# When Can I Retire? When Will I Be Financially Independent? A Retirement Calculator Guide

I get a lot of questions about retirement.

This might not come as a surprise to you since I write so much about the topic.

Most of the questions are one of these two: 1) When can I retire? (Yes, literally that simple.) and 2) I don’t think I have enough to retire. What do you think? (This is really just another form of the question above.)

I have penned several posts attempting to address these questions including:

You would think these would do the trick for most people, but admittedly they don’t exactly answer the question. It’s because they are general examples and don’t address a person’s individual money situation. How can they?

Well, now I have a place to point people who wonder if they have enough to retire. Today I am introducing my “When Can I Retire?” calculator.

Also to note: You may not want to retire but still want to know when you’ll be financially independent. The calculator is designed to equate “financial independence” and “retirement”, so it works for either one. I’ll use “retirement” more throughout this post but I could just as easily use “financial independence”.

#### Retirement Calculator Purpose

This calculator is not meant to be a sophisticated financial planning tool.

Instead it’s designed to give a ballpark estimate of when you can retire (which may be today, BTW) which, when coupled with some margins of safety, should give you a sense of how close you are. From there you can make detailed plans and do a bit more planning and work.

And for me, I now have a place to send people where they can run their own numbers. It’s awesome. 🙂

Let’s begin with the calculator itself, then I’ll add explanations below on how to use it (in case some have questions) plus some suggestions on speeding up retirement/financial independence.

#### Retirement Calculator Inputs

Like other calculators, this one begins with inputs. It starts by determining your retirement spending and income as follows:

• Retirement Spending Needs — This is the annual amount you’d spend in retirement if you were retiring today.
• Annual Spending Inflation — This is your estimate of what inflation will be from today until you reach your retirement age (the calculator will tell you how many years until you can retire.) The result is that it’s going to take more money to retire in 10 years than it will to retire today.
• Assumed Withdrawal Rate or Earnings on Assets — This could represent several options depending on your circumstances: 1) what percentage of your assets you’re willing to spend/withdraw during retirement (4% is the standard, but you can pick a lower percentage for more safety), 2) the earnings you might have from your assets (for instance, your retirement assets might all be in real estate which churns off 8% annually in income), or 3) a blended rate of the two (an example would be 4% withdrawal of assets and 10% earning on real estate for a blended rate of 7% per year). Put in a percentage that fits your circumstances.
• Annual Side Hustle Income at Retirement — The amount in extra income you’ll earn annually during retirement. This could be from any source (and could even be multiple sources).

Next we move to the assets that will help you retire. The inputs include:

• Current Assets to be Used for Retirement Drawdown or Earnings — This is the amount you currently have saved to either drawdown or earn income from in retirement.
• Annual Return on Investments — This is the growth rate for the retirement funds you have already saved and for those you plan to save between now and retirement.
• Annual Contributions to Assets — This is the annual amount you’ll contribute to your retirement assets for this year.
• Annual Increase in Contributions — This is the percent you’ll increase retirement contributions each year between now and when you reach retirement.

Once you have all these inputted, you’re ready for the results.

#### Retirement Calculator Results

Once the inputs are completed you’ll see big, bold letters that read:

YOU ARE ON TRACK TO RETIRE IN:

And then there’s a red bar which will give you the answer (in years)!

That is unless you’re already there. In that case it’ll tell you that instead. 🙂

Once you have the results, here’s how to think about them:

• The “answer” is designed to give you a general feeling for when you can retire based on your current circumstances and plans. It’s just a ballpark estimate, but from here you can dig deeper and begin formulating a specific plan to retire (if that’s what you want).
• Next you’ll want to play with it to see the results of your actions. If you don’t like the answer it gives, then change what you’re doing (the inputs) to retire earlier. This is where it can help you formulate a plan to retire when you want to.

It’s not rocket science, but a simple, basic guide to get you started on your path to retirement.

#### How to Retire Early (Or Reach FI)

The tips to making retirement/financial independence happen as early as possible are pretty clear from the calculator and we’ve discussed them quite often on this blog. But just for the sake of being clear, let’s quickly review ways you can retire as quickly as possible:

• Learn to live on less. It’s certainly easier to retire faster with a \$40k spending need rather than a \$60k one.
• Grow your side hustle. I’ve detailed the fact that a side hustle is so powerful that it can help you retire in 10 years. This calculator illustrates this point. If you’re looking for opportunities, here are some side hustle ideas worth considering. If you’re a writer, you may want to consider starting your own blog.
• Maximize your assets. Obviously the more you have saved already the better off you’ll be. But you can also work to deploy your assets in different ways to make them more productive. For instance, I took some of my savings, invested in real estate, and started to earn 10% on my money instead of 5% or less. I also bought a business and turned cash earning almost nothing into a 50% return on my money annually.
• Save more. Save as much as you can as soon as you can as often as you can. By saving more now and adding to that amount aggressively each year, you will be able to retire faster.

So that’s it. Test it out and let me know what you think.

Originally posted at https://esimoney.com/when-can-i-retire-when-will-i-be-financially-independent-a-retirement-calculator-guide/