Financial Freedom Planning
The goal of these tools is simple: the earlier you start saving and investing, the more compound interest does the work for you. Try plugging in your own numbers, the gap between starting today and starting in ten years is usually the most convincing argument there is.
Part 1: Find Your Monthly Investment Target
These two calculators work together to answer one question: how much do you need to invest each month to reach financial freedom?
Step 1. Retirement Budget
Estimate your monthly income and expenses in retirement to see if you'd have a shortfall to cover from savings.
Monthly Income in Retirement
Monthly Expenses in Retirement
Step 2. Your Financial Freedom Number
Answer four questions and this calculates the nest egg you'll need, and how much to invest each month to get there.
This is the gap, not your whole cost of living: monthly expenses minus the income you'll already have from a pension, 401(k), Social Security, or part-time work.
Auto-filled from your Retirement Budget shortfall above. Feel free to edit it.
Two different kinds of return, on purpose. During retirement, enter the return after inflation, since the withdrawal stays constant in today's buying power; around 5% is a reasonable figure for a mix of stocks and bonds. While you're still working, enter the ordinary return before inflation, because the calculator already inflates your retirement costs separately; the S&P 500 has averaged about 11.89% a year over roughly the past 50 years.
Your account balance over your lifetime
Growing while you invest, then drawing down as you withdraw in retirement.
Part 2: The Cost of Waiting
Two people invest the same amount every month, at the same return, and stop at the same retirement age. The only difference is when they started. This is the single most convincing chart in the whole workshop.
Run the calculator in Part 1 and your own numbers will appear here.
Part 3: Saving on Eating Out
Small habits are easier to change than big ones, and over a working life they add up to more than most people expect. Skip a little takeout each week, invest it instead, and let it compound.
Part 4: Saving Rate vs. Chasing Returns
Person A saves more but earns an ordinary return. Person B saves less but chases a much higher return. Who gets there first? How much you put in is the part you control.
Person A
Person B
Part 5: Track Your Income & Expenses
Before you can build a realistic budget, you need to know where your money actually goes. Record every dollar of income and every expense, every day, for about six months. At the end, total each category (you'll likely be surprised by at least one of them), then build a budget around what you find, and stick to it.
Download a blank tracking template (.xlsx)