Financial tools
We created some tools for you to answer commmon financial questions.
How much money do I need to retire now?
You need $.... to retire.
The calculation
To calcuate the amount of money you need to retire, we used the following formula:PV = P * [(1 - (1 + r)^-n) / r]Where:
- PV =
- Present Value (the amount you need today)
- P =
- Annual payment (inflation-adjusted withdrawal amount)
- r =
- Effective annual rate (net return after accounting for inflation) calcualted as:
r = (1 + Return on investment) / (1 + Inflation rate) - 1 - n =
- Number of years of retirement
To derive the above number, we assume the following:
- You make your first payment to yourself the moment you retire. If you only start paying yourself at the end of the first year in retirement, you can deduct your yearly budget from the amount you need to retire.
- You spend the same amount of money every year.
- Your return on investments and the inflation rate are constant throughout the entire period.