Want to retire early? Use our Financial Independence Calculator

We created BetterWealth to help you invest better. So you can have a better, more comfortable future. This is about having enough money to afford your goals.

Read about why Goals Based Investing rocks here.

As we are building our product, we continue to collect client feedback. We found that most people don't have specific goals they are investing towards.

The people who are investing towards a goal, generally have the same goal in mind - retire early! For this group of people, retiring early isn't about not ever working again. It is achieving a point where money isn't a worry anymore. They can work on things / jobs that they want to, only if, and when, they want. Some people call this Financial Independence.

This is about having enough money to live comfortably according to your standards. We will all be different. There is no shame in wanting to live on Target Yearly Spend of $80,000 per year. Just know that the more money you want to spend, the longer it will take for you to get to Financial Independence. Use ASIC's nifty Budget Calculator to work out your Target Yearly Spend.

So, how do you retire early? Or more specifically, how much money do you need to retire early? When we asked our clients for feedback, most people said $1 million. When probed about why $1 million, most people couldn't give us a rationale explanation. It was like "it sounds good".


Calculating how much you need to retire early

When we asked ourselves the same question, it was clear that it is quite hard to know the answer. Experienced financial advisor Frank Paul wrote about the common mistakes people make in their estimation here. How much money you need to retire early depends on a few factors. The maths can get pretty complex.

So, we made a Financial Independence Calculator. Click here then "Make a copy" or "Download as ---> Excel".

Remember to only edit cells with a grey background!


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This calculator will tell you two key things:

  1. At what age will you reach Financial Independence; and
  2. How much money do you need to have to achieve Financial Independence (in today's dollars).


This calculator will confirm what we already know. The key to retiring early:

  • save more and spend less now;
  • invest your savings. The higher the rate of return, the more your capital will grow;
  • the less you need to spend at retirement, the easier it is to retire early.


What does this calculator do?

  • It adds together the money coming from your current investments with extra savings you contribute in future years;
  • It also captures the growth of your money from investment returns, including your Super;
  • It looks at your Target Yearly Spend once you hit Financial Independence;
  • Then works out if you'll have enough money to fund your Target Yearly Spend. This depends on your investment returns and selling down your assets to fund your lifestyle



To make the most of the Financial Independence Calculator, you will need to estimate a few things:

  1. Target Yearly Spend - just talked about that above. When using ASIC's calculator, leave out housing cost. The calculator assumes you will pay off your mortgage separately
  2. Current Income (pre-tax) - to estimate the amount you will put into your Super going forward
  3. Current Mortgage Payment - if you have one
  4. Current Savings - if you are saving any money after paying for expenses and your mortgage. This money is assumed to be invested into the Non-Super Portfolio
  5. Current Super Balance
  6. Current Non-Super Balance - the total value of all your investments in shares, the high saver account or Term Deposit, etc
  7. Current Super Portfolio Growth Rate - your Super fund should give you an estimate of it's target return. The higher risk the higher the return
  8. Super Portfolio Growth After 60 y.o. - people generally believe in investing in a safe asset, like Term Deposits, once you hit 60 y.o. This is because you can't afford to take the risks in the sharemarket as much. You can decide if that is you, or want to take on more risks
  9. Current Non-Super Portfolio growth rate - you need to estimate the average return of the money you have sitting outside of Super. For Savings that is about 3% p.a., for the sharemarket it should be closer to 8%-9% p.a. Take the average of all your investments
  10. Non-Super Portfolio Growth After Financial Independence - once you reach Financial Independence, money should be invested in low risk, low return assets
  11. Inflation rate - what you think inflation will be. This will be used to convert future dollars into today's money. Making it easier to understand
  12. Years to pay off mortgage - once you've paid off your mortgage, the calculator will add the same amount of money into your Non-Super investment portfolio


Now you have the tools, you should be able to estimate what you need for Financial Independence. Drop me a comment. Let us know what is your Financial Independence balance, and how you are planning to get there.

About the Author


Cofounder & CEO of BetterWealth (@jeremykwonglaw). Former investment banker turned technology entrepreneur. muru-D alumni (Telstra startup accelerator). Passionated about leveraging technology to provide better financial products & services to consumers. Coffee snob, business book reader, and fitness fan.

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