When Will You Reach Retirement?



retirementWould you still work the job that you have today if you were completely financially independent?


Is there a dollar amount in your bank account that would make you secure enough to leave your job right now?  


At some point, most of us desire to leave the pressure of the office even if we love the job that we have.  You think to yourself, there’s more to life than just earning a paycheck.


Honestly, days when I’m sitting in a meeting and people are arguing about font color or other minutia details cause me to daydream and think about all the other things I could be doing with my time.


retirementI could be doing relief work, traveling overseas, or anything else!


For the longest time, I had no idea how much I needed for retirement.  On the internet, it seems like it is the wild wild west when it comes to investment advice.  


Most experts tout that you need to have 80% of your work income in retirement.  


This is a completely false.  


You need 100% of your retirement spending in retirement.  See what I did there– I changed it from income to spending.  It doesn’t matter how much you make at the end of the day.  It’s about how much you spend.  


retirementWe read about the countless millionaires, who spent it all and ended up bankrupt.  On the other hand, there are many other wealthy individuals who are much wiser with their money and have the ability to give much of it away.


So how much you need for retirement will completely depend on you.  If you plan to jet set around the world after you retire, you may need more than 80% of your work income in retirement.  Or, if you plan to retire to a beach and lay low, you may only need 30%.  


Only you will know the correct spending outcome for your own self, but knowing that figure is the only way you can actually reach FIRE.


So, how much do you really need?

retirementThe Trinity Study

The Trinity Study was derived from a paper written by several Trinity College finance professors.  One of the main aspects of this study was determining the safest withdrawal rate from a retirement account.  The study proposes that one should be able to withdraw 4% of your portfolio per year and have it last the rest of your life.


Yes, 4%.  The researchers confirmed this figure when they studied a period from 1925 to 1995.  At a 4% withdrawal rate, it was very unlikely to exhaust an entire portfolio.


Some of you are probably thinking that you have no idea what your expenses are going to be in the future.  How can you figure future expenses today?


The 25X Spending Principle

buyer's remorse retirementI recommend using Personal Capital to track your expenses, so you can have an idea of how much you spend per year.  I wrote a review of Personal Capital touting all the wonderful benefits this free valuable tool can provide.  


Once you arrive at your yearly spending figure, you can determine if this is an accurate baseline for you.  For example, some might expect an increase in expenses in the future or may foresee a decrease if you are eliminating debt.


Determine whatever amount you believe is “right” for your yearly spending expenses.  Then, all you must do to come up with the retirement is number is multiply that yearly expense figure by 25.  So if you expect a yearly spending of $40,000, you will need one million dollars for retirement.


Let’s go into a little more detail.  If you plan to work until retirement age, which is 66, the average Social Security check is $16,000 a year.  So using that average figure, you would only need $24,000 per year, or roughly $2,000 a month.  That means instead of the $1,000,000 that you needed for retirement (from the 25X Principle), you would need to reach $600,000, which is lofty but more attainable than a million dollars.


Starting Early Pays Off

dollar-cost averaging retirementIf you start at the age of 22 and invest $125 every month in the S&P 500, you should have over $600,000, based on the historic 8% return this passive index fund has provided since 1926.  


If you wait just 8 years and don’t start until you’re 30, based on the average market returns, you lose about ⅔ of $600,000, leaving you at just $200,000.  You will need to double the amount that you put in for retirement ($250/mo instead of $125/mo), in order to catch up.  Compounding interest is really invaluable in this case.


You’re Not Average

Since you’re reading this article though, we know you’re not average.  You want to reach FIRE as soon as possible.  


What does is it take to get there faster?


Well first things first, if you’re not going to rely Social Security, you’re going to have to increase your portfolio to cover the deficit.  So based on the information above, one could contribute $125 over 44 years, and it would return $600,000.  But how to get to $1,000,000?


