How to use the Financial Freedom Calculator

The short version

1. 1Load or enter a plan

   Start from a worked plan in Quick Start, or enter your ages, what you save or earn, and what you spend now and once you stop.

2. 2Investment and goal

   What you hold and its return and volatility, what the money should do, then inflation and how sure the answer has to be.

3. 3Simulate and read

   Press Simulate. Path to freedom gives the age you get there; Cashflows tests stopping at any age you drag to.

Nothing is uploaded. Every figure is worked out in your browser, and your plan is kept in this browser only. This guide is general information, not financial advice.

The screen

Inputs on the left, two boards of results beside them. Point at a part in the list to see where it is.

Top right, Tour replays a one minute walk through the tool, and Guide opens this page.

Quick Start

Six worked plans, each built to show one lever: Moderate FIRE (the baseline), Frugal Living, Geoarbitrage, Bali, Fat FIRE, forever, Family legacy and Late start, on a pension. One click fills every tab and runs it.

On a phone, press Full screen under a demo and turn the phone sideways to read it.

• The slider starts on the answer. No plan sets a retirement age: Retire at opens on the plan's own freedom age, rounded up to a whole year.
• Then make it yours. Change any figure over the top of a plan. A Quick Start always starts from the defaults, so nothing from the last one carries over.

The You tab

The figures you know: the currency, your ages, the money coming in and the money going out. Every amount is in today's money.

• A week, a month or a year. Each amount takes its own period. Change the period and the figure is restated, so $60,000 a year becomes $5,000 a month.
• Government or age pension. Simple mode has a pension switch: its start age, its amount, and whether it Rises with inflation.
• Currency Symbol is display only. Nothing is converted.

Life stages

Set Detail to Detailed under Money in or Money out and the one figure becomes a list of stages, each between two ages: study, a hustle, kids, part-time work, a pension.

• + Add stage starts a stage where the last one ends. A blank start follows the stage above; a blank end runs to your life expectancy.
• Up to 12 stages a side. A stage of income ending at 120 has no end: it is paid for life.

The Investment tab

What you hold today, and what you expect it to earn and how much it swings.

• Every field stays editable. A preset is a starting point, not a forecast.

The Goal tab

What should the money do? Three answers, and each needs a different pot.

The Assumptions tab

The guesses nobody knows for sure: what prices do, and how sure the answer has to be.

Path to freedom

One question: how early could you stop? Nothing on this board depends on the retirement slider.

• Money deposited, the dotted line, is what you have paid in that is still in the pot. Above it is growth.
• Hover to read. The box under the chart gives any year's figures. Scroll or pinch to zoom, drag to pan; ⟳ resets it.

Cashflows

What happens if you stop at this age. The slider is the one control that runs the answer on its own.

• A miss is drawn below zero. A plan that runs out shows a negative balance: the size of the shortfall.
• Not by this age? The verdict lists the one change that would close the gap: save more, spend less, a higher return, or retire later.

Year by year, and what it assumes

Under the chart, the plan as a cash flow statement; at the foot, the assumptions in figures.

Save, export and share

The tool keeps your plan in this browser between visits. The rest makes something to keep or send.

• An embed is live. It shows the chart as you drew it, and a reader can hover and zoom it.

The model in one picture

Two curves over age. One is what your investment has grown to if you never stop paying in. The other is the pot you would need if you stopped at that age. The tool's answer is where the first catches the second.

• aan age, tried month by month from today
• W_c(a)what the investment has grown to by that age, never drawn on, reached in at least c percent of futures
• Pot(a)the pot that funds the rest of your life from that age, for your goal
• cthe Investment outcome chance: at 50% the line is the expected return's

• rthe Expected return (CAGR), before inflation
• ithe Inflation rate
• r_rthe real return a year, by Fisher rather than subtraction
• r_mthe real return a month, which every step compounds

• Everything runs in today's money, month by month. Your spending is entered in today's money and stays flat in real terms, so inflation never has to be added back to it; it lives in the real return instead. A figure in the money of the day is only made for display: today's figure × (1 + i)^y.
• Why the pot falls with age. Each year you wait is a year fewer to fund, so the red line drifts down while the blue line climbs. In Simple mode they cross at most once.
• The retirement slider is a separate question. Neither curve depends on it. It asks what happens if you stop at one age: the Cashflows board, further down.

