(Total Income – Total Spending) / (Total Income) What is your current savings rate? The Basic Formula Money Mustache’s The Shockingly Simple Math Behind Early Retirement. If you retire with 25x your annual spending in invested assets and live off 4% of your portfolio per year, statistics are in your favor.įor a more in-depth analysis or for those wanting to cut their time even shorter, see Mr. You can always get lucky (the market returns are better than average, you inherit extra money, etc.) which means an earlier exit is possible, but I prefer not to leave my future up to chance.
There’s not a one-size-fits-all answer for an overall savings rate, so let’s talk about what works for your situation.
#Mister money mustache shockingly simple math full#
Fair enough.) Always take advantage of any employee matching programs, and contribute the minimum required to get the full match. (If you start at age 25, you can retire at age 65. I always recommend at minimum that you save 15% of your salary to put into retirement accounts, although it potentially means 40 years of work.