How much do I need to retire early?

A standard retirement estimate assumes the money has to last about 30 years, from the mid-60s into the mid-90s. Retiring at 45 or 50 stretches that to 40 or 50 years, and the extra decades change the math in two ways.

First, a longer horizon gives a bad run of markets more time to arrive and less room to recover from it. Second, there is no salary to fall back on and no Social Security for many years, so the portfolio carries the full load for longer than in a conventional plan.

The shorthand people use for this is a multiple of annual spending: divide your yearly spending by a withdrawal rate. At 4% the multiple is 25. At 3.5% it is about 28.6. At 3% it is about 33.3. The online community around financial independence calls the result a FIRE number, and our FIRE movement statistics page covers who pursues it and how.

Five inputs do almost all the work, and the first one matters more than the other four combined.

• Annual spending. Every $10,000 a year of spending adds $250,000 to the target at 25 times and about $333,000 at 33 times. Cutting spending also raises the savings rate, so it shortens the wait from both ends.
• How long the money has to last. A plan that ends at 95 needs 50 years of withdrawals from 45, against 30 years from 65.
• Other income. Rent, a pension, part-time work or a spouse who keeps working all reduce what the portfolio has to produce. Only the gap gets multiplied.
• Flexibility. The classic studies assume spending never changes, whatever markets do. Households willing to spend less after a bad year can support a higher starting rate, which is the point of the flexible approaches Morningstar also models.
• Taxes. A withdrawal from a traditional 401(k) is taxed as income, while a Roth withdrawal or a sale of long-held shares in a taxable account usually costs less. The spending figure has to include whatever tax the withdrawals generate.

The 4% figure traces to William Bengen's 1994 research in the Journal of Financial Planning and to the 1998 Trinity study by Philip Cooley, Carl Hubbard and Daniel Walz, published in the AAII Journal. Trinity found that withdrawing 4% of a 50% stock, 50% bond portfolio in year one, then raising the amount with inflation, lasted through 95% of the 41 rolling 30-year periods from 1926 to 1995.

The research has kept moving since. In his 2025 book A Richer Retirement, Bengen raised his worst-case starting rate for a 30-year retirement to 4.7%, mostly by testing a more diversified mix of seven asset classes. Morningstar's late-2025 State of Retirement Income research went the other way on its base case, putting the highest safe starting rate at 3.9% for a 30-year retirement with a 90% chance of money remaining, using forward-looking return estimates rather than history.

All of these are 30-year results. None of them was built for a 45-year-old, which is why early-retirement planning usually starts below 4% rather than above it. Our financial independence statistics collect more of the evidence.

The table divides annual spending by four withdrawal rates. The left column is what the portfolio has to cover each year, after any rental income, pension or part-time earnings you are confident about.

A rough way to match a column to an age: 4% is the 30-year research figure, so it fits retiring in the early 60s. Retiring around 55 gives a 35-year horizon, and many plans use about 3.5%. Retiring at 50 is roughly 40 years, often planned at 3% to 3.25%. Retiring at 40 or 45 is 45 to 50 years, and 3% is a common floor. These are planning conventions, not findings, and the guides on retiring at 50 and at 55 go further into each.

Take a 35-year-old household that spends $60,000 a year, has $400,000 invested, and saves $50,000 a year. Assume a 5% real return, meaning 5% a year after inflation, so every figure below is in today's dollars. The rate is an assumption for illustration, below the long-run US stock average on our average stock market return page because a retirement portfolio usually holds bonds too.

1. Set the target

At a 3.25% withdrawal rate: $60,000 divided by 0.0325 equals about $1,846,000. At 4% it would be $60,000 divided by 0.04, or $1,500,000.

2. Grow the balance

Each year the balance grows 5% and then the $50,000 goes in. Year one: $400,000 times 1.05 is $420,000, plus $50,000, is $470,000. Year two: $470,000 times 1.05 plus $50,000 is $543,500. Repeating that, the balance passes $1.51 million in year 12 and $1.91 million in year 15.

3. Read the result

On the 4% target this household could stop at about 47. On the 3.25% target it is about 50. The gap between those two ages, roughly three years of work, is the price of planning for a 40-year retirement instead of a 30-year one.

4. Check where the money sits

If they stop at 50, they need about nine and a half years of spending, around $570,000 before any growth, reachable before 59.5. If most of the $1.85 million is inside a 401(k), the total is right and the plan still does not work on day one.

Income matters less than the share of it you keep, because a higher savings rate both builds the balance faster and lowers the spending the balance has to support. The table assumes you start from zero, earn a 5% real return, spend everything you do not save, and target 25 times spending.

