The whole FIRE concept is based on the 4% rule, which comes from the Trinity study which basically states that you can withdraw 4% at the start of your retirement and update for inflation every year and have a 95% success rate for a 30 year retirement if you have a 60/40 stock/bonds portfolio. Or in other words, you can retire once you have 25x your current expenses (100%/4 = 25).

So a lot of people use the 25x expenses metric to decide their FI date. I think this is a really nice number, but some people like to go a bit beyond and figure out things like when you’ll reach that point, or what percentage of the way there you are.

For this post, I’ll use the following short hands:

  • SWR - your safe withdrawal rate - basically, if you think the 4% rule is too aggressive for your retirement (say, you’ll be retired longer than 30 years), adjust this
  • CAGR - compound annual growth rate, or basically the average market return you expect between now and retirement; I’m assuming inflation adjusted figures here
  • SR - savings rate, or annual savings in dollars
  • E - expenses per year
  • NW - net worth; in this post, I mean your retirement assets, so don’t include non-income generating assets here, like your house

If you expect a pension, merely reduce your expenses by your expected payout.

To calculate your retirement number, simply divide your expenses by your SWR:

=E/SWR

To estimate your years to retirement, use the NPER spreadsheet formula, and be careful about the negative signs:

=NPER(CAGR, -SR, -NW, E/SWR)

This will give you the number of periods (in this case years) until your current assets will match your FI number, assuming compounding at the market rate.

To calculate what percent of the way to FI you are, use a ratio of the above estimate and an estimate assuming you’re starting from scratch:

=(1-NPER(CAGR, -SR, -NW, E/SWR)/NPER(CAGR, -SR, 0, E/SWR))

If you do a simple NW/FI number, you’ll be off because it doesn’t account for compounding.

If you want to find your coast FI date, or the date you’d retire if you stopped investing entirely, just zero out the savings rate:

=NPER(CAGR, 0, -NW, E/SWR)

I hope something here was helpful. I use a bunch of other formulas, so feel free to ask for other things you may be interested in, or share some of your own!