How many years of work you need to retire?

If you are familiar (4% rule) you only need about 25 times your expenses in assets to never run out of money.

Now, the question is how many years of full time work you need to retire? Let's take a look at how soon you will reach the assets/expense ratio of 25:

Case 1: John and Kristin

Let's a simple case with the following income :
John and Kristin are both 25, new grads starting to work.

  • Income : 100000$
  • Plan to maximize contribution to 401k : 18000$
  • Investment return of 4%

Now the wildcard is their expenses. If they can keep their expenses low, they would need less time to reach the factor of 25.

Expense Number of years
$10,000.00 4
$12,000.00 5
$15,000.00 7
$20,000.00 10
$25,000.00 14
$30,000.00 19
$35,000.00 25

You can see there is a huge difference in the number of years based on your expense. It is important here not to force an uncomfortable expense level, but rather find your optimal expense level. You want to find the minimum expense level at the maximum happiness. Remember that the relation expense/happiness is also a diminishing return. Buying a 10000$ car will remove a lot of pain in your life. Buying a used luxury car at 20000$ might give you a bit more joy, but a 100000$ brand new luxury won't give you 5 times more joy on a sustain basis.

If you set your yearly expense to 20000$ (or 1666$ per months), then you could have enough to retire after 10 years of work. Now, why do people work rather 30-40 years until they reach 65? Of course, we don't want everyone to realize this since our consumption driven economy would take a hit. But do you really want to the last guy/girl in Plato's cave, grinding away until you're 65?

What you need to do: After reading this post, your action should be try to understand how much do you spend per year. You can break it down in categories, but finding this number is really important if you want true financial independence.

What is your comfortable yearly expense level? Share in the comments what is a comfortable level for you and your family.

Here are the detailed calculations for and income of 100k$, an expense of 20k$ and a return on investment of 4%.

Number of years Age Salary After taxes Savings Total savings Investment income 401k FIELD9 Total savings Asset/Expense ratio
1 23 $100,000.00 $53,300.00 $33,300.00 $33,300.00 $1,332.00 $18,000.00 $18,720.00 $52,020.00 2.60
2 24 $100,000.00 $54,165.80 $33,840.92 $67,140.92 $2,685.64 $18,000.00 $36,720.00 $103,860.92 5.19
3 25 $100,000.00 $53,300.00 $33,300.00 $100,440.92 $4,017.64 $18,000.00 $54,720.00 $155,160.92 7.76
4 26 $100,000.00 $53,300.00 $33,300.00 $133,740.92 $5,349.64 $18,000.00 $72,720.00 $206,460.92 10.32
5 27 $100,000.00 $53,300.00 $33,300.00 $167,040.92 $6,681.64 $18,000.00 $90,720.00 $257,760.92 12.89
6 28 $100,000.00 $53,300.00 $33,300.00 $200,340.92 $8,013.64 $18,000.00 $108,720.00 $309,060.92 15.45
7 29 $100,000.00 $53,300.00 $33,300.00 $233,640.92 $9,345.64 $18,000.00 $126,720.00 $360,360.92 18.02
8 30 $100,000.00 $53,300.00 $33,300.00 $266,940.92 $10,677.64 $18,000.00 $144,720.00 $411,660.92 20.58
9 31 $100,000.00 $53,300.00 $33,300.00 $300,240.92 $12,009.64 $18,000.00 $162,720.00 $462,960.92 23.15
10 32 $100,000.00 $53,300.00 $33,300.00 $333,540.92 $13,341.64 $18,000.00 $180,720.00 $514,260.92 25.71
11 33 $100,000.00 $53,300.00 $33,300.00 $366,840.92 $14,673.64 $18,000.00 $198,720.00 $565,560.92 28.28
12 34 $100,000.00 $53,300.00 $33,300.00 $400,140.92 $16,005.64 $18,000.00 $216,720.00 $616,860.92 30.84
13 35 $100,000.00 $53,300.00 $33,300.00 $433,440.92 $17,337.64 $18,000.00 $234,720.00 $668,160.92 33.41
14 36 $100,000.00 $53,300.00 $33,300.00 $466,740.92 $18,669.64 $18,000.00 $252,720.00 $719,460.92 35.97