Financial Independence Calculator

How to Use the Financial Independence Calculator

The Financial Independence Calculator is a tool designed to help you plan for retirement by assessing whether your current savings and expected investments align with your retirement goals. Follow this step-by-step guide to use the calculator effectively.

Step 1: Enter Basic Information

First, provide some basic information about yourself into the calculator:

• Current Age: Enter your current age. The value must be between 18 and 100.
• Target Retirement Age: Specify the age at which you plan to retire. The value must be between 30 and 100.

Step 2: Provide Financial Details

Next, enter your financial details as follows:

• Current Annual Income ($): Insert your current annual income. Ensure the value is non-negative and in steps of $1000.
• Current Total Savings ($): Input the total amount you have saved so far. The figure must be above $0 and in increments of $1000.
• Monthly Savings ($): Input the amount you save every month. It should be a positive number in steps of $100.

Step 3: Set Your Investment Expectations

Specify your expectations for investment returns:

• Expected Annual Investment Return (%): Indicate the annual return rate you anticipate from your investments. Values range from 0% to 30% in 0.1% increments.
• Expected Annual Inflation Rate (%): Provide the expected rate of inflation. This should be between 0% and 20% in 0.1% increments.

Step 4: Define Your Retirement Goals

The next step involves setting your retirement goals:

• Desired Annual Retirement Income ($): Specify the annual income you wish to have during retirement. It should be a positive value in increments of $1000.
• Annual Withdrawal Rate (%): Insert the percentage of your retirement savings you plan to withdraw annually. This rate should be between 0.5% and 10% and should be entered in steps of 0.1%.

Step 5: Review the Results

After entering all required data, the calculator will provide you with several results:

• Years Until Retirement: Displays the number of years left until your target retirement age.
• Required Retirement Savings: Shows the amount of savings needed to achieve your desired retirement income, based on the withdrawal rate.
• Projected Savings at Retirement: Indicates the total savings expected at the time of retirement, given your current savings and monthly contributions.
• Savings Gap: Reveals the difference between the projected savings and the required savings.
• Additional Monthly Savings Needed: Specifies any additional monthly savings required to meet your retirement goal. If none is needed, the value will be $0.
• Progress Towards Goal: Illustrates your progress as a percentage toward your retirement savings goal.

Use these results to assess your current retirement plan and make informed decisions about any adjustments needed to reach your financial independence goals effectively.