Early Retirement Calculator: Crunch Your Numbers and Find Your Earliest Retirement Age
Early retirement isn’t an unattainable dream. It’s what you want out of life now and in retirement that determines when you can retire. An early retirement is not the easiest thing you’ll do, but the best things in life usually aren’t. Use an early retirement calculator to find out if you have what it takes (and that does not necessarily mean a specific amount of money).
There’s a whole new retirement world out there, and you get to define it.
Can You Retire Early? The Only Way to Know is to Get Detailed with Your Numbers
There are basically three paths to an early retirement:
1. Save a lot of your income when working
2. Reduce your expenses as much as possible both while working and after retirement
3. Ideally, do all of the above
Exactly how much you need to save? How drastically do you need to cut expenses? How early can you actually retire? The answer is that these questions are interdependent — change one of the metrics and everything else shifts. So, the best way to find out when you could retire is to use a really detailed early retirement calculator. and keep playing with all of the numbers until you have a really solid plan.
See what happens if you cut your current expenses by 20% and your projected retirement expenses by 40%. Then see what happens by increasing your savings rate. Not enough, try again with more dramatic cuts. Now, what happens if you take a little more risk with your investments?
Early Retirement Does Not Necessarily Mean No Work Income
With more people working throughout retirement and putting off Social Security until later to max out benefits, the lines between work and retirement are getting blurred. You get to define what what exactly “retirement” means for you.
Many people who achieve an early retirement quit their long term career and then either:
- Find a new job that they really love — perhaps at a salary cut
- Consult or work part time — giving themselves much more freedom
- Take a complete break from work for some period of time and then eventually return to employment in either a full or part time basis
The NewRetirement retirement calculator allows you to set different levels of work income for different time periods. You can even document a work sabbatical.
Accumulating debt is not always a bad idea, but if you want to retire early, you need to save every penny and servicing interest payments is not a good use of your money.
If you think a car loan is a necessity, then perhaps an early retirement is not really for you. Reconsider and think about buying a highly reputable car used, with cash.
And, while credit cards can be an efficient way to track all of your spending, paying interest on your balances is akin to setting your money on fire.
If you have debt — or are considering a loan, try out the scenario in the NewRetirement retirement planning calculator. You will easily be able to assess how the loan impacts your overall retirement plans. See what happens if you make bigger payments or pay it all off right away.
Cutting Back on Expenses
For most people with moderate income, being able to save money now to use later means scaling back big time. Peter Adeney, the “Mr.” of Mr. Money Mustache fame, and his wife retired when he was merely 31. And they did so on a combined working income of about $134,000.
Adeney tells Business Insider that it all came down to living on about half as much as their peers, and investing 3/4 of their income.
The less you spend every month, the more you can save now and the less money you will need for retirement.
Pay particular attention to the biggest spending categories:
Housing: This is the big one. According to the Bureau of Labor Statistics (BLS), housing accounts for 32% of an average household’s annual expenditures. Cutting this cost can allow you to save more and retire earlier. Can you downsize? Move to a less expensive community? One popular option for cutting costs dramatically — especially in retirement — is moving abroad.
Transportation: For average households, transportation related costs account for about 16% of annual spending.
Food: Meals at home and out are — on average — 13% of expenditures.
Health Insurance: A study from the Commonwealth Fund found that the average American family spends 10% of their income on healthcare.
To retire early, you need to amass enough savings to fund the rest of your life — no matter how long that turns out to be.
Key to accomplishing sustainable retirement income is saving adequately, investing wisely and always be reinvesting all returns. You will want to earn a reasonable rate of return — 5% would be nice — and pay low fees on any and all accounts.
Once you have adequate savings that are earning a good rate of return, you will be able to take withdrawals from the accounts that essentially equal to or less than your investment returns so you won’t actually be diminishing your savings.
Get Inspired by These Early Retirement Stories
There is more to achieving an early retirement than crunching your own numbers. There are quite a few people out there who retired early and want to share their know how with you.
Here are a few favorites:
Mr. Money Moustache: This guy has a bit of a cult following and for good reason. He makes a clear and easy to follow case for retiring early and explains how to do it.
Get Rich Slowly: J.D. Roth started Get Rich Slowly to document how he got out of debt. That experience led him to learn about saving and investing and — 12 years later — to an early retirement. He offers smart no nonsense money advice.
Can I Retire Yet?: Darrow Kirkpatrick retired at 50 and now uses his own personal finance experiences and expertise to help baby boomers (anyone really) know how to retire early.
Physician on FIRE: This take on early retirement is from a high earning physician who got a late start on retirement savings. He discusses how he achieved financial independence as well as why he actually opted to keep working.
Financial Samurai: The Financial Samurai retired at age 34 after starting a blog in the wake of the 2008 financial crisis.
How to Find the Best Early Retirement Calculator
Retirement calculators can vary widely. Most retirement calculators only ask you for a few pieces of information and then they make a bunch of assumptions to fill in the rest of the details.
These simple retirement calculators are good for quick estimates, but are not great if you seriously want to create a credible plan for retiring early.
The NewRetirement retirement planning tool has been named a best retirement calculator by the American Association of Individual Investors (AAII), Forbes Magazine, The Center for Retirement Research at Boston College, MoneyBoss, CanIRetireyet and many more.
The tool is ideal for planning an early retirement because it covers a comprehensive set of information relevant to retirement and let’s you customize everything.
If you want to leave the 9-5 workforce sooner than typical retirement age, chances are you can. It all depends on how determined you are and how well you invest, save money and cut expenses. Try out our retirement calculator today and start an early retirement plan of your own.
See what real users say about the tool. Here is a sampling of recent feedback:
Most comprehensive estimator I’ve found in years of searching!
Atlanta, GA – November 20, 2017
Yours is one of the most comprehensive sites I have used and it continues to improve. You provide a wealth of information and provide various inexpensive options to obtain advice. It has been highly recommended by various publications and testimonials.
Warsaw, IN – November 14, 2017
Rarely do you find a site on line that is really free to use , gives great advise through the articles provided , and really seems to want to help you on a path of a good retirement .
Pottstown, PA – October 25, 2017
The details of the information the site asks about and the ease with which one can do “What If” analysis … I have yet to see a tool as comprehensive and useful as yours in retirement financial planning and forecasting! So glad I accidentally stumbled upon it.
Madison, WI – June 24, 2017
Easy to navigate; resources available following each topic; raises guestions I had not considered; like having a “live ” document that I can change, alter & update the most!
Honolulu, HI – June 17, 2017