1) The withdrawal rates are calculated using the same methodology as the Withdrawal Rates calculator. /// More Info ///
2) The Financial Independence calculator uses the applicable 30-year withdrawal rate for a given asset allocation. The default setting is the Perpetual WR, as that is the more conservative and practical number for an early retiree with a life expectancy of greater than 30 years. Users can switch to the more traditional Safe WR at their discretion.
3) The savings goal is calculated from the single lowest withdrawal rate of the selected type. Accumulation paths then model the inflation-adjusted portfolio accumulation using every possible start year since 1970.
4) The asset allocation is constant (subject to normal annual rebalancing) across both accumulation and retirement.
5) The lowest number of working years is the one where at least one accumulation run met the final goal. The highest number of working years is the first one where all accumulation runs met the final goal.
6) The savings rate is assumed to be based on net income after taxes.
7) Returns include reinvested dividends.
8) Returns ignore taxes. Individual tax situations are far too complex for a tool like this to model.
Note that the calculator does not look at full consecutive 60-year accumulation and retirement market sequences, and any single historic lifetime is impossible to accurately represent in the data set. That’s not the goal, however, as the chart displays the full range of accumulation paths using every possible start year to fund the all-time minimum withdrawal rate. The purpose of the calculator is to assume your own sequence of returns will be unknown and to paint the big picture rather than represent any single investing lifetime with precision.
That said, be careful not to fall in love with specific assets or portfolios that have done well since 1970 but may not perform as well over longer timeframes. A lot can change over an investing lifetime, and past performance is no guarantee of future returns. Diverse portfolios with several uncorrelated assets are generally recommended over concentrated portfolios even with great numbers, and a good investment plan requires more consideration than simply a desirable calculator result.
The numbers do not account for taxes. Taxes may vary significantly between individual investors, and careful tax planning is recommended when depending on money in tax-deferred accounts. Considering taxes, your personal withdrawal rate may be lower than the one shown, and your working years may be longer.