If I never saved again…

I haven’t fully committed myself to a timeline for financial independence and early retirement. My numbers feel too fluid at this point to make any predictions. I have no idea how my income will progress. Being so far away from it, it feels a bit silly to try to make any predictions. What’s the point of a goal if the timeline has no meaning? Without a timeline, I’ve committed to saving as much as a can and I’ll leave it at that. It will happen when it happens.

What if, however, I could define the end goal? What is the earliest I could retire if everything completely fell apart today?

What if I never saved again?

I found a fancy formula on Reddit that solves for that exact answer. But first, let’s address a few assumptions.

  • One: I don’t add anything to my investments
  • Two: I never raid any of the invested assets I currently have.
  • Three: All data is inflation adjusted and presented in today’s dollars.
  • Four: My lifestyle doesn’t inflate.

The Formula!

X=LN((1+7%)^A*B/C)/LN((1+7%))

where A is my current age, B is my goal of investable assets (I used current annual expenses x 25), C is my current investable assets and 7% is my expected rate of return.

This formula was an amazing burst of fresh air. If I never invest another dime, this math should tell me when my investments can kick off a sufficient return to support me.

This formula is the End Game. With 100% reliance on math, I will be able to retire at the age it outputs.

What is my worst case scenario?

One person on Reddit got an answer of 96.11 years old. Time to save bud! A few others chimed in with answers between 54 and 65 years old.

To calculate my answer, I plugged in 29 for my age, and $1 million as my goal for investable assets. One million dollars should give me and Hubs a comfortable life. I don’t foresee that number going up much unless we can’t get our travel expenses under control.

Initially, I plugged in my current net worth for C. Solve for X.* If I never save again, I’d be financially independent at 71! That’s a good number, especially considering that I started actively saving last year.

However, the more I thought about it, my numbers were flawed. The $1 million covers expenses for me and Hubs. If its for just me, I don’t need that much.  The net worth number is also incredibly misleading because of the fluff in there. My car won’t return 7% over time, neither will my car fund or house fund. I cut the fat and only included investable assets. To be more precise, I included Hubs’ investable assets as well, for a sum of just over $100k.

The answer…. 61.88 years old!

If I never saved again, and lived off Hubs and my current invested assets, we could retire when I am 61.88 years old or THE SUMMER OF 2048! Never investing again and I will still be able to technically retire early! This isn’t Frugalwoods or MMM early, but by social security standards, I’ll still be able to retire early!

The amazing thing about 61.88 is that Hubs and I have already invested enough money for me to retire before my mom or dad did. That is a jaw dropping. (Thanks Hubs for the investing head start!)

61.88 is an exciting fun fact! This is a number I can project my retirement around because we all know that I can’t stop saving now 🙂

Here’s the link to Reddit if you want to see the original formula posted by aspiringFI_throwaway.

*I used Excel to solve for x. Let’s not get crazy and try to calculate this by hand.

When could you retire if you never saved again?

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16 comments

  1. This is the very exercise that led me to the decision that I can stay home while Rob is still in school. As long as we don’t go into debt, we can probably retire around 50 without investing ever again.

    We also want to provide for our kids education, which requires additional savings that we don’t have, but outside of that we can sort of limp along if we wanted to (we don’t want to limp along financially for long, but I’m okay doing it for a short period of time).

    1. I love that you used a number like this and made a life change! Knowing this number is the worst case scenario is incredibly freeing and you are already living that freedom by staying home with your kiddo!

  2. I’m 27 and it’s currently giving me a rough figure of 58-57 years old that I could retire without adding any more to my investments. It looks like I’ll take 5 years off of that figure with my normal retirement account additions each year as well, so I think I’m in okay shape for now! At the end of my first year post-college, the figure was 105, so I’ve made some huge strides in the last 5 years!

  3. That’s an awesome formula! Thanks for sharing it. Mine is 62.8, but I’d like to reach FI way before that!

  4. Oh wow, that is so interesting! I’m not even going to calculate this for myself because it would probably spit out 149, but it’s a pretty cool idea. And hey, looks like you’re doing great! 🙂

    1. Don’t hide from your numbers! Though maybe at this point it’s best. Had I calculated this a year or two ago, I would have gotten a crazy high number too that would have done nothing but discourage. Get a job, kill that debt and then we can calculate!

  5. Hoo boy. My first try got me age 88. I reduced my goal number of investable assets to $500K (which is low, but doable, esp with social security), reset my “age” to 40 and my “current” assets to $100000 (which I project reaching just before 40 at my current rate), and came up with a more reasonable 64 years old. I think I’d better plan to keep investing even after I turn 40 though 🙂

    1. It’s an interesting formula to play with. Especially as you tinker with things you can control – what you need and what you save- and things you can’t control – the rate of return and your age.
      And yes! This doesn’t take into account social security or any other pensions, even though those are a dying breed. Keep investing my friend!

  6. Very interesting formula – I can’t believe I haven’t come across it before. My age turns out to be 70.8. Oops! Better crank up those personal finance goals today!

    1. Thanks Fehmeen. I got pretty excited when I found it. 70.8 isn’t too bad, especially if you quit today. But yes, there’s always room to crank up those PF goals! Good luck!

  7. Such a fun exercise! But first, to address the note you started on, I think it makes total sense not to have an FI date picked out just yet. Ours was never specific and evolved a lot until we were in the home stretch / last four years or so. Stuff will become apparent over time — how much you’re comfortable living on, where you’re willing to scrimp, where you feel you must splurge, which raises you can hide in savings increases, etc. So no need to rush that stuff. As for this formula, that’s pretty great! 61.8 is a pretty respectable place to be only one year into saving in earnest. Though I did snort at the 7% assumption, given this year’s amazing return of less than 1 percent! But I know, I know.. historical averages. 🙂

    1. If I do the math on 1%, I’ll never get there! Correction: I’ll get there when I’m 252 years old. That doesn’t bring hope to anyone!
      I appreciate the reassurance on my resistance to set a date. It feels like a pointless exercise this point. It also feels a bit like wishing my life away and I certainly don’t want to do that!

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