Trying to figure out my target for financial independence and is about to start building an investment portfolio for 3 lifetimes. (3 lifetimes as in I want to inherit it to my kids and grandchildren: 80 x 3 = 240 years horizon).

I'm looking for help to figure out my Financial independence (FI) target. I have been to the subreddit of said subject and found this thread here: https://money.stackexchange.com/questions/69993/

  • I have also used this calculator: Networthify
  • I have also used the formula from the wiki (see above answer)

I want to figure out my FI target and years to FI in my own calculations. I record all my income and expenses every month and I have made an excel sheet to update this as time goes by.

Here are some relevant figures:

  • Age: 28 y/o
  • Annual income: $31,000 after tax
  • Annual expenses: $21,000
  • Portfolio: $10,000 (zero tax on all financial investments)
  • SWR (withdrawal rate): 4%
  • Nationality: Non-US (401k etc. does not apply to me)
  • ROI: 4%
  • Savings rate: 32%
  • Multiple: 25

Here is a quote by a money.stack user that uses some parameters I've found everywhere on the web (also from the Trinity study).

Which in turn means that I estimate I need investments 1/.04 times the yearly spending estimate to declare the "forever" independence/retirement, or 25x the yearly. @Keshlam

I have also visited the Monevator, a blog that recommended this process:

  1. Annual income / Withdrawal rate = FI target
  2. Take FI target
  3. monthly saving figure
  4. real return rate assumption
  5. Feed numbers into calculator
  6. = Years until you are FI!

Here are my calculations so far:

FI target using 4% SWR: annual expenses / SWR = FI: 21000/0.04=$525,000

FI target using multiple of 25: annual expenses * multiple = FI: 21000*25=$525,000

FI target using annual income and SWR: annual income / SWR= FI: 31000/0.04=$775,000

Years to FI using wiki formula: ((21000/0.04)-10000)/(31000*0.32)= 51.5 Years

Perhaps I am overcomplicating things, but I want this to work as I track the expenses on a rolling 12 month period and regularly watch my savings rate. Basically, I don't know if I can trust my calculations to be "fair". (they will never be the truth, I get that).

  • I am having a really hard time generating a good answer, but it started out like this: TLDR: I think you are over complicating things. In the end keep up the good work and you will be more than fine.
    – Pete B.
    Commented Jan 25, 2017 at 16:57
  • 1
    See many past answers replanning for eventual retirement. It's the same question, really.
    – keshlam
    Commented Jan 25, 2017 at 17:02
  • @PeteB. Thank you for your honesty. I realize that I might be. I will revise and go with something like 1/0.04
    – wiro
    Commented Jan 26, 2017 at 7:20

2 Answers 2


First, notice that .04 = 1/25, so your first two calculations are really doing the exact same thing. Multiplying by 25 is just given as an easier way to do the calculation, but it will always give you the same number as dividing by 0.04.

A withdrawal timeframe of 240 years requires practically the same target as an infinite timeframe, but it is simpler to calculate for the infinite case.

Note that if your ROI is only 4%, then 4% cannot also be your SWR. You need your ROI to be at least than your SWR + inflation to be able to withdraw 4% indefinitely (and you need it to be almost equal to SWR + inflation to be able to withdraw for 240 years).

Other considerations:

