What is the Rule of 72 and how does it work for retirement planning?
The Rule of 72 estimates how long it takes an investment to double: divide 72 by your annual return rate. At a 7% average real return, your money doubles roughly every 10.3 years — a critical mental model for FIRE planning.
Formula
Doubling Time (years) = 72 / Annual Return Rate (%)
Example
You invest $100,000 at age 30 and expect a 7% average annual real return. 72 ÷ 7 = 10.3 years to double. By age 40, you have ~$200,000. By age 50, ~$400,000. By age 60, ~$800,000 — without contributing another dollar.
How it works in detail
The Rule of 72 is a simple mathematical shortcut used to estimate investment doubling time without a calculator. Divide 72 by your expected annual rate of return, and the result is approximately the number of years needed for your money to double. At the S&P 500's historical average real return of roughly 7%, money doubles every 10.3 years. At 6%, it doubles in 12 years. At 10% (nominal), every 7.2 years. For retirement and FIRE planning, the Rule of 72 makes the power of early investing viscerally clear. A 25-year-old with $50,000 invested sees it grow to roughly $200,000 by age 45 and $400,000 by age 55 — without adding a single dollar — at a 7% real return. This compounding mechanic is the engine behind Coast FIRE, where you front-load savings so growth alone carries you to your target. The rule is an approximation that works best between 6%–10% returns; it slightly underestimates doubling time at very high or very low rates. For more precision, use the exact formula: Years = ln(2) / ln(1 + r). But for quick mental math and planning conversations, Rule of 72 is accurate within one year across most realistic return assumptions. Financial planners including those citing Bengen's original Trinity Study research routinely use it to illustrate why starting early compounds so dramatically.
See exactly how the Rule of 72 plays out in your specific timeline using Rightmont's FIRE calculator.
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What is Coast FIRE and how much do I need?
Coast FIRE is the invested balance today that will compound to your FIRE number by retirement age without any additional contributions. If your FIRE number is $1.5M and you're 30 with a 7% real return, you need $194,000 today to coast — meaning you only need to earn enough to cover current expenses.
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.
How do I calculate my FIRE number?
Your FIRE number is your expected annual retirement spending multiplied by 25, assuming a 4% withdrawal rate. For example, if you plan to spend $50,000 per year in retirement, your FIRE number is $1,250,000. Adjusting to a 3.5% rate for early retirement raises it to approximately $1,430,000.
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