How much to live off your investments
Your data
The return has to be the one above inflation, not the one on the statement. Using the number on the statement counts the same money twice and shortens the deadline by years.
Results
How long until the pile pays for your month
—
| How much has to be in there | — |
| That is this many years of your spending | — |
| The share of what comes in that you are putting away | — |
| Which is this much every month | — |
What each withdrawal rate asks of you
| Withdrawn each year | How much has to be in there | Years of your spending | Years of waiting |
|---|
Notice that the rows do not step evenly. The pile you need is your yearly spending divided by the rate, so each point you shave off the rate costs more than the point before: going from five to four adds five years of spending to the target, and going from four to three adds another eight and a third.
The four per cent figure comes from a study of thirty year retirements in one country and one century, and it is an assumption here, not a recommendation. A longer retirement, a different market or a bad first decade all change it, which is exactly why the rate is a field you can edit rather than a number written into the page.
How much do I need to live off my investments?
Your yearly spending divided by the share you plan to withdraw each year. At four per cent that is twenty five years of spending; at three per cent it is thirty three and a third; at five per cent it is twenty.
Notice those steps are not even. The pile is your spending divided by the rate, so it is a curve, not a line: shaving the rate from five to four adds five years of spending to the target, and from four to three adds another eight and a third.
Does the deadline depend on how much I earn?
It does not, and that is the part that surprises people. If you put away a share of what comes in, you spend the rest, and the target is that rest divided by the withdrawal rate. Your income shows up on both sides of the division and cancels out.
Measured with thirty per cent put away and five per cent above inflation, the answer is three hundred and thirty one point six eight months on an income of three thousand, of twelve thousand and of sixty thousand. Identical to four decimal places. A bigger salary changes the size of the pile, not the wait.
What matters more, saving more or investing better?
With thirty per cent put away, sweeping the return above inflation across the whole plausible range, from three to eight per cent, moves the wait from thirty three point nine years to twenty two point two. That is eleven point seven years.
Holding the return at five per cent and moving the share put away from twenty to forty per cent moves it from thirty six point three to twenty one point three, which is fifteen years. The lever with more travel is also the one you decide, while the other one is decided for you.
Why does the page ask for the return above inflation?
Because the target is written in today's money. If you feed it the return printed on the statement, inflation gets counted as growth on one side and ignored on the other, and the deadline comes out years too short.
Subtracting one from the other is close enough for a plan. What the field must never receive is the raw number from the statement.
Is the four per cent rule safe?
It is an assumption, not a law, and this page treats it as one: it is a field you can edit rather than a number written into the calculation. It comes from a study of thirty year retirements in one country and one century.
A retirement longer than thirty years, a different market, or a bad first decade all change it. Type the rate you actually believe in and read the row that matches, which is why the table shows several of them side by side.
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