shockingly simple math behind early retirement

Sometimes in life, the simplest things are incredibly difficult. I never promised an easy solution, but it is simple. You simply need to save around 65% of your take-home pay over the next 10 years. How much you can live on: How much money would you need (not want) to cover all your living expenses at your desired lifestyle. Savings rate: What percentage of your take-home pay are you saving/investing? Think of this as the actual money that gets deposited into your bank account on payday.

Take-home pay: How much of your income you keep after all taxes and deductions. For many, this is the point where they decide to retire (if they don’t have to work, they won't) hence the term Financial Independence & Retire Early (FIRE). Put simply, reaching FI means you don’t need to rely on your job to cover your living expenses. You have reached Financial Independence and have the ability, if you choose, to Retire Early once you have reached a point where your savings and investments can cover your living expenses for the rest of your life. Both Financial Independence (FI) and Retire Early (RE) amount to the same thing as it relates to your savings and investments. Let’s quickly define a few terms here, so we are all on the same page.įinancial Independence/Early Retirement (FIRE): In the personal finance community, these terms are often used interchangeably.

Money Moustache knows that the m ath behind early retirement is shockingly simple The more of the take-home pay that you save, the earlier you will reach financial independence and be able to retire.

Shockingly simple math behind early retirement