# Calculate your Minimum Income to Retire

Calculate how little you need to earn in order to meet your targeted retirement age and life expectancy.

## Minimum Income to Retire Calculator Settings

 Starting Investments Total \$ Starting Annual Spending \$ Avg Investment Return% Avg Inflation% Avg Wage Growth% Tax Rate on Investment Withdrawals% Current Ageyears Planned Retirement Ageyears Life Expectancyyears

## 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.

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.

Minimum Income Scenario Chart

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.

Assumptions
• 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).