In order to do that, we now know that it will take 52 years to achieve the goal.  By doubling the contribution to $250, it would take 44 years.  Now let’s start getting crazy and double the contribution again to $500.  Now it’s only 35 years to reach $1,000,000.  Are you noticing a pattern?  Every time you double the contribution, roughly 8 years is eliminated.  If you don’t believe me, let’s do it again by raising the stakes by increasing our contribution to $1,000.  It drops now to 27 years.  Now let’s double it again, to $2,000, and it’s down to 19.5 years.


So as you can see, the more you increase your contribution, the quicker you will get to your desired number.  I’ve linked a chart that I created so that you can play around with the numbers.  Enjoy!    


Are you closer or further away from FIRE than you anticipated?  Will you make any changes based off this chart?  Share your thoughts below.

Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.


  1. We have a couple of posts (The Numbers Game / Part I & II) at our site on this topic. As you point out, considering a percentage of your current income rather than your spending is an awful way to plan for retirement.

    We are pretty conservative when it comes to finances, so I’m targeting more like 3.3% instead of 4% as an average withdrawal rate. That will not be a hard and fast rule though, and we will adjust as needed.

    Before becoming a member of the FIRE community, our retirement goal was 58 (we are currently 44). With a bit more focus and adjustment, our new goal is 51… or perhaps 50.
    Mr. Need2Save recently posted…2 Troubling Realities about HSAsMy Profile

    • Thanks for sharing Mr. Need2Save!!! I have definitely thought about being a little less aggressive when it comes to retirement. I definitely don’t want to run out of money over time 🙂

    • Thanks for stopping by Yaz!!! Everyone has to start somewhere 🙂 I was talking to a friend it’s amazing how far we’ve come along over the years!!!

  2. As Daniel said, I like you shift the focus to spending. It has been crazy how often I have been able to look into an expense and spend WAY less than what the ‘social standard’ is for that expense. It takes a little time to research, but it helps keep cash in the pocket, and bring the retirement date closer!
    The Tepid Tamale recently posted…Do I have to spend $200/month on hair?My Profile

  3. Rob, great post. I like that you discuss spending because many people won’t want their spending levels to decrease. Sure, their housing may cost less, but they don’t want the quality of life to decrease in terms of going out, taking trips, etc. Most of us don’t do a very good job of planning that out. We think we can figure it out when the time comes! And that’s why so many people end up with the Social Security retirement plan, instead of using it as a supplement to their retirement income.
    Dave @ Run The Money recently posted…Looking for a Last Minute Graduation Gift? How about Stock?My Profile

    • Thanks for stopping by Dave!!! I definitely agree that too many depend on social security and it’s eye raising to see how much the average yearly amount is. Definitely a lot less than I thought.

  4. I agree that when you can FIRE is determined by saving and spending. I FIREd in 2012 and as I got closer I focused more and more on reducing spending. The 25X Spending Principle really makes it worthwhile to aggressively attack even relatively small monthly expenses. And it’s actually fun!
    Mr. Freaky Frugal recently posted…Adventures in negotiating rentMy Profile

    • Thanks for sharing Mr. Freaky Frugal!!! That’s awesome that you’ve reached FIRE and going on five years. Way to go. I am definitely looking forward as we get closer to ramping it up and seeing how much faster we can get there.

  5. Thanks for sharing, MSM. Also, I like the calculator – nice work!! I haven’t set a FI date for myself. I’m still figuring out what I want once I achieve FI. By that I mean will I want to retire? Probably not. I may take some time off, but I will need to do something to fill my time. I plan to change jobs and go into a career that is more rewarding to me. A career that is not only about making money. With that said, I have a good 10+ years before I get anywhere close!!
    The Grounded Engineer recently posted…Seven Factors Millionaires PossessMy Profile

    • Thanks for stopping by!!! I’m glad you liked the calculator. I thought it was fun to play with 🙂 Definitely puts things into perspective for me!!!

  6. I’ve been thinking about this question a lot lately. I’d feel comfortable retiring if I know we had a big cushion of cash and a nice portfolio of investments that won’t tank together with a sinking market.

