About the FI Calculator
This calculator was created as a tool to help you evaluate the effect of different inputs to your path to Financial Independence. It uses some fancy math to generate a very precise number for your Years to FI, but don't be fooled: the real world is not so perfect. You are unlikely to save and spend exactly the numbers you estimate every year. Even if you are a budgeting ninja, the returns on your investments and the rate of inflation will fluctuate in the short term even if they average out over the long term.
Additionally, the calculator uses many simplifying assumptions to get you up and running with a directional answer, rather than filling out volumes of tax return like details to hone the precision. So instead of a final answer, use this calculator to pull different levers and see what effect they have. Some may surprise you. Let me know in the comments what interesting things you discover while using the calculator!Notes and simplifying assumptions:
- The calculator assumes all your Annual Savings and Initial Investment Balance are being invested and generating the specified Investment Growth Rate. Don't include cash or other "assets" that don't generate a return.
- The Annual Expenses and Annual Savings amounts you enter will both be carried forward, adjusted by the Inflation Rate.
- Your Stash Rate is defined as Annual Savings over Annual Expenses, as described here.
- The Target FI Number (Real) is defined as your Annual Expenses over your Withdrawal Rate, as described here.
- The Target FI Number (Nominal) is what target will have grown to due to the Inflation Rate by the time you reach it.
- The Real CAGR is your portfolio's annual Investment Growth Rate adjusted by the Inflation Rate. The Real Growth Rate is this same number if compounded continually instead of annually, as used by the calculator.
- At some point on your journey to FI, the returns being generated by your wealth each year will surpass the amount you are saving. This is labelled as the Crossover Point.