  • Do you have or expect to have just one kid who will also have exactly one kid? If you expect to have more than one then you might want to plan to have an even bigger gap between your ROI and your SWR to allow the investment to double or triple in size before your kids inherit it
  • The 240 year target is still quite strange. For you to have a grandkid alive in 240 years, assuming you have a kid around now and your kid has a kid around 30, your grandkid would be 210 years old before 240 years from now. Maybe that is possible, 240 years is a long time for healthcare innovations in the modern era; but it doesn't correspond well with your 80x3 calculation.
  • If you plan to have years of overlap, where the withdrawals are doubled or tripled, because you and your descendants are withdrawing at the same time, then you need to plan for your 4% SWR to include double your annual expenses. That means doubling your target. You cannot just add up the years of overlap and count them as extra years, because you would be withdrawing more than your SWR during those years and you can't do that without your investments being depleted.
  • You may want to consider just saving for your own indefinite retirement and teaching your kid to do the same (instead of saving for your kid's). That way you don't have to worry about things like living an unexpectedly long life. You could live to 110 and your kid could be 80 before you stop needing the investment income. It would sure be nice if your kid had also become financially independent themselves well before that. I believe that one of the best gifts you can give to your children is the peace of mind that you can stick it out in this world for as long as you like, without ever becoming a financial burden. Then they can focus on their own goals without having to worry about yours.
  • Thanks for your comment! So considering the FI target for myself only, would you say that I should take the 31000/0.04=$775,000 or 21000/0.04=$525,000
    – wiro
    Commented Jan 26, 2017 at 7:23
  • @RobinWiman It depends on your goals and expectations. If you think you will achieve a fairly consistent ROI of 4% + inflation then $525,000 is what you need to be able to withdraw $21,000 (plus inflation) through every year indefinitely. On the other hand, $775,000 would allow you to withdraw $21,000 and have $10,000 extra every year to continue growing your investment (and therefor grow your withdrawal amount faster than inflation).
    – Paul
    Commented Jan 26, 2017 at 21:07
  • @RobinWiman I don't have firsthand experience, but from what I have read, most people's annual spending tends to decrease when they retire, so you might find that $21,000 is more than you need anyway. However depending on where you live and whether you own a home, $21,000 already seems fairly low.
    – Paul
    Commented Jan 26, 2017 at 21:12
  • @RobinWiman You should also consider that your target is in "today's dollars". When you reach your target it should be $525,000 of today's dollars. Assuming your salary increases over time at the rate of inflation and you keep the same savings rate (then the $10,000 you save yearly will also grow at the same rate as inflation). It will take the same amount of time to reach the target in future dollars, as you calculated based on todays dollars, as long as your salary and therefore the amount you save increases too.
    – Paul
    Commented Jan 26, 2017 at 21:16
  • @RobinWiman For example, if you consider an inflation rate of 2% for 40 years, you will need $1,159,220 to retire and be able to withdraw $46,368 every year (which is the equivalent of $21,000 in today's dollars). However your salary should grow at the same rate as inflation or faster, and if you continue to save 32% of it you will reach the goal in future dollars in the same amount of time.
    – Paul
    Commented Jan 26, 2017 at 21:26

There's a great (fake) anecdote about your long term thinking:

A Texas oil baron is asked about his wealth, compared with his ancestors and his future descendants. He says "My grandparents took the bus, my parents drove a twenty year old truck, I drive a Mercedes, my children will drive Bentleys, and my grandchildren will take the bus."

Among the implications you can glean from the above, is that the oil baron has a limited ability to control his children's lifestyles, and by the time the grandchildren are adults, the family money may well be gone. Planning ahead for your grandchildren is admirable, but futile. Don't worry about what will happen 160 years after your death; there is enough stress in one lifetime already.

Paulpro's answer has some great resources on both your specific questions, and also general thoughts about how your math will play out differently than you expect (ie: if you have 3 kids and each of your 3 kids has 3 kids, there will be 9 grandchildren withdrawing form the inheritance).

  • I don't think this answers the question, but instead just argues with it.
    – Joe
    Commented Jan 25, 2017 at 20:31
  • 1
    @joe If you think it is more valuable for someone in their 20's, making 30k a year, to hear advice on how to earn generation building wealth for grandchildren of children that don't yet exist, instead of hearing that this might be unwise, I respectfully disagree. Commented Jan 25, 2017 at 22:03
  • I don't make any value judgement on your answer in that regard. I simply stated that it does not answer the question, which makes it not a good fit for this site. This is a question and answer site, not an advice column; information like this is appropriate for a blog post, or in the context of this site appropriate for chat.
    – Joe
    Commented Jan 25, 2017 at 22:04
  • 3
    @Joe If someone asks you how to best punch themselves in the face, the best answer is "don't". An answer does not need to tell the asker what they wanted to hear. To cut it more closely to advice on this site, if someone asked "How do I give wire instructions to this kind Nigerian prince?" the correct answer would not be one that described how to do that. Commented Jan 25, 2017 at 22:13
  • 1
    @JohnPirie Actually, things like this aren't really encouraged as comments either: comments should clarify the question, not give advice. Chat is the best place for telling the OP that it's not appropriate to do [thing].
    – Joe
    Commented Jan 25, 2017 at 22:16

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