I often use 40 year examples in my comparisons. It’s a nice big round number, about the length of a typical career (say from 25-65) and long enough for the magical effects of compound growth to make a dramatic impact.

But understandably, I get lots of comments like “I don’t want to wait until I’m old to be rich” or “I don’t have 40 years left!”.

I love this post, because it let’s you choose your own adventure. Want to have to work until the day you die? Great, 0-4% is the right savings rate for you. Want to retire in 11 years? Consider going HAM and saving 60% of your income. And note, that these numbers are starting from ZERO. If you’re later in your career, you may be doing better than zero. If your debt currently is higher than your savings and investments, you’re below zero.

This math is based on an assumption of a 7% rate of return. The goal is for your investments to hit a value of 25X your annual spending. Once you’re there, you can rely on the “safe withdrawal rate” to provide enough income, even adjusting for inflation, to cover your cost of living indefinitely.

Note that this math works independent of your income. Whether you make $500K or $50K, the math works based on you living on what’s left after you save and invest. Of course, saving 60% of your income if you make $50K/year is nearly impossible in the US, so you’ll have to make a plan that works for you. Preferably that plan includes ramping up your income and lowering your expenses, to make a higher savings rate possible!

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As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy