From spending to a FIRE target
The target is annual retirement spending divided by the chosen withdrawal rate as a decimal. At a 4 percent assumption, $40,000 of annual spending produces a $1,000,000 target. This is arithmetic, not a guarantee that the rate will be sustainable.
Why the projection uses real return
The entered annual return is nominal and the spending target is stated in today’s dollars. The calculator converts nominal return and inflation into an effective real return using (1 + return) ÷ (1 + inflation) − 1. Balances and contributions are then projected in today’s purchasing power.
Contribution assumptions matter
A monthly contribution “in today’s dollars” implies that the nominal amount rises with inflation over time. Contributions are modeled at the end of each month. Taxes, fees, employer matches, income changes, contribution limits, and account-specific rules are not included.
Average returns hide investment sequence
The model applies one smooth monthly rate. Real markets fluctuate, and losses near retirement can have a different effect from the same average return delivered in another order. A single projection should be tested against lower returns, higher inflation, different spending, and different withdrawal assumptions.
The withdrawal rate is not a universal rule
Sustainable withdrawals depend on retirement length, asset allocation, fees, taxes, flexibility, pensions, public benefits, healthcare, location, and future spending. Early retirement may require a much longer horizon than conventional retirement research assumes.
This is an educational scenario in today’s dollars, not investment, retirement, tax, legal, or financial advice. It does not predict returns or prove that assets will last. Consider professional guidance and multiple adverse scenarios before acting.