    Mr. FAF told me his goal is to have $5M by the time he’s 50 so that he can retire. But he said I’d need to keep working since we would need a monthly source of stable income (!?). Not sure what he means by that. But if he retires, I’d love to be able to do that to. I might still work for fun though. Hopefully, we won’t bicker with each other every day since we spend so much time together when we retire.
    Ms. Frugal Asian Finance recently posted…Food Expense Report – May 2017 – $777.26My Profile

    • I use to think that I needed a huge cushion of cash. But now that I’m understanding retirement more and more I get that I was overestimating by a lot.

  7. The thing for me is I started at an early age, but I wish I saved more in those early years. Now I’m nearing the max amount per year and am happy with that. Maybe there should be a mandatory governmental course for people that get their first job to help them start saving 🙂

    • I guess if we were in Israel, the government would force newly minted high school grads into the military which obviously would encourage savings. Other than that I don’t know how to really mandate it unless they take it out of your check like payroll taxes.

    • Thanks for sharing Mrs. Picky Pincher!!! It’s definitely not an easy process and I’ve definitely lost focus over the years. But I’m sure it will be worth it when we finally arrive 🙂

  8. OMG that whole sitting in a meeting talking about stupid stuff like fonts rings so true for me. And to answer your question, “no!” 🙂 And I totally agree on it’s not what you earn. I could live off a lot less than what I’m making. I’m just thankful I am making what I’m making to SAVE!
    Tonya@Budget and the Beach recently posted…May Rewind: Was it Worth the Cost?My Profile

    • Thanks for stopping by Tonya!!! I definitely agree those type of meetings drive me crazy. There are so many other things in life I’d like to do.

  9. I’m far away from retirement, but I’m going to be a millionaire within the next 10 years. I’m investing $500 a month + $5500 per year via my IRA, for a total of about $11k a year. This does not include my equity build on my house, or any business investments, so I think I’m doing alright 🙂

    Thanks for sharing the chart. I love spreadsheets!

    • Wow 10 years until you’re a millionaire!!! That’s awesome Erik. You are definitely mastering the concept of investing early and letting compound interest take it’s course.

  10. With a pension at 55, that is the latest I would likely work. Earlier retirement would be much more likely if we decided to move to a lower cost area but that is not in our plans at this point. Also, if I become FI close to age 55…I’m not going to lie…those golden handcuffs get tighter because the penalty for leaving early is pretty harsh. It’s tough to say no thanks to that money.

  11. We’ve had the age of 55 as a goal for many years, but in recent years decided we’d like to see it happen a little earlier. We’re on track to reach FI in about 7 years, give or take, depending on how real estate investing pans out.

    As you show, that compound interest is magical! My only regret is not investing more at a younger age!
    Amanda @ centsiblyrich.com recently posted…An inside look at how we manage moneyMy Profile

    • Thanks for sharing Amanda!!! 7 years away is amazing plus having the real estate gig is awesome as well. Sounds like you are well on your way 🙂

  12. I completely agree with your statement. It’s all about your spending habits over your income. And the time in the market is huge in successfully achieving your goals. If you are able to set yourself up when you are younger and can postpone drawing from social security for a few years, you can increase your income down the line from it if necessary. Thanks for sharing. Love the spreadsheet.
    Dividend Daze recently posted…Dividend Update – MayMy Profile

    • Thanks for sharing Paul!!! I’m not sure I’m ready for retirement just yet either but I am looking forward to spending time concentrating less on a paycheck 🙂

  13. Until we find a way to stop supporting my dad’s basic living expenses, our spending is artificially inflated, but it’s also higher than I’d like it to be thanks to the HCOL in the SF area. We’re here for the long term, so the two factors are keeping us quite a distance away from FIRE. But never fear, we’ll figure it out 🙂 I always have been able to improve our situation by a few orders of magnitude and I’ll continue to work on that til we have enough in our savings to be free!
    Revanche @ A Gai Shan Life recently posted…Net Worth & Life Report: May 2017My Profile

    • Thanks for sharing Revanche!!! Sounds like you are well on your way especially if you know how to improve your situation by a few orders of magnitude 🙂

