Your Money

Use these homegrown tools to figure out if you could retire early

Key Points
  • A growing number of people are joining the FIRE (Financial Independence, Retire Early) movement, seeking to save more than half of their income so they can leave full-time work in their 30s, 40s and 50s.
  • These home-grown calculators can help you determine whether you can handle early retirement.
  • Unlike many other retirement tools, some of these calculators can show you the savings from decreasing your living expenses.
Top retirement myths
Top retirement myths

A growing number of people are saving as much as they can to ditch the rat race early and retire in their 30s, 40s and 50s.

The FIRE (Financial Independence, Retire Early) movement is not for everyone. It usually requires that you save and invest up to half of your take-home pay so you can pursue the lifestyle that you want.

These people are not retired in the traditional sense. Many early retirees work part-time on things that inspire them while they earn most of their income from their investment portfolios.

"I like retirement calculators that provide actionable steps to get to where you want to go," said Sam Dogen, creator of the personal finance website Financial Samurai, who retired in 2012 at age 34 after a 13-year career in finance. "Achieving financial independence is really about taking action."

Here are tools developed by early retirees that can help you figure out if that lifestyle is right for you by answering these three key questions:

Why should you retire early?

Many online tools can tell you how much you should save for retirement, but few tell you why. The yFIRECalc can show you the trade-offs between working longer to save more money or retiring sooner to have more freedom.

"I wanted to focus on the time aspect rather the money aspect of early retirement," said Steve, a 57-year-old lawyer who retired at age 48 in Boulder, Colorado, and who updated the yFIRECalc this year after learning JavaScript in his free time. (Since Steve blogs anonymously about the details of his net worth at, he asked that his last name not be used.)

The calculator gives you a snapshot of your life before and after early retirement based on the hours you will spend working, sleeping and left to your own devices.

"It's designed to help make early retirement more tangible," said Steve. "The highest and best use of money is freedom."

Where can you find places to save more?

Peter Adeney, the popular blogger known as Mr. Money Mustache, has built a devoted following of people who strive for early retirement. Nicholas Marrone, a 38-year-old software engineer in Seattle who aims to have enough money to retire at age 47 if he wants, developed six simple calculators to help people live like a "Mustachian" at Mustache Calc.

Many of Marrone's tools focus on the value of reducing your spending because increasing your income only helps when you're working while cutting expenses aids you throughout your retirement.

One big area of savings: eliminating or reducing the cost of owning a car.

"If you don't really account for all the expenses around owning a car, it is difficult to comprehend exactly how expensive it is to drive to work," said Marrone, who has a calculator that estimates the total cost of every mile you drive.

That said, where to cut in your budget is a personal decision based on your priorities.

"Question what really makes you happy. If owning fancy cars does it, then so be it. But if you are craving more time and freedom maybe that is too high of a cost to bear," Marrone said.

More from Your Money Your Future:
Frugal retirees ditch 4 percent rule, hoard savings instead
Six common myths that can really mess up your retirement
Survive your boomerang kids without depleting your retirement savings

Are you on track to retire early?

Once you know why you want to retire early and where you can cut your expenses to save more, you need to benchmark your progress.

Net worth is the best measure of how close you are to early retirement, said Dogen of Financial Samurai. Net worth is simply your assets minus your liabilities. Your assets include things like the money you have in your bank accounts, the value of your investments and your home. Your liabilities are what you owe, which includes your mortgage, student loans and credit-card debt.

It's easy to figure out your net worth. You can do the calculation on a spreadsheet, by documenting your assets and liabilities, or use an app like Mint or Personal Capital that will track your net worth automatically.

Dogen created net worth targets by age, income and work experience for early retirement. Compare your number to the benchmark to see how far you need to go.

"The ultimate goal is to get to 20 times your gross annual income," Dogen said. "These benchmarks give FIRE folks something aggressive to shoot for, so they can be [financially] conservative in their post-work life."