Dreaming of leaving the 9-to-5 grind years before traditional retirement age? You’re not alone. But before you hand in your resignation letter, there’s one big question you need to answer: How much money do you actually need to retire early?
This guide walks you through the calculation process — and yes, we’ve included a simple, interactive calculator to help you figure it out!
🧠 How to Calculate Your Early Retirement Number
The most common method is the 4% Rule, based on the famous Trinity Study. It suggests that if you withdraw 4% of your investments annually, your money should last 30 years or more.
✅ Simple Formula:
Annual Expenses × 25 = Retirement Portfolio Needed
Example:
If you spend $40,000 per year:
$40,000 × 25 = $1,000,000 needed to retire early.
📊 Interactive Retirement Calculator
Let’s calculate how much you need right now!
| Input | Your Numbers |
|---|---|
| Annual Living Expenses | $ |
| Desired Retirement Age | |
| Current Savings | $ |
| Expected Annual Return % |
Calculation Formula:
Annual Expenses × 25 = Target Retirement Portfolio
💡 Tip: Be sure to include essential expenses (housing, food, insurance) and any fun retirement goals like travel!
📈 How to Reach Your Retirement Number Faster
- Increase Your Savings Rate: Aim to save 50% or more of your income.
- Invest Aggressively: Focus on index funds, ETFs, and dividend stocks to grow wealth.
- Cut Expenses: Lower your housing, transportation, and entertainment costs.
- Boost Your Income: Start a side hustle or pursue higher-paying career opportunities.
🎯 Example Retirement Goals
| Retirement Lifestyle | Annual Expenses | Portfolio Needed |
|---|---|---|
| Lean FIRE (Simple Life) | $25,000 | $625,000 |
| Comfortable FIRE | $40,000 | $1,000,000 |
| Fat FIRE (Luxury Life) | $80,000 | $2,000,000 |
🙋 FAQ: How Much Do You Need to Retire Early?
❓What if I retire at 40?
If you plan to retire by 40, consider increasing your portfolio target beyond the 4% Rule — aim for 3–3.5% safe withdrawal rates to avoid running out of money.
❓What about healthcare costs?
Factor in the cost of health insurance and out-of-pocket expenses, especially if you retire before Medicare eligibility.
❓Can I include Social Security or pensions?
If you’re retiring really early, don’t count on them. Treat them as bonus income when you reach eligibility age.
🧭 Final Thoughts
Retiring early isn’t just a fantasy — it’s a math problem you can solve with the right plan and discipline. Use the calculator above to find your number, then start building the life you want today!
