How much should I save per month?
The 50/30/20 rule suggests saving 20% of after-tax income. On $6,000/month take-home, save $1,200/month. For early retirement (FIRE), aim for 40–60% of after-tax income. The actual minimum for traditional retirement: 15% of gross income into retirement accounts, starting by age 25.
Formula
Minimum monthly savings = Gross Income × 15% (traditional retirement). Aggressive: After-Tax Income × 50%+ (early retirement).
Example
Gross $100k/year, take-home $6,500/month. Minimum: $1,250/month (15% gross). Target: $1,950/month (30% take-home). FIRE track: $3,250/month (50% take-home) → FI in ~17 years.
How it works in detail
Savings targets by goal: (1) Traditional retirement at 65: save 15% of gross starting at 25, or 25%+ if starting after 35, (2) Early retirement at 50–55: save 40–50% of after-tax income, (3) Just building wealth: save everything above essentials + reasonable lifestyle spending. The 50/30/20 breakdown: 50% needs (housing, food, insurance, minimums), 30% wants (dining, entertainment, travel), 20% savings (retirement, emergency fund, goals). For high earners, the 50/30/20 is too conservative — if you earn $200k and spend like you earn $80k, you're saving 60%+ and can retire in 12–15 years regardless of age.
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What is a FIRE number and how do I calculate mine?
Your FIRE number is 25× your annual spending — the portfolio size where a 4% withdrawal covers your expenses indefinitely. If you spend $50,000/year, your FIRE number is $1,250,000. It's the threshold for financial independence.
What savings rate do I need to retire early?
At a 50% savings rate, you can retire in roughly 17 years. At 65%, about 10 years. At 75%, about 7 years. The relationship is logarithmic — your savings rate matters far more than your income or investment returns for determining time to financial independence.
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