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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

Enter the annual spending you want the main estimate to fund from your portfolio, in today’s money. Include any expected tax on portfolio withdrawals once. You can start with total spending or the remaining amount after allowing for reliable outside income, after its relevant costs and taxes, for the same years. The main estimate does not subtract income automatically. In the optional work-income comparison, enter only income you have not already deducted.

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 assumed first-year withdrawal as a percentage of the starting portfolio. In the inflation-adjusted withdrawal method, later withdrawal amounts are adjusted for inflation. This calculator uses the rate only to estimate a target; it does not simulate those later withdrawals.

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 calculated. If withdrawals from your portfolio will be taxed and your spending figure does not include an allowance for that tax, the invested assets actually required may be higher than this estimate.
  • No separate modelling of return sequences, one-off costs or changing spending. State or public pensions are not calculated or subtracted automatically.

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 calculated. Include an expected allowance in your spending figure, counted once; if it is left out, 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 calculated or subtracted automatically. If reliable pension income after tax covers part of your spending for the years in this estimate, you can allow for it in the spending input. Do not deduct the same income again.

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.