The working life can become a daily grind. You get up in the morning, join the queues of traffic, then head home again. Such monotony can have you asking how much longer you have to work until you retire. 

While retirement can seem like a faraway dream, it doesn’t have to be. Using an early retirement calculator can help you work out how much money you need to retire. It can also establish how much you need to live off the interest of your earnings.

Read on to see how long you have to put up with the daily nine-to-five grind.

What is an Early Retirement Calculator?

An early retirement calculator is a helpful tool that tells you when you can put your feet up. It also makes you aware of how much cash you can withdraw for your expenses. According to research, four percent would allow you funds for at least 30 years.

The task now is to establish what you will need to do in order to ensure the above. For this, you’ll need to know your expected return on investment (ROI) and withdrawal rate.

Your withdrawal rate and return on investment are two different things. They both tell you how much your money makes each year, but that’s it. When the market is weak, you can lose money or not save as much. When you retire, you aren’t earning anything anymore. ROI becomes your gain, and the withdrawal rate is your adjustment once you retire. In the early retirement calculator, both of these options consider inflation. 

With inflation, withdrawal rates and ROI cancel each other out. If inflation were 0 percent now, your $100 note would be worth $100 now and in the future. In the real world, your investment yields better returns, but your cash becomes worth much less over time. 

This early retirement calculator assumes you’ll live on interest, not the principal. A retirement calculator doesn’t. It takes into account your average life expectancy, then divides the money. If you live longer than expected, you’ll have no money towards the end.

The early retirement calculator relies on you to save a lot of money so that you can live on the interest. That interest will cover your expenses, providing you with a passive income. Your account balance also increases, leaving your family with an inheritance once you pass.

How to Create a Savings Plan

Knowing the reasons for an early retirement calculator then means you’re ready to use it. Plan your financial future in these easy steps.

1.	Identify your net income – the money you make after deductions for tax

2.	Identify your yearly expenses

3.	Decide on your initial investment – how much you are putting into a savings account to begin

4.	Read the deposit recommendation – the money you should add to your savings account

5.	Choose your ROI – the interest you will earn

6.	Your annual withdrawal rate – how much you will withdraw yearly

7.	Read the calculator equation – it tells you when you can retire based on your savings plan

The calculator shows you the savings balance once you make your computations. Isn’t interest incredible? The interest rate becomes your passive income. The earlier you begin saving, the higher that income will be.

How to Retire Earlier

No one wants to work forever. Think about the freedom a holiday allows, then imagine that as your life forever. The sooner you can retire, the better. How do you do it? The first step is to establish your earnings. 

Let’s say you earn $65,000 with expenses of $50,000 a year. That leaves $15,000 in extra money available for saving - $1,250 a month. You’ve already saved $20,000 tucked away for a rainy day. With that data, you can retire in 31 years and seven months.

If that doesn’t sound appealing, then find out where you can make cuts. Put more in your bank account each month. Consider higher-earning accounts or banking facilities. If you were able to add an extra $10,000 per year to your savings account, you could retire in 21 years and two months. The more you save, the earlier you can retire.