Advanced options
The 4% rule: a diversified portfolio has historically sustained ~4% annual withdrawals (inflation-adjusted) over 30-year retirements, hence needing 25x spending. It's a planning heuristic from US data, not a guarantee: UK FIRE folk often prefer 3.5% (28.5x) for longer retirements. Spending, not income, sets the target: cutting GBP 100/month of spending shrinks the number by GBP 30,000. Not financial advice.
What The Financial Independence Calculator Works Out
- Financial independence number: annual spending divided by the safe withdrawal rate, which at 4% is 25 times spending. A GBP 25,000 lifestyle prices at GBP 625,000 and a GBP 40,000 one at a million. Spending sets the target: GBP 100 a month trimmed deletes GBP 30,000 from it.
- Progress: the invested pot as a percentage of the number. The first GBP 100,000 is famously the slowest; returns gradually outweigh contributions until the portfolio does more of the saving than you do.
- Time to target: the months until pot plus monthly investing, compounding at the real return, reaches the number. The simple mode assumes a 5% real (after-inflation) return.
- Safe withdrawal rate (advanced): the 4% rule comes from the Trinity study of 30-year US retirements. UK early retirees with 50-year horizons often use 3.5% (28.5 times spending) or lower; sequence-of-returns risk, the bad decade arriving first, is what breaks plans.
- Expected real return (advanced): override the 5% assumption. A diversified global equity portfolio has historically returned around 5% above inflation; bonds and cash much less.
- Other retirement income (advanced): the state pension (around GBP 12,000 a year in 2026/27), a defined-benefit pension or part-time work reduces what the pot must fund. Every GBP 5,000 of other income deletes GBP 125,000 from the target at 4%.
- Raise investing each year (advanced): grows the monthly contribution by a percentage every 12 months, as pay rises are saved rather than spent; the projection then runs month by month.
- Financially independent at age (advanced): your age plus the time to target, compared with the age you want to stop work.
- Coast FIRE number (advanced): the number divided by (1 + return) raised to the years until your target age: the pot that, invested today with nothing added, grows to the target on its own. Once reached, work only needs to cover the bills.
- Monthly needed to hit the target age (advanced): the regular investment that, alongside today's pot, lands exactly on the number at your chosen age.
- Passive income today (advanced): the current pot multiplied by the withdrawal rate, and the share of spending it already covers. ISAs bridge the years before pension access; pensions add tax relief the US literature lacks.