You: ages, money in and money out

What you add to the investment each month while you work depends on which figure you entered. The two are different models, and the panel says which one is running.

• S(t)what you add in month t from today, while you work
• S₀, I₀the savings or net income you entered, as a month
• g_mthe real monthly growth of Growth of that amount, by Fisher
• E(t)what you spend in a working month: living expenses, or a life stage
• X, X_rLiving expenses and Retirement expenses, monthly
• pctretirement as a % of living, or enter an amount instead

Watch out. Under Savings, living expenses do not change what you save: the amount saved is what you typed, and your income is implied. They only size the pot. Switch to Net income and a spending cut works twice: it fills the pot faster and shrinks the pot needed. Moderate FIRE entered as $110,000 take-home is free at 44y 1m; spend 10% less and it is 42y 3m, against 43y 4m under Savings.

Life stages

A stage is a span of ages, [from, to), with a level of its own. Stages run in list order and never overlap; a gap between them falls back to the base level.

• Lwhat the stage pays when it starts, in today's money
• g_m,sthe stage's own growth, made real and monthly
• mmonths from the later of its start and today
• Income while working: the stage covering that age, else your first stage
• Income once retired: a stage covering that age if it is still paid, else nothing

Watch out. A spending stage replaces your spending, it does not add to it. Family legacy's 150% with two kids at home means the household spends 150% of today, not 150% on top. Enter 50% and you would be saying spending halves.

Investment: how the pot grows

While you work, the balance earns a month's return, then that month's saving lands on top.

• W(t)the balance after t months, never drawn on
• W(0)Invested assets today
• r_mthe real monthly return
• S(t)that month's saving, from the You tab

• Compounding. At Moderate FIRE's 5.85% real a year, money doubles in real terms in about 12 years: the $120,000 it starts with is worth $242,040 in today's money by 44y 4m without another cent added.
• The return is the lever with two ends. A higher return fills the pot faster and makes the pot needed smaller, because the money still invested in retirement keeps earning it.

Watch out. The return you enter is nominal. With 8.5% and 2.5% inflation the real return is 1.085 ÷ 1.025 − 1 = 5.85%, not 6%, and it is the real return that sizes the pot.

Goal: the pot needed to stop

Once you stop, each month's spending comes out at the start of the month and the rest earns the return. The pot needed is the smallest that never goes below zero and meets your goal at the end. With flat spending and no pension that is a textbook annuity.

• X_rretirement spending a month, less any pension or income still paid
• nmonths from the age you stop to your life expectancy
• Just Die is an annuity paid in advance; Die Rich a perpetuity, which needs r_m above 0
• Lthe Amount to leave behind, in today's money

• One pass for any plan. With a pension, stages or a draw that changes, each month adds a "never below zero" bound and the goal adds one at the end; the pot needed is the largest of them. Die Rich asks that the pot at age 120 could go on for ever on the draw at that age.

• The withdrawal rate is an answer, not an input. The tool never asks for one. It works out the pot your own return and horizon need, then reports the rate it implies: Pot needed at 45 for Moderate FIRE reads 16.3x a year of spending, a 6.15% safe withdrawal rate (SWR).
• The 25 times rule is one case of it. The Real return card says what for ever costs: 17.6x spending at 5.85% real. At about 4% real the perpetuity is the familiar 25x.

Assumptions: inflation, and how sure the answer is

A single average return hides the order the good and bad years come in. The tool works out the spread of futures instead, in one pass rather than by simulating thousands of them.

• za standard normal draw, independent month to month
• μthe drift: the CAGR, so a lump sum's middle future is the expected line
• σthe Volatility

• So returns are lognormal. A balance is many deposits, each grown over a different stretch, and that sum has no formula of its own. The tool reads each horizon through one normal factor that weighs every month by the money at stake in it (the comonotonic approximation of Kaas, Dhaene and Goovaerts, 2000), and takes each deposit's exact average given that factor.
• Worked out, not simulated. A percentile q is that factor at Φ⁻¹(q): no random numbers, the same answer every run, exact for a single lump sum. Against 5,000 simulated futures on every Quick Start, the 90% confidence pot agrees to about 1% and the chance it works to about a percentage point.

