How to Retire Early: The Shockingly Simple Math

Enroll in our Personal Finance Masterclass for just $10:

How to retire early – let’s break down the steps to early retirement.

Take a premium course at

This video shows you how to retire early with shockingly simple math.

I’ve been a personal finance nerd for a while, and the idea of early retirement is really interesting. I’m a huge fan of Mr. Money Mustache who wrote a great article on the shockingly simple math behind early retirement. Since I make videos, I wanted to take his theories and break them down into a digestible video.

I hope you enjoy! And like I say in the video, please like and share this video, then leave a comment. What do you think? Is this amazing or crazy? What is your savings rate? What other personal finance questions do you have?

I credit a lot of this work/theory to Mr Money Mustache. Read his full article about it here ( ). Also, check out this cool early retirement calculator ( )


Hi, my name is Phil. I’m a video creator and online instructor. I’m also a personal finance nerd.

Because of that, I want to create a series of videos that breaks down some of the most mystifying topics that plague our society.

In a world where people’s finances are typically locked away and not-talked about, I believe opening up the gates of financial conversation will help everyone live a better and smarter life.

In this first video, I want to explain the shockingly simple math behind early retirement – thanks to one of my biggest heroes, Mr Money Mustache.

While the ability to retire may seem like a distant and unreachable goal for many, the premise comes down to one thing. You need to invest money so that it earns more money. This could be investing in stocks or bonds, real estate, or any other of investment vehicles. As soon as your investments earn enough money for you to live on each year, you are able to retire.

Let’s break it down further to know when you can retire.

The most important concept is knowing your savings rate, basically how much you make minus your expenses.

If you spend 100% of your income, you will never retire… because you will never be able to invest any money that earns money for retirement.

If you spend 0% of your income, you can retire right now… because somehow you are living without needing to make any more money.

Between 0% and 100% are a number of savings rates that correlate with the years it will take to retire.

For this, let’s assume your annual investment return is 5% (which is conservatively low) and your withdrawal rate is 4%… meaning you spend 4% of your net worth each year. For example, if you have a $1,000,000 net worth, and you live on $40,000.

If your savings rate is 10%, you will be able to safely retire after 51.4 years. Safely, meaning you will never run out of money.

If your savings rate is 25%, you can retire in 31.9 years.

50%, you can retire in 16.6 years.

And if you can somehow save 75% of your income, you can retire in 7.1 years.

Now getting to that savings rate might not be easy in our world of societal pressures, keeping up with the Joneses, and bad habits. But you can get closer by making smart decisions, avoiding debt, and living simply.

The key take away is…
Cutting your spending rate is way more powerful than increasing your income because no matter how much money you make, decreasing your spending will speed up the process.

A note, The math behind early retirement works if you are working a minimum wage job or a 7-figure CEO salary.
It’s all about the savings rate.

So if you want to retire in 10 years, the math tells us that you need to save 66% of your income.

Now there is a lot that I didn’t talk about – like how to invest, and how to cut expenses to get to a high savings rate. Those will come in a future video.

For now, get excited about the honest truth about retirement (and early retirement at that!)!

Let me know what you think in the comments below? Is this exciting or bogus?

Until next time… start being money smart.

Please subscribe to the channel and leave a comment below!

Video School Online:

77 Replies to “How to Retire Early: The Shockingly Simple Math”

  1. “Shockingly simple”, indeed. Very short-sighted analysis here, I have to say. There isn’t even a passing mention of the fact that your money is being increasingly devalued by inflation every year, or that just putting it in the bank doesn’t even begin to protect it from a failing economy. If you really want to save up enough money to retire on in today’s world, you need to invest your money in something that pays far better dividends than what a savings account will. Banks are hardly paying anything any more in the way of a real interest rate on your savings- not even close to what they used to, or what you could get through other means, like real estate investing. I understand that this is probably just a quick introductory video on the subject of money management, but the title would have you believe that there is some simple formula to retiring comfortably, and nothing could be further from the truth. With the way the world’s economy in general is today, you have to be a very active manager of your assets, no matter how much money you have. Just putting it in a savings account and forgetting about it is simply not an option any more, and probably never will be again.

    1. Dirk Diggler
      You thought he meant “put in a bank” when he said “save”. He used “save” and “invest” interchangeably in this video. That part was pretty obvious because he said “let’s assume a 5% average annual return”. Your criticism is nullified.

  2. Great video!! It really is that simple. The right mindset is the hard part for most people. Minimalist living, entrepreneurship, and real estate will be my vehicles to early retirement!!

    1. Now factor in taxes and see how long it takes. And after working and saving all those years living frugally, someone will come along and sue you. Chances are 90% if you have over $150k USD and over 99% if you have over $1m you will be sued. By the time the avg person figures all this out their youth has been spent and they will be unable to start over. All because they were deceived by videos like this.

  3. Phil, you say 10% savings is 51.4 years in the middle of the video and then 10% is 54.1 years at the end of the video.
    Plus, where is the simple math. I didn’t see any math in the whole video. What if I want to assume 8% returns or 7% withdrawal. You didn’t help me figure out anything for myself.

    1. Yep. I’m 49 and have nothing to show for it. Never worked in the fast food industry. And I doubt they would hire me.. I spent all my money on alcohol. Been drinking for over 30 years. Just quit drinking. I definitely feel richer. Better late than never. Now I’m trying to put away money for retirement. Don’t have retirement plane or anything. Any suggestions would be nice.

  4. What a lot of these videos fail to address and scares away the newbies to retirement planning is early retirement is not the old fashioned concept of sitting in a rocking chair and never working again.

    Let’s be honest, if you can mostly retire at 45 like a lot of commenters here say, no body is just gonna sit around and do nothing, for that gets old quick and makes you old too.

