Early Retirement Calculator

The 25 times rule, and where the number comes from

Early retirement math starts with one division. Take the spending you want each year and divide it by the withdrawal rate you are willing to use. At 4 percent, dividing by 0.04 is the same as multiplying by 25, so a $50,000 year needs $1,250,000.

The 4 percent figure comes from US market history. Financial planner William Bengen published the first version in 1994, testing withdrawals against rolling 30 year periods from 1926 onward. The Trinity study repeated the work in 1998 with more asset mixes and reached a similar range. Both looked at a 30 year retirement, which is the detail people drop when they apply the number to a 45 year retirement.

The rule is a starting point, not a guarantee. It assumes a mix of stocks and bonds, steady withdrawals adjusted for inflation, and US returns that look like the last century. A plan that starts in a bad market can fail at 4 percent, and a plan that starts in a good one can survive 5 percent. What the rule gives you is a target that is roughly right instead of a guess that is wildly wrong.

Withdrawal rate sets the target, not your age

Every tenth of a point on the withdrawal rate moves the target by tens of thousands of dollars. The table holds spending at $50,000 a year and the other inputs at the defaults, then shows what each rate does to the target and to the date.

Moving from 4 percent to 3.5 percent adds $178,571 to the target and 2.6 years to the plan. Moving to 5 percent removes $250,000 and 4 years. The choice is not about optimism. It is about how long the money has to last and how badly a bad first decade would hurt.

A common approach is to plan at 4 percent, then check the plan at 3.5 percent. If 3.5 percent still works, the plan has room for a bad market. If it only works at 5 percent, the plan depends on good luck.

Why life expectancy matters more than the return

A withdrawal rate is a bet on how many years you have to fund. Retire at 65 and a 30 year plan takes you to 95. Retire at 50 and the same money has to last 45 years, which is a different problem.

The Social Security Administration publishes a period life table with the 2026 Trustees Report. It shows a 65 year old man living 18.12 more years on average, and a 65 year old woman 20.66 more years. At 67 the figures are 16.71 and 19.08. Those are averages across everyone alive at that age, so half of the people in the table live longer than the number.

Planning to the average is a coin flip. Planning to age 95 is a 30 year horizon from 65, and it is the reason the 4 percent rule was built around 30 years. For an early retirement at 50, a 45 year horizon is closer to honest, and that pushes the safe rate down toward 3.5 percent.

Family history, health and the age of your parents are better inputs than a national table, but the table is the number you can look up. Use it as a floor, then add years for safety rather than subtracting them for optimism.

What you can put aside each year

The savings rate is the input you control most directly, and it moves the date faster than a better return does. The table keeps spending at $50,000, savings at $250,000, a 6 percent return and 3 percent inflation, and changes only the amount added each year.

Doubling the annual savings from $15,000 to $30,000 removes 9 years from the plan. Adding another $15,000 removes 4.7 more. The returns shrink because the balance is already doing more of the work, which is why the first years of saving feel slow and the last years feel fast.

The 2026 limit on employee salary deferrals to a 401(k) is $24,500, up from $23,500 in 2025, according to the IRS contribution limit table. A couple with two plans can shelter $49,000, and an employer match sits on top of that. Maxing the account is often the difference between the 20 year row and the 15 year row.

The two costs people underestimate: health insurance and inflation

Health insurance is the line that breaks early retirement budgets. In the US you do not reach Medicare until 65, so a retirement at 55 has a 10 year gap to cover. The 2025 KFF Employer Health Benefits Survey puts the average employer plan premium at $9,325 a year for single coverage and $26,993 for family coverage. Buying comparable coverage on the individual market as an older adult often costs more than the employer share, and the subsidy rules change with income.

Put that cost in the spending number, not in a separate mental account. A couple who plans on $60,000 of spending and then pays $20,000 for coverage is planning on $40,000 of living, and the whole plan is off by a third.

Inflation is the second quiet cost. The default here uses 3 percent. Raise it to 4 percent with the same return and the date moves from 20.1 years to 23.1 years, almost 3 extra years, because the return after inflation falls from 2.91 percent to 1.92 percent. Over 25 years that difference compounds into a much larger target in future dollars, and the target on this page is stated in today's dollars for exactly that reason.

Both costs hit at the same time. Health premiums rise faster than general inflation, and the years before Medicare are the years when a gap in coverage is most expensive to fix.

Worked example: retiring at 60 on $50,000 a year

Start with $50,000 of annual spending and a 4 percent withdrawal rate. The target is $1,250,000. With $250,000 already saved, the gap is $1,000,000.

A 6 percent return against 3 percent inflation is a real return of 1.06 divided by 1.03 minus 1, or 2.91 percent. Feeding $30,000 a year into that for 20.1 years reaches the target, which puts retirement at age 60.1. The first year withdrawal at that point is $50,000, which is the spending the plan was built around.

Of the $1,250,000, $250,000 is money already saved, about $195,000 is growth on the existing balance, and about $805,000 is new savings plus the growth on it. New savings do most of the work in the first decade, and growth does most of it in the last.

Now test the plan. If you stop saving today, the $250,000 alone reaches $1,250,000 in 56.1 years, at age 96.1. If spending is $70,000 instead of $50,000, the target is $1,750,000 and the date moves to 67.0. If you save $45,000 a year, the date moves up to 55.4. Each of those is one input changed and the rest held still, which is how a plan gets tested.

Getting money out before 59 and a half

Most retirement accounts charge a 10 percent additional tax on withdrawals before age 59 and a half, on top of ordinary income tax. The IRS list of exceptions is long, and three of them matter for early retirement.

The rule of 55 lets you take money from the 401(k) of the employer you left, without the 10 percent tax, if you separate from service in or after the year you turn 55. It does not cover an old employer's plan, and it does not cover an IRA. The 72(t) route, formally substantially equal periodic payments, lets you take a calculated series of payments for at least five years or until 59 and a half, whichever is longer. The amount is fixed by a formula, and changing it early undoes the exception.

The third route is not a loophole at all: keep enough in a taxable brokerage account to cover the first five years. That money has no penalty and no age limit, and it buys time for the retirement accounts to keep growing. A Roth conversion ladder is a version of the same idea, but it needs five years of seasoning before each converted amount can be withdrawn.

Plan the bridge before you quit. The year you stop working is the wrong year to discover that most of your money is locked behind a penalty.

What the plan misses, and how to stress test it

The calculator uses one steady return, one steady inflation rate and one spending number. Real markets do not cooperate. A bad first five years hurts more than a bad last five, because withdrawals from a falling balance lock in the loss. That is sequence risk, and no single average return can show it.

The table below changes only the return assumption, holding $50,000 of spending, $250,000 saved, $30,000 a year added and 3 percent inflation. It shows how much of the plan rests on the return you assume.

A 2 point drop in the return adds 7 years. That is a large swing for an assumption nobody controls, which is why the savings rate and the spending level deserve more attention than the return forecast.

Three things are outside the model on purpose: taxes on withdrawals, Social Security, and a paid off house. Taxes lower the spendable amount, Social Security lowers the amount you need to fund, and a paid off house lowers both spending and the risk of a rent increase. A serious plan runs the numbers with and without each one, then keeps a cash buffer of one to two years of spending so a bad market does not force a sale.

This is an estimate for planning, not financial, tax or insurance advice. Returns, inflation, health premiums and tax rules change. Confirm the rules that apply to you with the IRS, Medicare or a licensed professional before you act.