• W(t)the expected-return balance
• W_{1 − c}(t)the balance at percentile 1 − c of futures
• Φthe standard normal distribution
• z*the score at which the pot needed equals the balance you stop with

• Why a higher chance pushes the age out. At 50% the line is the middle of the road: half of futures do worse. At 90% only one future in ten does worse, so the line sits lower and takes longer to reach the pot.
• Why the swing of an average narrows. Over many years good and bad months partly cancel, so the band is not one rate run for every horizon: each horizon has its own factor.
• Sequence risk. A month weighs by the money exposed in it, so a crash in the years either side of stopping counts most: the risk an average return hides.

Watch out. At the default 50% outcome chance, volatility does not move the freedom age at all: that age is read off the expected-return line. Moderate FIRE stopping on it at 45 has a 53% Chance it works, close to a coin flip. Read that card, or raise the outcome chance, before you plan around the age.

Cashflows: stopping at one age

The Cashflows board saves until the slider's age, then lives off whatever is there. This is the only place a withdrawal appears.

• X_r(t)that month's retirement spending, or a stage's
• P(t)a pension, or a stage still paid
• Before it: working months follow the investment line at your outcome chance

• The four cards. Pot needed is Pot(R); Balance is what the investment line reaches by then; Chance it works is the share of futures that balance lasts through; Left at is the balance at your life expectancy, negative when it runs out.
• The table reconciles. Growth is the residual, next balance less this balance less what was saved, so each row adds up to the cent in either money.

Worked example: Moderate FIRE

A 32-year-old saving $45,000 a year (growing 3%), spending $65,000 now and the same once retired, with $120,000 in global equity at 8.5% and 15% volatility, inflation 2.5%, Just Die at 90, outcome chance 50%.

• 16.3x a year of spending. $1,060,070 ÷ $65,000, as the Pot needed then card reads it.
• Now the risk. The slider opens at 45. Stopping there with $1.14m has a 53% chance of lasting; the pot for 90% confidence is $1.97m. At a 90% outcome chance the freedom age is 49y 7m.

What moves the answer most

Measured on the tool's own engine: Moderate FIRE as the Quick Start loads it, each input moved down and up one step while the rest stay put. Left of the line is an earlier freedom age.

• The real return decides the most. Inflation and the return are the two figures nobody controls, and together they set the real return. One point either way moves the age two to three years. Test your plan at a real return a point lower before you trust it.
• Your own levers move it about a year for 10%. Spending 10% less does a little more than saving 10% more, because it shrinks the pot for every year of retirement. Under Net income a spending cut does both jobs and moves it nearly twice as far.
• Risk only shows once you ask for it. At 50% the age ignores volatility; at 90% each 5 points of volatility is about two years. The goal matters less than it sounds: Leave a Legacy with $500,000 is free at 44y 8m, Die Rich at 45y 1m.

Watch it move

The top of the tornado, live: inflation up a point, then down a point, on Moderate FIRE.

What it leaves out

The tool's own What this assumes card lists the assumptions your plan rests on. The ones that matter most:

• No tax. The return and the savings or income you enter are taken as after tax. Tax differs too much between countries and between ordinary and pension accounts to model honestly in one tool.
• No fees beyond the return. Enter the return after fees.
• One return, one inflation rate, for life. Volatility spreads the futures around them, but the long-run average never changes, and one rate covers prices at home and abroad (Geoarbitrage runs 3% for that reason).
• Returns are lognormal and independent month to month. Real markets have fatter tails and runs of bad years, so the worst futures can be worse than the band.
• Once you stop, the pot is drawn at the expected return. The outcome chance shapes the years you save; the spread in retirement shows in Chance it works and the band, not in the balance line.
• No lumpy spending. A stage changes spending for whole months at a time, never for one bill such as a car or a wedding.
• Spending stays flat in real terms within a stage. Slower later years are a stage you add, not something the tool assumes.
• No home. Invested assets exclude the home you live in, and no house is bought or sold.

When not to trust it. If your answer only works on the expected return, stopping there is close to a coin flip. If a point less real return pushes it out by years, the plan is thin. And if tax on your savings or withdrawals is large, enter after-tax figures or treat the age as optimistic.