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I just did a quick excel sheet, and the answer to that question that looks like around 24 years: year a savings rate of 0%) how long would it take to reach a 50% savings rate if you get a 3% raise every year and save it? For instance, if your income currently equals you expenses (i.e. She retired to a homestead in Vermont USA. Frugalwoods If you dream of retiring early to the woods- take a page from her. Check out this chart:Ģ comments for The Math Behind The Shockingly Simple Math Behind Early RetirementĪt that point, I’m not sure it could be solved in a single equation, although I could see something along the lines of how long would it take you to reach a certain savings rate. One of our Favorite blog posts by MMM: The Shockingly Simple Math Behind Early Retirement.

Lastly, one nice thing about this math is that it isn’t linear - it has a nice curve to it. My guess would be either he had multiple interest periods annually (versus my one) or that fact that his assumption of 5% returns included being adjusted for inflation. Now you’re doing the same for MMM in terms of plain-spoken demystification of the shockingly simple math behind the 4 Rule. Without the hassles of paper map plotting, complex math and hours of data. Each row looks something like this: =A2-5 Use this reader's simple, easy-to-follow approach, and the Gear Guide will. Let’s try plugging the numbers in to see if I get the same results Mr. If someone starts out their career making 78k per year, and after 12 years are making 178k per year, and during that entire time are saving 40 of their income, your model states they could retire after 22 years on 60 of 178k. This explains why, if you’re able to save 100% of your income, then you can retire right now: you have no expenses! This model assumes an individual is making the same amount every year.

100% of your income = expense rate % + savings rate %

Mmm the shockingly simple math