You only need 3 numbers to calculate when you can retire.
1. How much you spend
2. How much you own
3. How much you save
HOW MUCH YOU SPEND
Multiply your annual spending by 20.
That’s how much money you need to retire (aka your Financial Zen Number).
When you reach that number you can live off your savings forever.
HOW MUCH YOU OWN
Now that you know your “number”, calculate how close you are by adding up all the money you’ve already saved for retirement.
So far, so easy!
HOW MUCH YOU SAVE
Lastly, calculate your annual savings towards retirement.
Add up your 401k’s, HSA’s, IRA’s and regular savings.
PUTTING IT ALL TOGETHER
Below are estimates based on $100,000 of living expenses.
You can prorate the numbers yourself. The important part is the spending-to-savings ratio.
If both your spending and saving are double, the years won’t change.
You can ignore everything else. These 3 numbers are the only ones that matter.
