Years Until Retirement 💸

After reading an intriguing article about early retirement written by Mr. Money Mustache, I wanted to reproduce the calculations presented there for myself. The basic premise of the article is that the number of years until retirement depends entirely on your savings rate rather than how much you earn.

I have never thought about this simple but not immediately obvious idea by always assuming that the more you earn, the faster you can retire. However, if you earn a lot, and spend a lot, you will not be able to retire anytime earlier than someone who earns less but saves more.

To put it in numbers, you can retire in 17 years from now if you save 50% of your income, or in 10 years with 64% savings rate, assuming a reasonable 5% interest on your savings per year (fees not accounted for). You can see these calculations in the Excel spreadsheet I built that uses VBA script for automatic calculation so you only have to alter the parameters in the sheet.

Below is the graph demonstrating the years until retirement based on data taken from the spreadsheet.

See the Pen Years until retirement by Karolis (@karolis) on CodePen.

Disclaimer: I want to make sure that nobody thinks I want to retire early and do nothing. Currently, I enjoy what I do but my life/career decisions are still somewhat influenced by money. For me early retirement means financial independence which enables to choose jobs or projects based 100% on your passions and not money. That's all there is to it. That's also why I occasionally read MMM and how I found the article on which this article is based upon. It reminds me that it is possible to escape the rat race without going to extremes i.e. becoming a bum or incredibly rich.