (asset value) will give you in that first year of retirement. This amount can be used either entirely for you to live on, or to further invest and build your wealth.
This is proof that the FIRE movement works. The FIRE movement calculator shows you that given enough discipline and time, you can have an income equal to or greater than your current income, whilst you are not working at all.
The FIRE movement leans towards a balance between living from this income (your asset yield), whilst allowing it to build over time. Early retirement is exactly that: Retirement. Therefore your asset value should increase while you are retired.
True Financial Independence is achieved when you don’t have to work a day in your life. Your living expenses are covered, forever. This means no more stress of how to pay the bills, no more late nights to keep your boss happy. Financial independence is the freedom to choose what you want to do, every day, for the rest of your life.
A large enough asset value, allows you do to just this. Living and Investing - allows you full financial independence.
An Early Retirement Calculator Example
If you are 30 years of age and your current living expenses are $25,000 per year, your equivalent retirement living expenses are about $20,000 (80% of your current living expenses). If you save and invest $25,000 per year (taxable savings contributions annually), you will be able to retire in 15 years, with $750,000 in asset value.
This means that at the age of 45, the income from your asset value (asset yield at retirement) will be $53,000, more than double your current living expenses. The larger income allows you to cover your current lifestyle, and continue to build your asset value permanently.
The years to retirement will be shortened if you have any existing assets and in turn, will be longer if you have any existing debts. The calculator allows you to insert the value of your home, mortgage, student loans, cars, and other investments or debts for an accurate indication of time to retirement, asset value by age, and asset yield at retirement.
Your Early Retirement Journey
Use our free FIRE Movement Calculator to run different scenarios and see how you can set up your lifestyle to shorten the years to retirement and increase the asset value.
The FIRE movement requires a few years of hard work and smart living in order to fast-track your comfortable lifestyle with the freedom to choose. Being financially independent does not necessarily mean that you have to do nothing for the rest of your life, it simply means that you can pursue other projects and goals, without being tied down to the nine to five.
Start thinking about what you can do if you don’t have to work every day to keep on living. Imagine what your life would be with consistent income, and a growing asset value, but most of all: financial freedom and peace of mind.
Now use our free Early Retirement Calculator above to determine how you are going to get there.