How much you need to save to retire today

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The theory that initially drew me into the FIRE movement was the Trinity Study, so I wanted to dedicate a post to it. It’s great to talk about financial freedom, but to actually have a number to work towards is way easier. Hopefully by the end of this post, you’ll feel empowered to reach the signpoint the Trinity Study gives in order to retire without worry.

What is the Trinity Study?

The Trinity study got its name from the researchers who were employed at Trinity University. It focused on determining how much wealth a person had to accumulate in order to be ready for retirement. In other words, at what point will you have accumulated enough wealth to never have to work another day in your life?

There’s obviously a lot of variables to this, the most important being:

  • How long your lifespan is after you stop working
  • What investments you’re holding (i.e. stocks will have a higher rate of return than bonds, but are riskier)
  • How much you are spending during the years of your life where you’re not working
  • Effects of inflation

The researchers used mathematical models and tested the sensitivity of each of the variables. Their conclusion?

(In non-mathematical terms) If you only withdraw 4% of your portfolio every year, there is an almost guaranteed likelihood that you will be able to sustain your lifestyle indefinitely.

If we invert that, this means that if you have an investment portfolio which is 25 times your annual expenditures, you’ll never have to work another day in your life.

What do I do to make the Trinity Study a part of my daily life?

The implications of The Trinity Study are astounding but amassing 25 times your annual expenditures while also living your life is no easy feat. To remind me of this goal, I created a tab in my financial tracker called “Life” where I set out the expenses I plan to incur when living my ideal life, as well, all the assets I currently have, as well as my current savings rate (money saved/money earned). My spreadsheet then calculates, based on my current savings rate, how long it will take me to achieve the golden 25x. Currently, with aggressive savings goals and minimal projected expenditures, I’m calculating that I can get there within 4 years! This calculation is something I plan to calibrate every year during New Years’ resolution time, to see how my numbers change.

What are your savings goals, and how long do you think it will take you to achieve them?


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