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Financial Independence Target

Estimate how large your invested assets would need to be for withdrawals from them — rather than your work — to cover your yearly spending.

Two figures and one assumption. The assumption does most of the work, and you can change it.

What you spend

Your total yearly spending in retirement, in today’s money. Include housing, insurance, and everything else you actually spend.

US dollars, each year
Enter as

Monthly figures are multiplied by 12. The calculation is annual. Changing this reads the same number as a different period; it does not rewrite what you typed.

The assumption

The share of your portfolio you assume you could withdraw each year, adjusted for inflation.

percent a year

4.0% is a common planning starting point drawn from historical US market research. It is a modelling assumption, not a guaranteed safe rate, a rule, or a recommendation — and it may be too high or too low for your horizon, your costs, and your markets.

Where does this rate come from, and why do people disagree about it?

Optional

Adds a comparison against the target. It does not change the target.

Your estimated Financial Independence Target

Enter a yearly spending figure to see an estimate.

What this estimate assumes

  • The withdrawal rate is a modelling assumption you can change.
  • Every figure is stated in today’s money.
  • Tax is not modelled. Where withdrawals from your portfolio are taxed, the invested assets actually required may be higher than this estimate.
  • Not included: tax on withdrawals, the order of good and bad market years, one-off costs, state or public pensions, and any change in your spending over time.

One source of uncertainty is quantified here: how the target moves with the withdrawal-rate assumption. The others named below — tax, the order of market years, one-off costs, health and longevity, pensions — are not quantified anywhere on this page, and no range shown here accounts for them.

What this calculation leaves out, and why
  • Tax on withdrawals — not modelled. Where withdrawals are taxed, the amount required may be higher.
  • Sequence of returns — not modelled. The order of good and bad years matters, and a single rate cannot express it.
  • One-off costs — not included. Housing changes, care, and large purchases sit outside a yearly spending figure.
  • Inflation — handled by keeping every figure in today’s money rather than by forecasting prices.
  • Health and longevity — not modelled. The horizon behind a withdrawal rate is an assumption about how long the money must last.
  • State or public pensions — not modelled. Where they apply, the portfolio needed may be lower.

How much does the withdrawal rate change this?

The same spending figure divided by three different assumptions — 3.0%, 4.0% and 5.0% — appears here once an estimate exists.

Other questions

These follow on from the estimate above rather than replacing it, and open one at a time.

Read further

Disclaimer

The results provided by this calculator are estimates based on the information you enter. They are intended for educational and planning purposes only and do not constitute financial, investment, tax or legal advice. Actual outcomes will vary depending on market performance, inflation, taxes, fees and personal circumstances. Always perform your own research and consider consulting a qualified professional before making important financial decisions.