Tool 06 — Financial Independence

When does work
become optional?

Financial independence is the point at which your investment portfolio generates enough income to cover your expenses indefinitely. Set your numbers and see the year you cross over.

Monthly Take-Home Income $8,500
$2K$25K$50K
Monthly Living Expenses $5,500
$1K$20K$40K
Currently Invested $75,000
$0$1M$2M
Monthly Investment Contribution $2,500
$0$10K$20K

Note: Currently saving 29% of income.

Expected Annual Return 7.0%
2%7%12%
Sustainable Withdrawal Rate 4.0%
2%4%7%

Default 4% — Trinity Study heuristic. Lower for safer, higher for shorter horizons.

Years To Financial Independence
0yr
$0
Nest Egg Needed
$0
Monthly Passive Income
0
FI Coverage

The model assumes a constant pre-FI rate of return, constant expenses, and that you'll continue contributing until FI. The sustainable withdrawal rate is a planning heuristic based on the Trinity Study and Bengen (1994); it does not guarantee any specific outcome. Ignores taxes, fees, sequence-of-returns risk, and Canadian government benefits (CPP/OAS). A real FI plan accounts for all of these.

Build A Real FI Plan
A Plain-English Explanation

How this works.

Financial independence isn't about getting rich. It's about reaching a portfolio size where the annual income it can sustainably generate covers your annual expenses. The arithmetic:

Nest Egg Needed = Annual Expenses ÷ Withdrawal Rate
→ At a 4% withdrawal rate, you need 25× your annual expenses.

Years to FI = solve year-by-year until invested balance ≥ Nest Egg Needed
→ Each year you add 12 × monthly contribution and compound at expected return.

Three levers move the timeline more than anything else: how much you spend (lower expenses lower the target and free up contribution capacity), how much you invest (more contribution compounds harder), and what you earn on investments (modest changes compound dramatically over a working life).

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