What should I include in runway calculations?

Include liquid assets like cash, savings, and taxable brokerage accounts in your runway calculations, along with any passive income. Avoid counting illiquid assets unless you plan to sell them, and be conservative with your growth estimates.

What should I include in runway calculations?

Include liquid assets like cash, savings, and taxable brokerage accounts in your runway calculations, along with any passive income. Avoid counting illiquid assets unless you plan to sell them, and be conservative with your growth estimates.

How can I extend my runway fast?

Cut top expenses (housing/transport/food), add part‑time income, pause big discretionary items, and keep 6–12 months cash to avoid selling investments in downturns.

How can I extend my runway fast?

Cut top expenses (housing/transport/food), add part‑time income, pause big discretionary items, and keep 6–12 months cash to avoid selling investments in downturns.

Should I count retirement accounts?

Only if you’re over 59½ or have a penalty‑free plan (Roth ladder, 72(t)). Otherwise, treat them as backup for long horizons, not near‑term runway.

Should I count retirement accounts?

Only if you’re over 59½ or have a penalty‑free plan (Roth ladder, 72(t)). Otherwise, treat them as backup for long horizons, not near‑term runway.

Runway vs. FIRE number—what’s the difference?

Runway is temporary (months/years with no income). FIRE is permanent (portfolio ≥ 25× annual expenses). Both matter but serve different goals.

Runway vs. FIRE number—what’s the difference?

Runway is temporary (months/years with no income). FIRE is permanent (portfolio ≥ 25× annual expenses). Both matter but serve different goals.

Financial Life Expectancy

Calculate how long your savings would last if you stopped working - your financial runway calculator

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How Long Will Your Money Last?

Financial life expectancy calculates how many years your current savings will fund your lifestyle based on withdrawal rates and investment returns. This concept is crucial for retirement planning, early retirement considerations, and financial independence decisions. The fundamental question: will your money outlast you, or will you outlast your money? Understanding this projection enables course corrections before running out of assets.

The calculation involves three primary inputs: current savings/investment balance, annual withdrawal amount (living expenses), and expected investment return. A simplified example: $500,000 saved, $30,000 annual expenses (6% withdrawal rate), and 5% investment return. At this rate, the savings last approximately 25 years. However, this assumes constant returns and expenses—real life presents more complexity with market volatility, inflation, and changing spending needs.

The "4% rule" in retirement planning suggests withdrawing 4% of initial portfolio value annually, adjusted for inflation, provides high probability (90%+) of not outlasting savings over 30 years. This rule, derived from historical market performance analysis, implies needing 25x annual expenses saved for retirement (100% ÷ 4% = 25). However, early retirees face longer time horizons requiring lower withdrawal rates (3-3.5%), meaning 28-33x expenses saved.

Sequence of returns risk poses the greatest danger to financial life expectancy. Market losses early in retirement can permanently impair portfolio sustainability even if long-term average returns meet expectations. A retiree experiencing a 30% market drop in year one and withdrawing expenses simultaneously suffers a double hit that's difficult to recover from. This argues for maintaining cash reserves (1-3 years expenses) separate from investments to avoid forced selling in down markets, extending financial life expectancy despite slightly lower overall returns.

Understanding Your Financial Runway

Your financial runway is how long your money would last if you stopped earning income today. It's calculated by dividing your net worth by your monthly burn rate (expenses minus passive income). This number is crucial for understanding your financial security, planning career transitions, or evaluating early retirement readiness.

For example: If you have $250,000 in accessible savings and spend $4,500/month with no passive income, your runway is 55.5 months (4.6 years). If you cut expenses to $3,000/month, your runway extends to 83 months (6.9 years) - adding 2.3 years without earning any more money.

This tool helps you visualize your financial security, identify ways to extend your runway through expense cuts or part-time income, and understand what it takes to reach financial independence.

⚠️ The Danger of Lifestyle Inflation

Higher income doesn't automatically mean longer runway if you spend it all. Many high earners have shockingly short runways due to expensive lifestyles.

✅ Frugal Andy

• Earns: $80,000/year
• Spends: $40,000/year ($3,333/mo)
• Saves: $40,000/year
• $250k runway: 75 months (6.25 years)

❌ Spendy Sarah

• Earns: $150,000/year
• Spends: $120,000/year ($10,000/mo)
• Saves: $30,000/year (less than Andy!)
• $250k runway: 25 months (2 years)

Andy earns less but has 3x longer runway! The key is the gap between income and spending, not income alone. Control your burn rate to maximize runway and build wealth faster.

The Power of Part-Time Income

You don't need a full-time job to dramatically extend your runway. Even small amounts of income have outsized effects.

0 hours/week: No income 55 months runway

10 hours/week at $25/hr ($1,000/mo) +16 months → 71 months

20 hours/week at $25/hr ($2,000/mo) +45 months → 100 months

30 hours/week at $25/hr ($3,000/mo) +111 months → 166 months (13.8 years!)

This is the "Barista FIRE" concept: work part-time to cover most expenses while your investments continue growing. Just 20 hours/week nearly doubles your runway from 4.6 years to 8.3 years!

Sequence of Returns Risk

If you're selling investments to fund expenses, market timing matters enormously. Bad market years early in retirement can devastate your runway.

Example: $250k, $4,500/month, 7% expected return

• Best case (market +15% first year): 85 months runway
• Expected (market +7% average): 73 months runway
• Worst case (market -20% first year): 48 months runway

That's a 37-month (3-year) difference based solely on market timing!

Solution: Keep 1-2 years of expenses in cash or short-term bonds. This lets you avoid selling stocks during market downturns, protecting your runway from sequence of returns risk.

Real-World Examples

✅ Case Study: Maria (Age 32) - Tech Layoff

Situation: Laid off with $40k severance + $85k savings = $125k total

Monthly expenses: $4,200

Initial runway: 29.7 months (2.5 years)

Strategy:

• Months 1-3: Full spending while actively job hunting
• Months 4-12: Freelance work earning $2,000/mo (reduced burn to $2,200/mo)
• Month 13: Landed new full-time job!

Result: Used 12 months of runway, kept $100k. Success!

❌ Case Study: John (Age 52) - Early Retirement Failure

Situation: Retired early with $800k

Monthly expenses: $6,000

Runway (0% growth): 133 months (11 years)

Problem: Money runs out at age 63, but Social Security doesn't start until 67

Result: 4-year gap with no money!

What John should have done:

• Wait until age 56 to retire (work 4 more years)
• OR reduce expenses to $4,444/mo (creates 15-year runway)
• OR plan part-time work from age 63-67 to bridge gap