You reach faster if you can save a bit more by trimming your living costs
Sanjib Saha
21 Dec 2025
Last week I wrote about Financial Freedom, with a simple tool to map out your journey. Here is a companion tool using the same methodology to show how dialing your lifestyle cost up or down changes your path. Use the tool if your income covers your entire living costs even after saving a meaningful amount for the future.
The previous post asserts: “The most reliable way to accelerate your journey to financial freedom is to maintain a high savings rate relative to your income. A high income doesn’t help much if your living expenses are proportionately high. Similarly, a frugal lifestyle can still be too expensive with a low income”.
To prove the point, this new tool doesn’t even ask for your income. You simply input your age, and your total investments – your retirement accounts, bank accounts, brokerage accounts and so on, as a multiple of your annual gross income. Do not include home equity, non-financial assets, assets earmarked for specific financial goals such as college savings, and so on.
For example, if you make $100,000 per year and the combined balance of your bank accounts and 401(k) account is $250,000, simply enter 2.5 ($250,000 / $100,000).
Go ahead and give it a try. Be sure to check out the fine prints at the bottom of this post.
The Fine Prints:
Expenses: The tool assumes that your annual spending is your gross income, minus all you save in a year and estimated Social Security withholdings. Since social security taxes are regressive, a high-earner might see slightly different results than those who pay Social Security taxes on their entire income. That said, the social security benefits are not included as future income, but they will be a handy cushion at retirement.
Inflation: Inflation expectations are built into the tool by assuming that your gross income during your earning years and your lifetime expenses will simply keep pace with inflation.
Investment Returns: The tool assumes your investment portfolio is allocated between risky assets (such as globally diversified stocks) and safer assets (such as cash, CDs and bonds) in an “age-appropriate” manner. This means a heavier allocation to stocks at younger ages, gradually shifting towards more stable investments as you grow older, while still maintaining a minimum stock allocation later in life. The tool uses historical performance of global stocks and bonds as a proxy for long-term expected returns.
Withdrawal Rate: The tool doesn’t rely on any fixed or sliding withdrawal rate. Instead, it assumes that in retirement, you’d withdraw your annual spending needs from your portfolio each year and let the balance grow. If you don’t run out of money by age 100, you’re golden.
Precision is not Accuracy: Keep in mind that the calculator gives only a rough estimate and you should use the results accordingly. Everyone’s situation is different, and the future is inherently uncertain. With a limited number of inputs, the results are likely to be off by a couple of years or even more depending on how things eventually play out for you.
It’s worth repeating the main takeaway from the last post:
Why does a high savings rate make the real difference regardless of the actual income level?
Because if you can save at a high rate, it means you’ve been able to keep a tight lid on your expenses and therefore need less money to support yourself when your income stops. At the same time, you’re saving more, which helps you reach that reduced target sooner.