Plan your path to living off your investments without depleting your principal.
Historically, World ETFs average 7-10%.
Income you want to extract monthly.
Modified 4% rule. 3% is considered highly safe to preserve capital indefinitely.
How is this calculated?
The calculation uses monthly compound interest. Your Target Portfolio Size is calculated by taking your desired annual income (Monthly × 12) and dividing it by your Safe Withdrawal Rate. For example, $3,000/mo ($36,000/yr) ÷ 3% = $1,200,000 target.
* This simulation assumes steady returns and does not account for inflation, taxes, or market volatility.
Achieving Financial Independence, Retire Early (FIRE) is not about picking the perfect stock or timing the market perfectly. It is anchored heavily in mathematical certainties, compounding growth, and strategic withdrawal rates. This calculator is built to help you simulate how your savings rate, investment strategy, and spending habits intersect over time to dictate your timeline to freedom.
The journey toward financial independence typically scales across a few core philosophies depending on your lifestyle goals:
The primary mechanism driving your financial trajectory is compound interest. When you invest, you earn a return on your initial capital. In subsequent periods, you earn returns not just on your principal, but also on the returns accumulated previously. Over decades, this creates an exponential growth curve where your investment growth eventually outpaces your manual monthly contributions.
Mathematically, the compounding growth in this tool calculates your balance over time by breaking down your annual expected return into localized monthly compounding periods. It accounts for systematic, recurring monthly contributions and simulates growth assuming regular reinvestment of all dividends and capital gains.
One of the most vital metrics in retirement planning is determining how much you can safely withdraw from your portfolio each year without risking running out of money before you die. This baseline is established through the historical data of the famous Trinity Study.
The study found that a portfolio consisting of stocks and bonds could historically withstand a 4% initial withdrawal rate (adjusted annually for inflation) over a 30-year horizon with an incredibly high success rate. This rule of thumb implies that your "FIRE Number" needs to be roughly 25 times your annual expenses.
Formula:
Target Portfolio = Annual Expenses × 25
While the standard 4% rule works exceptionally well for traditional retirees on a 30-year timeline, early retirees face unique risks. If you retire at age 35 or 40, your portfolio may need to sustain your lifestyle for 50 to 60 years instead of 30. This extended timeline drastically increases your exposure to Sequence of Returns Risk (SRR)—the risk that a severe market downturn occurs immediately after you stop working.
To combat Sequence of Returns Risk, many financial planners and early retirement advocates recommend adjusting your baseline expectations downward. Utilizing a more conservative Safe Withdrawal Rate—such as 3.0% or 3.5%—drastically improves portfolio longevity. Lowering your withdrawal rate implies building a larger cushion (e.g., saving 33.3 times your annual expenses instead of 25), fundamentally ensuring that market volatility in early retirement will not prematurely deplete your generational wealth.