  14. Great points! Definitely don’t rely on social security, for 20 somethings out there, it seems like a pipe dream.

    There has been a lot of criticism on the 4% rule recently because it’s simply not working and people are overshooting that 4% due to health care costs. I am hoping I’m wrong on this considering I was basing our math on the 4% rule as well.
    Lily recently posted…Find Meaning Before You Find WealthMy Profile

    • Thanks for sharing Lily!!! I do wonder that from time to time but the odds are in their favor at this point. We’ll see if they still hold up 🙂

  15. Very simple and easy to understand, great write-up! I think a lot of people get nervous when they think about trusting something like the 4% rule. “What if the money runs out? What if the stock market crashes? Etc.” In reality, it’s actually pretty lenient.
    The professors studied 55 30-year periods (there had been several crashes, along with the Great Depression), and in half of the scenarios, not only was the initial money still there, it had actually TRIPLED! And like you mentioned, there may also be social security income, and you may choose to work a little on the side to fill up you retirement time, so you’d make even more money. Also, spending often goes down at retirement so you may not even need to withdraw 4%.
    There’s always two sides to every coin, but 4% seems like a safe bet to me!
    Matt Kuhn recently posted…Taxes Made Easy Part 2: How to Legally Avoid Taxes and Keep More MoneyMy Profile

    • Thanks for stopping by Matt!!! I definitely agree that it should hold up. But who knows what the future will hold. If anything it gives something for people to shoot for 🙂

  16. As the name of my blog suggests, we’ve set the date. The plan is for me to retire when I turn 42 (in 2021) and for Mr. BITA to retire when he turns 42 (5.5 years after I do). We’re trying our hardest to pull the dates in though, blog name be damned. We want a SWR of about 3.5% though, so we’re targeting 28x expenses.
    Mrs. BITA recently posted…On the path to financial independence: May 2017My Profile

    • 28x is definitely a great number and something I kick around from time to time. Especially when considering how small it probably will be in the grand scheme if I work an extra year 🙂

  17. I keep going back and forth about my timing and number. I’ve saved enough in my retirement account that by the time I reach 60 (in about 26 years), I’ll be set in my later years. So my bigger challenge is finding a way to fund my life between now and then. We are close to finishing the remodel of our first rental property and hope to pick up a second one. So those will help cover that gap. My husband also likes his job and plans to continue working. Therefore, once we get rid of our mortgage (which could happen next year if we decide to move), I could easily go either part-time or focus more on my side work to cover my minimal living expenses. My goal isn’t necessarily early retirement so much as leaving full-time employment, so hopefully that will happen in 2018 (or 2019 at the latest)!

    • Thanks for sharing!!! Sounds like you have a ton of options available to you in the future. Options are definitely good especially when you have some flexibility. Definitely can’t wait to hear all about it 🙂

  18. We expect to FIRE in 3-4 years. Being a little late to the party we’ll be in our early 50’s. Definitely better than 65 though! Thanks for sharing a great post and chart MSM!

  19. For me, it would have to be $100MM to quit working completely. $10MM to quit my current work and do something else. To be honest, working is very fulfilling for me, so I can’t imagine not working in some capacity or another. Although, reaching full FI, would be nice though for sure.

    • Thanks for sharing Tim!!! If I had $100m I couldn’t even fathom what I would do with all of it. Sounds like a great challenge to figure out how I would spend all that money 🙂

    • I totally agree Financial Coach Brad!!! I think people need to start working backwards with their eye on the prize and building that financial bridge to get where they want to go.

  20. Before I calculated my FI number, all I know is that I want to retire before the normal retirement age of 65. After I calculated my FI number, my target retirement age is 48, with a net worth of $2M. The sooner I reach this net worth number, the sooner I will leave the corporate world to pursue my passion to build a business from the ground up. It’s going to be a low cost start up of course and I will be investing mostly my time rather than money to build it.