Starting with money already invested shortens every row, and targeting 30 times rather than 25 lengthens it. The pattern holds either way: moving from 20% to 40% roughly cuts the wait from 37 years to 22.

Withdrawals from a 401(k) or IRA before age 59.5 generally carry a 10% additional tax on top of income tax, according to the IRS. The exceptions that matter most to early retirees:

• The rule of 55. Leaving an employer in or after the year you turn 55 lets you draw from that employer's plan without the additional tax. It does not apply to IRAs, and public safety employees qualify at 50.
• Substantially equal periodic payments (72(t)). Available from IRAs at any age, and from an employer plan once you have left that employer. The payments must continue until the later of five years or age 59.5, and changing them triggers the 10% tax on every earlier year, plus interest.
• Roth IRA contributions. The amount you contributed, though not the earnings, can come out at any time without tax or penalty.
• Taxable brokerage accounts. No age rules at all, and long-term gains are taxed at lower rates than wages.

Many early retirees split saving between retirement accounts and a taxable account, rather than putting every dollar into the 401(k), for exactly this reason. The early 401(k) withdrawal guide covers the penalty in more detail.

Medicare starts at 65, so retiring at 45 means two decades of private or marketplace coverage. That cost belongs in the annual spending figure, not as an afterthought, and it often rises faster than general inflation. Marketplace subsidies depend on income, which early retirees partly control by choosing which account to draw from. Our healthcare cost in retirement statistics cover the numbers.

Social Security can start at 62, and the full retirement age is 67 for anyone born in 1960 or later. Benefits are based on your highest 35 years of indexed earnings, so someone who stops at 45 with 23 years of work has 12 zero years in the formula. Many plans fund the full gap from the portfolio until benefits begin, then let the benefit reduce withdrawals. Your own estimate on your Social Security statement beats any rule of thumb here, and the Social Security timing guide covers claiming age.

Not every early retirement means stopping all paid work. A few common patterns change the target a great deal:

• Part-time income in the first decade. Earning $20,000 a year for the first ten years cuts withdrawals during the stretch when a market fall does the most harm. At 25 times, that income is worth about $500,000 of portfolio while it lasts.
• Stopping contributions instead of stopping work. Some people save hard until the balance can grow to a full target by 60 or 65 with no more deposits, then take lower-paid or lower-stress work that only covers current costs.
• Lower fixed costs. A paid-off home, a cheaper area or a smaller household budget all shrink the number directly, since housing is usually the largest line.

Walnut does not hold your money or move it from your bank. It connects to the brokerage account you already have and works from what is in it.

1. Connect your brokerage

Link your account so Walnut can read your holdings and balances. If you do not have one yet, Public and Robinhood are both options. A read-only connection is enough for everything below except placing trades.

2. See where you stand against the market

The dashboard shows your holdings and how the portfolio has done against the S&P 500, which is a fair check on whether the return you assumed in the math above is the return you are getting.

3. Set the goal

Enter your target, for example $1.85 million by 50, and Walnut shows whether the current balance and pace put you on track for it.

4. Build a basket with target weights

Group the investments you want into a basket and give each a target weight, so you can see how far the real mix has moved from the plan. Recurring investments can then put a fixed amount into the basket on a schedule, using cash that is already sitting in your brokerage account. Every trade goes through your broker.

5. Ask the assistant

The AI assistant reads your connected portfolio, so you can ask things like how your holdings are spread across stocks and funds, or what your number looks like at 3% versus 4%.

• Using today's spending without adjusting it. Health insurance replaces an employer plan, and commuting costs disappear. Both move the target, often in opposite directions.
• Applying the 4% rule to a 50-year retirement. The research behind it covers 30 years. Using it for longer is an extrapolation.
• Counting the total and ignoring access. A balance locked in retirement accounts until 59.5 does not pay for age 46.
• Ignoring sequence risk. A sharp fall in the first few years of withdrawals does far more damage than the same fall twenty years in. Holding a few years of spending outside stocks is the usual defence.
• Treating the number as fixed. Spending, returns and tax rules all change. Rerunning the estimate every year or two keeps it honest.

Withdrawal-rate research: Cooley, Hubbard and Walz, "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable," AAII Journal, February 1998, summarized by AAII; Bengen's 4.7% update reported by Advisor Perspectives; Morningstar's base case in The State of Retirement Income. Early-distribution rules: IRS exceptions to tax on early distributions and substantially equal periodic payments. Claiming ages: Social Security Administration. The return assumption and every table are illustrations, not forecasts. Walnut is informational and is not an investment adviser. This guide is educational and not personalized financial advice.