![]() It may come as no surprise but I am a fan of Mr. Check out the first post in my soft launch of my consulting side gig: Fiscal Therapy. Money Mustache (referred to as MMM hereafter). He wasn’t my introduction to personal finance but his content fundamentally changed my approach to personal finance and, more than anything, made me less afraid of digging deeper (as opposed to just accepting some very rough cookie cutter solution – cough Dave Ramsey cough). One thing that MMM does great is, with a few assumptions, he reduces complex investing strategies into simple rules of thumb. For example, there’s the detailed analysis on killing your $1,000 grocery bill or how investing about half your take-home pay will allow you to retire in about 17 years. The Shockingly Simple Math Behind Early Retirement This leads me to the topic of this article. ![]() In the real world, we’ll have to try our luck with volatile equity and bond returns. This idea purely comes from MMM blog on this same topic. Shockingly Complicated and Random Math: Simulating the path to FI with actual returns There is no investment that guarantees a fixed 5 annual real return. Your time to reach retirement depends on only one factor: In this article, he details how the most important number in your financial independence journey is: your savings rate. ERNs post today ( ) evaluates the uncertainty in MMMs famous post about the Shockingly Simple Math behind early retirement Press J to jump to the feed. Your savings rate, as a percentage of your take-home pay. To expand on this, your savings rate is simply the amount of money you save each month divided by the amount of money you save month plus the amount of money you spend. SHOCKINGLY SIMPLE MATH BEHIND EARLY RETIREMENT PLUS Retire early and then what You have to maintain a modest lifestyle I assume. Sounds easy enough but this is probably where the simplicity ends. When looking at your take-home pay, at first glance it can be pretty straight forward to divide things up to Savings or Expenses. If you want your savings rate to be as efficient as possible you should have all personal debt paid off. Money Mustache and Jacob Lund Fisker’s How I live on 7,000 per year document the math and high savings rates that one needs to accomplish such feats. You may start to wonder things like “Does my mortgage count for savings or expenses?” Or “What about a college fund for my kids?”. The Shockingly Simple Math Behind Early Retirement by Mr. ![]()
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