A strong piece an a a very useful way to simplify the question. Simplicity matters.
I think the next layer of clarity comes after the 25x number: understanding what part of that future income needs to come from your portfolio at all.
For many people, a pension may already cover part of that number. So the real job is not just finding the number, but identifying the gap and building calmly towards that.
Calculation works both ways. The other way of thinking about it is how much could I spend per year if I retired now? Answer = current savings / 25. The benefit of that frame is seeing how much your financial freedom lifestyle grows as you increase your savings.
That is a good question. This tool does not factor in social security for simplicity. (Calculating social security is sadly not simple!)
If you expect a significant amount of Social Security, then you can potentially retire with a little less savings and investments than 25 times your spending. So in this way, the calculation is somewhat conservative.
A strong piece an a a very useful way to simplify the question. Simplicity matters.
I think the next layer of clarity comes after the 25x number: understanding what part of that future income needs to come from your portfolio at all.
For many people, a pension may already cover part of that number. So the real job is not just finding the number, but identifying the gap and building calmly towards that.
Yes, great point about the pension and simply knowing what you need and patiently working toward it. Thanks for the comment!
Calculation works both ways. The other way of thinking about it is how much could I spend per year if I retired now? Answer = current savings / 25. The benefit of that frame is seeing how much your financial freedom lifestyle grows as you increase your savings.
What about Social Security?
That is a good question. This tool does not factor in social security for simplicity. (Calculating social security is sadly not simple!)
If you expect a significant amount of Social Security, then you can potentially retire with a little less savings and investments than 25 times your spending. So in this way, the calculation is somewhat conservative.
What a out Social Security?