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Financial Independence & Capital Growth Calculator

Calculate your time to FIRE (Financial Independence, Retire Early). Adjusts for inflation, taxes, and savings rate with 3 market growth scenarios.

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About

Financial Independence (FI) is the point where your invested capital generates enough passive income to cover your living expenses indefinitely. This calculator uses the "4% Rule" (Safe Withdrawal Rate) as a baseline but allows for customization based on market volatility and tax drag. Unlike simple compound interest calculators, this tool adjusts for purchasing power erosion due to inflation.

The path to FI is dictated by your 'Savings Rate'-the percentage of net income you invest. A higher savings rate not only builds the nest egg faster but also lowers the lifestyle cost you need to sustain. The tool projects three scenarios: Conservative (high bond allocation), Moderate (balanced index funds), and Aggressive (high equity exposure) to help you understand the range of possible outcomes.

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Formulas

The core calculation solves for time (t) in the compound interest formula, adjusted for monthly contributions:

FV = P × (1 + r)t + PMT × [(1 + r)t − 1]r

Where r is the real monthly interest rate:

r = (1 + Rnom − Rinf)1/12 − 1

Reference Data

ScenarioEst. Real Return (After Inflation)Risk Profile
Conservative3% - 4%Preservation focus. Heavy bonds/cash. Lower volatility.
Moderate5% - 7%Standard S&P 500 historical average adjusted for inflation.
Aggressive8% - 10%High growth small-cap or emerging markets. High volatility.
Safe Withdrawal Rate3.5% - 4.0%Amount sold annually to live on without depleting principal.

Frequently Asked Questions

It is a guideline stating that you can withdraw 4% of your invested portfolio in the first year of retirement, and adjust that dollar amount for inflation in subsequent years, with a high probability of the money lasting 30 years.
You can input a "Tax Drag" percentage. This reduces your annual return rate to simulate the effect of taxes on dividends or capital gains. For precise tax planning, consult a CPA.
Mathematically, if you save 0%, you never retire. If you save 100%, you can retire now. Increasing your savings rate from 10% to 20% reduces your working career by years more than increasing your investment return by 1%.