    This is the time when people can finally work on their hobbies and side gigs and make them work for them. So in other words there usually will be other money coming in

    1. And that “other” money that comes in every month must come from some other “poor” person who “decided” to work as a slave all his life.

    1. My company offers 10% fixed APR to private lenders who work with me on Buy and Hold Real estate deals across the US. Literally all they do is lend the money and sign the contract and they get fixed returns paid monthly. Its definitely a financial possibility.

    2. Daniel, the problem is that there’s a different answer everyone. There are tons of factors:
      How comfortable are you with loss and fluctuation?
      Do you have a safety net to prevent you from redeeming from this account?
      How long before you need this money?
      How long do you need the money to last once you start drawing down?
      There are other factors like that that prevent somebody from just (responsibly) telling you what to invest in. Somebody just saying real estate is not a good person to listen to. It might be a suitable choice for him, but that doesn’t mean it will work for you.

    1. Eric D exactly. Spending money when you’re young and your peers have less money is more fulfilling than spending money when you’re old just to keep up with the Joneses and buying a second vacation home.

      That’s the hidden variable in these type of studies that’s forgotten. The fact that money is more fun to spend when you’re young.

    2. Bullshit. Money gets more fun to spend every day of my life. The relationships I have now are 100x better than the ones I had before, the meaning in life is 100x more than what it was before. Life gets progressively and substantially better, and due to that spending money gets progressively more fun and satisfying.

    3. Cameron yeah I’m sure you’re the only person who feels that way.

      I’ll enjoy wining and dining these cute girls off tinder and pounding them doggystyle at the end of the night in my swanky high rise condo while my sex drive is high and I’m young and healthy.

      You can enjoy pinching your pennies today while jacking off to porn on your 5 year old glitchy laptop in your moldy basement bedroom, so that when you’re 65 you can have gold spinner rims on your wheelchair and have a diamond encrusted backgammon board at the fanciest nursing home in the country. Enjoy that.

    1. A high savings rate of 75% is very much achievable. In one particular industry such as the maritime industry if you work on ships and you have no dependents, a home, or bills, then yes you can save close to 100%. Working in the maritime industry out at sea means that food and lodging is provided for you and you don’t commute. You don’t pay a dime of your income until you go home after months of being signed on and working on a ship. However, that kind of work is not for everyone.

    2. i started poor with $0 in my pocket. my only asset was my parents. I lived with them rent free from 16yrs old to 28yrs old (dropped out of HS too at 16). I saved 90% of my income while working full-time at a little over minimum wage. with the stock market and interest rates, I now have over 820k in investments. Im 32 now and retired all because i stayed at home, didn’t waste my money on anything and saved it all. Now I have money to spend and the time to do it.

    1. Slam Dunk
      Fictional family in every middle class neighborhood that live beyond their means,in debt,and they are always doing something in order to show that they have as much money as other people, rather than because they really want to do it

  5. Never buy anything you can’t pay cash for except your home. (Cash for every car you buy).
    Don’t waste money on expensive cars…and buy a car and drive it until it croaks. Keep up with the maintenance though.
    Don’t waste excessive money on any cable plan except for basic cable.
    You don’t need a smart phone unless that’s the ONLY device you have to connect to the internet.
    Marry a spouse that works. Double income is the only way nowadays.
    Don’t drink at bars or at sports venues. Chug a lug before you enter.
    Don’t waste any money on jewelry and don’t marry a woman that likes to spend money.
    Save at least 10% of your earnings in a 401k/IRA.
    Don’t chase losses if you’re a gambler.
    Pay off ALL your credit cards EVERY month.

    1. RapIsDeadly Most of your points are good, but if you can buy a car at 0% financing, then you should. Then those thousands of $ are making you money on your money.

    1. Actually you don’t. Savings rate factors in your spending relative to your salary. Try a few examples and you’ll see that the math works out. Saving 25% of your income on 100k salary will lead to the same retirement time as saving 25% of your income on 1 million salary

  6. There’s something else in retirement that should be considered. The way you retire. I despise the idea of having enough money that I’d simply be bludging on it. I love the idea of designing and making new things, of building a business or being actively involved in growing something. I would suck at bludge retirement, but having enough means to be able to work for myself at any hourly rate, would be the dream for me I think; perhaps not for everyone though.

    1. BingtheLizard There’s a big difference to building your own business or being freelance or even being able to work part time, than working 40-60 hours a week in a cubicle and saving 70%.

    1. craigmak Very true. I buy and resell cars as a side gig and a good chunk of my customers are Africans who buy cars cheaply here then send it to Africa

    2. Haha that’s true. But you can actually make it happen here, too. Proper real estate and savings game plan goes a long way. You’d be surprised 🙂

    3. Pagani Huayra You are correct if anybody tells you different there just ignorant and please nobody give that bullshit that 3 world countries are shitty that’s not true because there are good and bad every where in the world .

    1. Yeah I can see that. We do videos covering how to save money, invest and we will be doing one a out retiring early within 8 years if u have atleast a40k income

    2. True. Nothing in this video has any value. Nothing said has anything to do with saving or investing how to cut expenses. Here’s one example: stop going to Star

    3. yup this video is meaningless because its not considering how much the person makes per year………who makes more money will retire faster thats for sure, and if the person makes few money even tho he/she saves a lot it will not be enough to retire

    4. 9board6 yup, They also forgot to tell us in this video that people are living a lot longer. On average people will be living to 90 on up. Because of advances in medicine etc. Now your going to need a few million dollars to retire. I’m probably going to need at least 6 million. It’s gets more expensive because of medical bills, rest homes etc..

Leave a Reply