Early Retirement Calculator

When Can I retire?

Planning for Early Retirement can seem like a daunting task because we are talking about a distant future with variables like (a) expected investment returns, (b) inflation etc…One can spend numerous hours, or even months debating the most fool-proof answer. But that is not wise because you are losing on time and compounding, your most powerful friends in reaching your goal.

Here we have 2 Calculators, one is an Early Retirement Calculator and the second one is – Finish Saving Early For Retirement Calculator aka Coast F.I.R.E.

The Early Retirement Calculator is what people aspire in theory. because in Reality, all the people we know through internet continue to generate income and live on that income after claiming Early retirement.

In reality, they do save for ER but do not live off that for the rest of their lives. Instead they use that retirement corpus as a safety net to do the following:

  • Take a break from work.
  • Change professions
  • Reduce work hours
  • Travel for short or long term
  • Start a business

In all of the above scenarios the loss of income is temporary and not permanent. however the ability to earn may reduce for a while.

These 2 retirement calculators will help you estimate:

  • Total retirement sum you need to retire early based on your current monthly expenses
  • Monthly SIP you need to reach your goal.

Which calulator to use & & Why

Use Early Retirement Calculator if you are sure you will never generate another source of income to pay you bills.

Use Coast F.I.R.E orFinish Saving Early for Retirement Calculator, if you know you will create another source of income to pay your bills at some point. Secondly, in this approach you save for actual years you plan to live, so this approach is safer.

Early Retirement Calculator

Save for Early Retirement and start living and withdrawing from Early retirement corpus for the rest of your life.

  • Pick a number for your Retirement corpus- Usually a multiple of your inflation-adjusted annual expense. For eg- 25X, 30X, 40X, 50X.
  • 30X means you will save 30 Times you inflation-adjusted annual expenses. However, 25X is considered the minimum you should save.
  • Once you reach your retirement corpus you live by withdrawing a certain fixed amount of money each month from your corpus.

Double click on the cell to input data.

You can download this calculator by clicking–↑ Your changes will be saved once you download it on your computer

COAST F.I.R.E / Finish Saving Early for Retirement Calculator

  • No rule on minimum or maximum no: of years worth of expense you must save.
  • Retirement corpus is a function of your inflation-adjusted annual expense multiplied by the total number of years you expect to live after retirement.

How to effectively use this approach

  • Finish saving for Retirement and let it compound till Age 60 or any age you want to stop working completely.
  • Once you finish saving for retirement early, you will have a nice financial safety net. And your monthly outflow will also go down. (since you don’t need the monthly SIP towards retirement anymore)
  • At this point, either you can take a break from work to pursue your passion- start a business, travel the world or just chill. Or just take a more gratifying job with the pay cut.
  • At this point, you also have the flexibility to withdraw partly from the retirement corpus to build a life of your dreams- start a business, change jobs, travel for a couple of years etc . Provided you add whatever you spend back.

Double click on the cell to input data

The biggest difference in both the calculators

In Early retirement Calculator, once you save up for early retirement, you live on it by withdrawing certain fixed amount monthly from your corpus.

In COAST FIRE you finish saving up for retirement early and let it compound. You use this saving as a safety net to branch out and do your thing, but eventually, you create a source of income to cover your monthly expenses.

Confused about return & Inflation assumptions?

To simplify things assume three Return/inflation scenarios:

  1. Optimistic plan: Assume the highest investment returns, the lowest inflation
  2. Moderate plan: Assume moderate investment returns, moderate inflation
  3. Pessimistic plan: Assume low investment returns and highest possible logical inflation.

These three different assumptions will give you a band of time which takes care of your best to worst scenario. Choose one scenario that you are most comfortable with and start. You can revisit your assumption every three years and tweak them if necessary.

Related Article: 

Early Retirement in India- Ultimate Guide

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