Everyone needs a plan. And planning for your future is something that we all too often put off, and yet, it’s a vital component for making sure that we are heading in the right direction.
Some people plan by giving themselves a timeline: “Come hell or high water, in 20 years I will stop working.”
Others plan by giving themselves a savings goal: “When I have $10 million in the bank, I will stop working.”
However, probably the most reasonable approach is to consider how much you would like to spend each month after you quit working. Of course, the reason for this is that it will dictate your lifestyle.
When you stop working, the widely popularized safe withdrawal rate (SWR) is typically used to determine how much money you need to save in order to withdraw a certain amount of income, annually, with little concern of running out of cash. However, the higher the SWR, the higher the probability that you will run out of cash. Typically, a SWR of 4% ensures, with almost complete certainty, that you will not have to worry about money (at least for 30 years).
Sometimes, however, we’d rather think about how much money we’d like to be able to spend each month without having to worry about the money running out. The calculator below will help you calculate how long it will take, given your current financial situation, to be able to achieve a time in your life when you can withdraw at your desired spending limit.
Have a go!
How long until I hit my spending goal?
|Current Monthly Savings Rate:||$|
|Annual Return on Savings:||%|
|Desired Monthly Spending Rate (without having to work!):||$|