Special Diagram Shows How Many More Years You Need To Work Before You Can Retire

Have you ever wonder… when can you quit your job and finally retire comfortably?

There is more to life than just work and we all hope that one day we can quit our day jobs and spend our time in blissful retirement.

(Or is it just me?)

Zach at Four Pillars Freedom created an interesting diagram which estimates your retirement age based on your spending and earnings:

I present to you…

The Early Retirement Grid

Source: Four Pillars Freedom

How it works

Some assumptions:

  • Your retirement investments has a 5% annual return
  • You will withdraw 4% each year from your retirement fund when you retire

For example, Tom earns $50,000 a year and spends $40,000 a year. Thus, he invests $10,000 a year. So according to the grid, he will need to work 36.7 years more to reach financial independence.

This means that by investing $10,000 a year, it'll take 36.7 years for you to accumulate enough money until you can withdraw 4% of your funds for retirement (to sustain your daily spending) and never run out of money.

Take a moment now to calculate how much you are earning and spending.

Then figure out using the Early Retirement Grid what is your estimated retirement age.

Learn from the Living Legend

Are you making SMART investment decisions like Warren Buffett?

Warren Buffett's investment method condensed into 5 simple steps.

Are you cool with that?

Or are you going to work till your very last breath?

The Secret To Early Retirement

You should realise by now that you need to widen the gap between your income and expenses if you want to retire early.

But this grid allows to quantify and examine how far you actually are from retirement.

If you earn $40,000 a year and only spend $20,000 a year, you can retire 17 years later.

But if you earn $60,000 a year and spend $55,000 a year, it is going to take you 56 years to retire.

Good luck with that.

A key thing that Zach pointed out is what a difference a mere $5 to 10K can make:

Annual Income

Annual Spending

Years to Retirement







Just by reducing your spending from $40,000 to $30,000, you can retire 15 years earlier!

Invest More & Spend Less

Just by spending less and investing more, you are accelerating your journey to financial independence.

Step 1: Keep a close eye on your cash inflow and outflow for a month to identify expenses and possible weak financial loopholes.

Step 2: Identify how much you are going to spend at the beginning of each month and transfer the rest to your investment fund.

Let's face it, it is tough and challenging to stay to a budget. ​

Even I can't trust myself with my money.

My best bet is to transfer the money away right from the beginning so that I can't see it.​

Out of sight, out of mind.​

You can use this technique to protect your "marshmallows" from yourself.

After all...

When it comes to retirement, we are our greatest enemy.​

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About the Author

Tim Wayne is the chief writer at Elite Financial Habits. He understands that the rich didn't grow their wealth using magic; it is simply an intelligent combination of mathematics, psychology and economics.

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