Author Topic: Looking for a Tool to compare % of Stache to Time to FI  (Read 444 times)

Stone11

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Looking for a Tool to compare % of Stache to Time to FI
« on: August 06, 2019, 10:15:41 AM »
Thought I'd throw this out to the community.

In most circumstances, if one is looking to FI on $1M, then the first $500K will take quite a bit longer than the second $500K because while saving for the second $500K, the first $500K is generating its own green soldiers.  This means while $500K is the halfway FI point in raw numbers, when one reaches $500K, it will be well past the expected halfway point in time to FI.

I'm looking for a tool where one could input monthly savings and expected return to determine when time-related benchmarks are reached.

For example, if one is looking to be FI on $1M, saves $3K/month in a tax-advantaged account, and expects a 7% return, then it will take roughly 16 years to reach $1M from $0.

With the same assumptions, that individual would be at roughly $380K (38%) at 8 years, the halfway point in time between starting at $0 and reaching FI.  So that individual would be expected to be "halfway there" in time at $380K, or 38% of the FI number. 

Similarly, that person would be 1/4 of the way to FI in time at $165K and 3/4 of the way to FI in time at $664K. 

While my math skills are only sufficient enough to use a retirement calculator with nice round numbers to figure this out, is anyone aware of a tool or formula where one could easily change the inputs (amount saved/month, expected return, etc.) and receive a breakdown of raw dollar amounts that are roughly associated with time to FI so I could put my numbers in and see that I will be 1/4, 1/2, 3/4 to FI in time at $x saved?
 
I understand this would be a pretty pointless tool, but may be fun to play around with.  It could also be motivating to reach certain time benchmarks that are not the typical round numbers of having, say 100K saved.  Nothing wrong with having more numbers to celebrate (cost-consciously of course) while trekking through the long monotonous climb to FI!
« Last Edit: August 06, 2019, 10:18:44 AM by Stone11 »

CCCA

  • Pencil Stache
  • ****
  • Posts: 565
  • Location: Bay Area, California
  • born before the 80's
    • FI programming
Re: Looking for a Tool to compare % of Stasch to Time to FI
« Reply #1 on: August 06, 2019, 10:18:23 AM »
Hi Stone11,


Not sure if my calculator ticks all of the boxes you specified, but you can play with it and see what you think:
https://engaging-data.com/fire-calculator/


It will let you use a fixed return rate or use historical return rates.  Make sure if you want to keep constant savings that you set income growth to 0%.


Hopefully it is helpful for you.


Stone11

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Looking for a Tool to compare % of Stache to Time to FI
« Reply #2 on: August 06, 2019, 10:36:03 AM »
I believe I can manipulate the inputs of that tool to accomplish my goal. 

Thanks CCCA! 

FLBiker

  • Pencil Stache
  • ****
  • Posts: 985
  • Age: 43
Re: Looking for a Tool to compare % of Stache to Time to FI
« Reply #3 on: August 07, 2019, 11:54:09 AM »
That tool is very cool!

My family is planning to move to Canada next year (from the US).  We don't have jobs lined up yet, but my expectation is that we should at least be able to break even.  Interestingly (for me) if we kept working here in the US (and saving ~$35000 per year), we could retire in 5 years.  If we just "break even", we can retire in 7 (with a target of $1.3 million).  So at this point (~$800K in) it's clearly more about investment returns than savings.  Cool to see, thanks!

MDM

  • Walrus Stache
  • *******
  • Posts: 9622
Re: Looking for a Tool to compare % of Stache to Time to FI
« Reply #4 on: August 07, 2019, 02:00:06 PM »
...formula where one could easily change the inputs (amount saved/month, expected return, etc.) and receive a breakdown of raw dollar amounts that are roughly associated with time to FI so I could put my numbers in and see that I will be 1/4, 1/2, 3/4 to FI in time at $x saved?
CCCA posted a good tool.

If you want the details of the formula, see this thread: Time to FI derivation,

There is also row 48 and following on the 'Misc. calcs' tab of the case study spreadsheet:

Quick calculation of "Time to FI"
Planned Withdrawal RateWR4.0%
Annual Savings InvestedS40,000$/yr
Annual Expenses in RetirementE30,000$/yr
Current Assets InvestedA0$
Investment returnr_5.0%
Time to FIt13.6yr
Desired time to FIt9.0yr
Annual Savings NeededS68,018$/yr