Calculate your Minimum Income to Retire

Calculate how little you need to earn in order to meet your targeted retirement age and life expectancy. This calculator can help you decide if you are Barista Financially Indpendent or not. Being Baristia FI is the situation where you are close to financial independence / retirement extreme (FIRE), but are falling a little short and would need to work a little bit to close the gap. Some call it pre-retirement or funtirement. Basically you have saved up a large nest egg and you have the freedom to work less or work in more desirable occupation.

Minimum Income to Retire Calculator Settings

Current Age
Planned Full Retirement Age
Life Expectancy
Starting Investments Total
Starting Annual Spending
Avg Investment Return
Avg Inflation
Avg Wage Growth
Tax Rate on Investment Withdrawals

Minimum Income Calculated in your Scenario

In this scenario, you will need to earn a post-tax income of $31,200 per year to retire in 30 years. This would be separate from any investment income such as dividends or interest. If you worked as a barista at $10, you would need to work 60 hours per week. You better like making coffee if you want to be Barista FI.

This could roughly be a pre-tax income of between $35,880 to $40,560. Since effective tax rates vary so much depending on your location, income sources, family structure, and other factors, your actual pre-tax income could be more or less depending on your specific set of circumstances. This calculation assumes that your wages will grow at 2.5%, your spending will increase at 2.5%, and your investments will grow at 7% per year. As these are all rough inputs, use these results as one portion of many pieces of information in your financial planning, since life is generally more complicated than simple rates of increase.

If your minimum income is lower than your spending, the calculator is making the assumption that you will pull money out of your non-retirement investment accounts in order to cover living expenses. When it is pulling money from your accounts, it is applying a 15% tax rate to represent the long term capital gains tax. If your minimum income is greater than your spending, the calculator will add the difference to your investments.

Scroll up to enter changes to your budget.

Minimum Income Scenario Chart
About the Settings

If you are confused about anything, play around with the default numbers and bookmark this page. Sleep on it and come back tomorrow.

Starting Investments Total : Enter the amount of investments you currently have. This calculator does not differentiate the difference between retirement savings and normal investment savings.
Starting Annual Spending : This is your annual spending. Enter the amount that you intend to spend per year. This calculator assumes that your spending will stay locked with inflation.
Avg Investment Return : These are used in the exponential continuous compounding formula return = Principal *e^(rate * time). This number is defaulted to 7% which is slightly lower than most other similar rates to help build in some buffer in case of taxes.
Avg Inflation : This is the rate at which your spending will increase every year.
Avg Wage Growth : This is the rate at which you expect your earnings to increase or decrease. This is an additional lever if you expect that your industry's wages will change more/less than the rate of inflation.
Tax Rate on Investment Withdrawals : This will help account for the costs of using your investment accounts as your source of income. The long term capital gains tax is currently 15% or 20% depending on your marginal tax rate, so you can adjust this depending on your risk factors and personal circumstances.

  • The inflation, wage, and investment totals all use the exponential growth function. I've thought about switching the wage one to a normal power function, but have not done so yet.
  • Full dividend and investment re-investment with no tax impact. The investment growth rate is defaulted somewhat lower to build some buffer in case of this.
  • This does not take into account Social Security or any other benefits that you may be eligible for, so as long as those still exist you might have some amount of a safety net once you are at an eligible age.
  • The annual spending number assumes that you do not have additional sources of income besides your investments. If you would like to your other income into account, adjust your spending by the amount that would be covered by any side hustles that you might have.
  • Additional reading on effective tax rates The Average American pays this much in Federal Income Tax (Fool) and Effective Income Tax Rates (NY Times).

7 thoughts on “Calculate your Minimum Income to Retire”

      1. Consider HighCharts and/or HighStock JS library. It will give you more flexibility and variety. It is good for somebody who is not really a developer, but wants top-notch charts.

  1. Since it doesn’t include social security and or pensions one way to include their impact is to net your spending against those sources of income. For example if you think you are going to spend 100,000 per year in total, and social security is going to be 40,000 per year, then put 60,000 in for your spending and the calculator will give you a very accurate result. It worked for me and I tested the math. Nice!

  2. Please update Calculator to take into account Revenue Streams (Social Security being one of them). Every Stream has a window. SS will start 67 till death. Real Estate Investments for 10 years then sell off properties.

    Great Job folks this is very helpful and spurs more variables to manage.
    Thank you

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