My brain was feeling a little itchy for some Math yesterday. Math was my best subject in school, and my favourite subject when I tutor. So, I decided to try out to calculate and derive the formula for Early Retirement. After using this website (link), and MMM post (link) on how Early Retirement is only determined by the Savings Rate, I decided to try to derive the formula that calculates the number of years for retirement. This will be expressed in terms of savings rate, real rate of investment return, and withdrawal rate.

Warning

If you absolutely hate Mathematics or have a phobia of algebra or whatsoever, simply scroll all the way down to the last section for the formula, and how to use it!

Let the Mathemagic begin

Let: Savings rate = s Withdrawal rate = w Monthly income = y Real rate of investment ......