The formula
How to calculate years to independence
The striking thing about the time to financial independence is that your income does not appear in it. Only the share of income you save matters, because that one number sets both how fast the portfolio grows and how small it needs to be.
Everything is expressed in years of spending rather than currency. Saving 40% of take-home pay means living on 60%, so each year of work banks two-thirds of a year of spending — that is the "saved per year" figure below.
The calculator asks for:
- Savings rate (%) — share of take-home pay you save
- Real return (%)
- Withdrawal rate (%)
- Already saved (× annual spending) — current portfolio divided by your annual spending
No submit button: type and the answer moves. Your inputs end up in the link, so the page can be shared already filled in.
Worked example
Here is the calculation with the starting values:
- Savings rate: 40 %
- Real return: 5 %
- Withdrawal rate: 4 %
- Already saved: 2 × annual spending
That gives:
- Years to independence: 18.8 years
- Target, in years of spending: 25 ×
- Saved per year, in years of spending: 0.7 ×
Reading the result
The curve is brutal at the low end and flattens at the high end. Roughly: 10% saved is about 50 years, 25% is 30, 40% is 20, 50% is 15, 65% is around 9. Moving from 10% to 20% saves more than a decade; moving from 60% to 70% saves two or three years.
Where this goes wrong. Assuming your savings rate holds through the whole period. Children, a mortgage, a career break and eldercare all land in that window, and a plan that only survives at 55% is fragile.
Only if it raises your savings rate. Doubling your income and doubling your spending leaves the timeline unchanged, which is why high earners with expensive lifestyles are often further from independence than they assume.
It is the same annuity maths behind every other projection on this site, rewritten in units of annual spending so income cancels out. The popular version of it comes from Mr Money Mustache's "shockingly simple maths" post.
The answer it gives you is years to independence. With 40 % savings rate, 5 % real return and 4 % withdrawal rate, that comes to 18.8 years. Change any field and the figure moves with it.