# The Money Mustache Community

## General Discussion => Share Your Badassity => Topic started by: oldtoyota on July 08, 2013, 12:34:56 PM

Title: Question About the MMM Calculations
Post by: oldtoyota on July 08, 2013, 12:34:56 PM
Hi there--

In the Shockingly Simple Math to Early Retirement, MMM lays out a chart that shows how work years can be reduced by increasing savings.

The chart assumes a net worth of zero.

Anyone have a formula or spreadsheet that would allow me to input a current net worth and still figure out the calculation?
Title: Re: Question About the MMM Calculations
Post by: dragoncar on July 08, 2013, 01:21:27 PM
It stops being shockingly simple because then you need to include your annual expenses.  In that case, it's easier to just multiply your annual expenses by 25, subtract net worth, and divide by annual savings.
Title: Re: Question About the MMM Calculations
Post by: velocistar237 on July 08, 2013, 01:51:53 PM
T = ln([1+ROI*(1/SR-1)/SWR]/[1+ROI*(1/SR-1)*AoE])/ln(1+ROI)

T = time to retirement, in years
ROI = return on investment during accumulation, in real terms (4% is 0.04)
SR = savings rate (50% = 0.5)
SWR = safe withdrawal rate
AoE = assets over expenses, number of years worth of expenses you have saved

Edit: fix equation
Title: Re: Question About the MMM Calculations
Post by: snshijuptr on July 08, 2013, 01:59:44 PM
Or you can use FIREcalc and put in different contributions. That's what I do.
Title: Re: Question About the MMM Calculations
Post by: arebelspy on July 08, 2013, 02:03:34 PM
Here.

Networthify (http://networthify.com/calculator/earlyretirement?income=50000&initialBalance=0&expenses=20000&annualPct=5&withdrawalRate=4).

It's one of the best online ones.
Title: Re: Question About the MMM Calculations
Post by: psu256 on July 08, 2013, 03:27:19 PM
It stops being shockingly simple because then you need to include your annual expenses.  In that case, it's easier to just multiply your annual expenses by 25, subtract net worth, and divide by annual savings.

Yeah, but don't forget ROI. If you use the 25x annual expenses method, I like to mess with http://www.bankrate.com/calculators/savings/saving-goals-calculator.aspx
Title: Re: Question About the MMM Calculations
Post by: dragoncar on July 08, 2013, 04:51:03 PM
I hand wave ROI because its not significant at high savings rates, and not even high likelihood of being positive over short time frames (I'm negative right now)
Title: Re: Question About the MMM Calculations
Post by: oldtoyota on July 08, 2013, 08:54:50 PM
Thank you, all. You are extremely helpful!