calculation for years until FI

[new mustache city]

I have used a spreadsheet to chart out each year's gains and figure out approximately how many years until I reach my FI net worth, accounting for interest earned each year.

I'm trying to also come up with a formula which will give me the exact number of years until FI. Wikipedia has one, but it's wrong.

http://en.wikipedia.org/wiki/Financial_independence#Calculation

First of all there is a typo, 75% is multiplied twice in the denominator. Second, running my numbers through this gives me about double the number of years my chart gave me. Third, using the exact numbers from the example, I come up with 10.9 years, not 14.5. As I put it into a google spreadsheet:

=((10000/.04)-5000)/(30000*.75)

Does anybody know the real formula?

[matchewed]

Technically there isn't a single formula which will tell you how many years till FI. An excel calculation will be very precise but loses the messiness of normal life with that precision. There are some great rules of thumb, but they're just rules of thumb (about as useful as an equation) and some decent prediction calculations.

Other than that this whole board is dedicated to figuring out that question in the many different ways to interpret it. So go digging and have fun. :)

[arebelspy]

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

http://the-military-guide.com/2011/01/03/how-many-years-does-it-take-to-become-financially-independent-2/

(Savings rate) * [(1 + compounding rate)^^Time - 1] / (compounding rate)

[arebelspy]

Best simple tool, IMO: Networthify.

Best mid-level tool is this spreadsheet.  It is better than Networthify, IMO, because it allows more variables (including a difference in spending both before and after retirement - some of us will spend more, some will spend less, but so many retirement calculators assume you will spend the same).  Still very easy to use though.

Best advanced tool is cFIREsim.

[oldtoyota]

Here you go:

Pre-tax contrib. + principal repayment on mortgage (not interest) + any other savings
____________________________________

Net home pay + pre-tax contrib

[dragoncar]

Years to FI = too many

Edit:  Seriously though, the wiki formula looks right.  The extra 75% is for the assumed 25% tax rate.

[arebelspy]

Here you go:

Pre-tax contrib. + principal repayment on mortgage (not interest) + any other savings
____________________________________

Net home pay + pre-tax contrib

I'm not sure you know what's going on in this thread.  Savings rate is not being discussed, but years to FI.  Your calculation doesn't give anything remotely correct in that regard (though it is one component of the calculation for what is being discussed).

[oldtoyota]

Here you go:

Pre-tax contrib. + principal repayment on mortgage (not interest) + any other savings
____________________________________

Net home pay + pre-tax contrib

I'm not sure you know what's going on in this thread.  Savings rate is not being discussed, but years to FI.  Your calculation doesn't give anything remotely correct in that regard (though it is one component of the calculation for what is being discussed).

If you have your savings rate, you can calculate the years to retirement.

Google "The Shockingly Simple Math to Early Retirement." That blog posts links savings rate to years left to retirement starting with a net worth of zero. If net worth is not zero, then other tools mentioned above can be used.

PS: I find your first sentence a bit rude.

[arebelspy]

If you have your savings rate, you can calculate the years to retirement.

Sure, like I mentioned, it is one component to to calculation, but alone it tells you nothing about time to FI.

Google "The Shockingly Simple Math to Early Retirement."

No need.  That was the first link I posted.

PS: I find your first sentence a bit rude.

It was the nicest way I could think to say that sentence.

Answering a "how do I calculate X" with "here you go:" and giving a completely different formula is or helpful.

I think if you were honest right now, you'd admit you didn't read the thread (again, which included a link that you later say to google for) and just posted your opinion of how to calculate savings rate, since that's been discussed so many times before.

Otherwise I see no way that you could answer a "how do I calculate time to FI" saying "here you go" with a calculation for savings rate.

I was giving you the benefit of the doubt that you didn't read the thread and didn't know what was going on.  The other option is much less favorable.