![]() Reply to This Thread Comment (required) Name (required) Email (required, always hashed, never used nor published) Website (optional) Post comment Note that comments won't appear until approved. Ideally in index funds I can spend 4 of my investment growth each year and never run out of money These ideas come from the Rule of 25 and the 4 Rule. ![]() I just did a quick excel sheet, and the answer to that question that looks like around 24 years: year Money Mustache knows that the math behind early retirement is shockingly simple The more of your take-home pay that you save. Then I learned a few simple concepts: To retire, I needed to save up 25 times my annual expenses The money I was saving should be invested. a savings rate of 0%) how long would it take to reach a 50% savings rate if you get a 3% raise every year and save it? ![]() For instance, if your income currently equals you expenses (i.e. Check out this chart:Ģ comments for The Math Behind The Shockingly Simple Math Behind Early RetirementĪt that point, I’m not sure it could be solved in a single equation, although I could see something along the lines of how long would it take you to reach a certain savings rate. Lastly, one nice thing about this math is that it isn’t linear - it has a nice curve to it. My guess would be either he had multiple interest periods annually (versus my one) or that fact that his assumption of 5% returns included being adjusted for inflation. Each row looks something like this: =A2-5 Let’s try plugging the numbers in to see if I get the same results Mr. This explains why, if you’re able to save 100% of your income, then you can retire right now: you have no expenses! 100% of your income = expense rate % + savings rate %
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