Finding Your Retirement Number
The 4% Rule · Trinity Study · Safe Withdrawal Rates
The scariest question in personal finance is: "Do I have enough money to stop working?" Thanks to the FIRE (Financial Independence, Retire Early) movement and the Trinity Study, we now have a mathematical framework to answer that exact question.
How to Use the Retirement Goal Calculator
Simply enter your Desired Annual Income in retirement, how many Years Until Retirement you have left, and adjust the Inflation Rate and Safe Withdrawal Rate to match your risk tolerance. The calculator will instantly reveal your exact FIRE Number (the size of the nest egg you need) and the monthly savings required to get there!
What is the 4% Rule?
In the 1990s, three professors at Trinity University looked at historical stock and bond market returns. They wanted to know: how much money can a retiree withdraw from their portfolio every year, adjusting for inflation, without ever running out of money over a 30-year period?
The answer was 4%. If you withdraw 4% of your starting portfolio balance in year one, and then simply adjust that dollar amount for inflation every year after, historical data says you have a near 100% chance of your money surviving a 30-year retirement.
The Impact of Inflation
Do not underestimate inflation. If you want a lifestyle that costs $60,000 a year today, you cannot plan to retire on $60,000 in 20 years. Assuming a 2.5% inflation rate, that same lifestyle will cost nearly $98,000 a year by the time you retire. Our calculator automatically handles this complex inflation math for you.
How to Calculate Your "FIRE Number"
Because of the 4% rule, finding your baseline target number is incredibly easy. You simply take your expected annual expenses and multiply them by 25.
- Need $40,000 a year? You need $1,000,000.
- Need $60,000 a year? You need $1,500,000.
- Need $100,000 a year? You need $2,500,000.
What if I want to retire *very* early?
The Trinity Study only looked at 30-year retirements (e.g., retiring at 65 and living to 95). If you want to retire at age 40, your money needs to last 50+ years. In this case, many experts recommend lowering your Safe Withdrawal Rate (SWR) to 3.5% or even 3.0%.
You can adjust the Safe Withdrawal Rate in the advanced settings of our calculator. Notice that lowering it to 3% drastically increases the amount of money you need to save.