    Knowing my FI number had improved my happiness as I have something to look forward to. It also helped that my target date is less than 10 years away.
    Leo T. Ly @ isaved5k.com recently posted…Lessons From A Young EntrepreneurMy Profile

    • Thanks for sharing Leo!!! It’s an incredibly freeing feeling knowing what your retirement number is instead of thinking it’s some number in the abyss. Thanks as always for stopping by and I can’t wait to hear about your dreams of starting your business from the ground up 🙂

  21. We’ve been thinking more and more about this stuff. We really don’t spend that much if you take away our debt payments, which will be gone long before we retire. We’re trying not to count on social security, but it will be nice if it’s there and if it is we won’t need much at all from retirement. We’re also working on options that would allow Rick to retire early. But right now the focus is debt payoff.

    • Thanks for sharing Laurie!!! I like that having a number brings clarity and focus to the situation. So many people have no idea and think social security will take care of things which I’m trying not to bank on 🙂

  22. My last day of real work is 7/5. I must say, it feels totally strange to not be 100% in equities for the first time ever. I have been loading some funds into bonds as the market has rallied. Having two years of expenses in cash like bond funds, albeit not quite cash, is my margin of safety for market downswings.

    It helps that I negotiated a favorable severance. I figure this will make the transition smoother. After I leave, I will still get full salary and benefits for three more months. Plus, my second annual bonus in August will be paid out, even though I won’t be working.

    I say if the math works, just retire.
    FinancePatriot recently posted…How to earn more than 2% cash back with Citi price rewindMy Profile

    • Congrats Finance Patriot!!! Sounds like retirement is right around the corner for you. I would imagine that your July 4th party is going to be epic. I know mine would 🙂

  23. I really like that point – start saving for retirement at the age of 22 and invest $125 every month in the S&P 500.

    This is something I’ve been thinking about for a little while. I’ve been told you should start saving for retirement early but it’s something often overlooked by people.

    I believe everyone should save money for their future since we don’t know what will happen later on in life.

    • Thanks for stopping by Cory!!! It’s definitely interesting to see how quickly your investment will grow over time even based off a small amount of money. I think it should be required in HS and College to graduate with a class in personal finance. I think this would help tremendously 🙂

  24. We are still a ways away from FIRE, but are saving aggressively to get there as soon as possible. So many people overlook the benefit of saving early on in life. People have often told me that they will just wait a few years and start later so then can enjoy life. What they miss is that waiting even a few years can have a big difference 30 to 40 years from now. My husband and I now consider FIRE when we make financial decisions because the things we do today can impact our savings and future retirement goals!

    • Thanks for sharing Courtney!!! I definitely agree everything adds up and it’s amazing how a couple dollars now will affect big dollars down the road 🙂

  25. I think what you should add into that equation is the return on investment (ROI), because S&P 500 could get to 8% per year but going into real estate and other alternative investments could generate over 10% per year which will change the path over so many years. Also doubling down at some point will be very hard to do unless you generate much more income which isn’t easy.
    Alex @ Asset plus recently posted…Small steps towards financial independenceMy Profile

    • Thanks for sharing Alex!!! I used the 8% number since it has the lowest barrier cost with the stock market being so accessible. If someone has the ability to generate more than that I would definitely encourage them to raise the number 🙂

  26. I do agree that spending is what really matters because for most of us – the income we generate now is far too high for our living expenses – that’s why we have the ability to save so much. Assuming the living expenses don’t change much or even go down, you can get by on a much smaller income when you retire especially when you consider the taxes on the lower end of the income and how that works with investment income.

    • Thanks for stopping by TimeInTheMarket!!! I definitely agree that you can get by a smaller income when you retire especially when you consider investments. Great points!!!

  27. I’m sneaking out by the end of this year. Not FI yet, but Mrs CF will continue to work to make sure we get there. In the mean time I’m going to see if I can side hustle to speed things up.
    Team CF recently posted…May 2017 Dividend UpdateMy Profile

  28. The FIRE movement is really great. It shows a lot of people that there are other options out there. You don’t need to get stuck in the work/spend cycle. Saving more is the key to achieving FI. The more you save the earlier you’ll get there.
    I don’t know if I’ll ever stop working completely. Part time self employment is too awesome to quit. 🙂

    • Thanks for stopping by Joe!!! I definitely think that you have an awesome hustle going on. I don’t think I’d quit either if I was doing as well as you 🙂

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