---
title: 'Track These 4 Numbers to Retire Decades Early'
source: 'https://youtube.com/watch?v=sEPxRxKp8lg'
video_id: 'sEPxRxKp8lg'
date: 2026-08-05
duration_sec: 845
---

# Track These 4 Numbers to Retire Decades Early

> Source: [Track These 4 Numbers to Retire Decades Early](https://youtube.com/watch?v=sEPxRxKp8lg)

## Summary

The video presents a straightforward system for achieving early retirement by tracking four key financial numbers: savings rate, annual spending, investable assets, and years to financial independence. The host, Humphrey, emphasizes that early retirement is not about picking stocks or timing the market, but about knowing and regularly checking these numbers, which can be done in less than an hour per month.

### Key Points

- **Savings Rate Formula** [00:29] — Savings rate is calculated as total amount invested divided by take-home pay. Example: $500 invested / $5,000 take-home = 10% savings rate. Use take-home pay, not gross, to accurately reflect savings.
- **Including 401k Contributions** [01:34] — Add pre-tax 401k contributions to your investments when calculating savings rate, as they are money going toward your future. Example: $75k income, $5k Roth IRA + $10k 401k = $15k invested / $57k take-home = 26.3% savings rate.
- **Impact of Savings Rate on Retirement Timeline** [02:17] — Using a networthify calculator: 50% savings rate leads to retirement in ~14.3 years; 20% takes 28.5 years; 5% takes 47.6 years. Higher savings rate significantly shortens time to retirement.
- **Mr. Money Mustache Quote** [03:37] — Quote: 'If you are spending 100% or more of your income, you will never be prepared to retire unless someone else is doing the saving for you.' Emphasizes the inverse relationship between spending and retirement readiness.
- **Calculating Annual Spending** [04:16] — To calculate annual spending, review bank statements from the last 3 months, add up all recurring transactions (rent, groceries, subscriptions) and one-off purchases (laptop, trips). Average monthly spending then annualize it.
- **Frequency of Checking Finances** [06:05] — Research shows people who check financial numbers regularly save more. Daily checkers save over 10% of income; weekly/monthly checkers are 30% more likely to hit 10% savings than quarterly/annual checkers.
- **Defining Investable Assets** [07:01] — Investable assets are anything that can generate a return: 401k, IRA, taxable brokerage, cash. Excludes car, house, collectibles. Net worth includes non-liquid assets, which can inflate perceived progress.
- **Years to FI Calculation** [09:12] — Years to FI is an ETA for retirement. Calculate FIRE number using rule of 25 (annual spending x 25) or 21.3x (based on 4.7% withdrawal rate). Subtract investable assets to find gap, then divide by annual savings, adjusting for compound growth.
- **William Bengen's Revised 4% Rule** [10:32] — Bengen, creator of the 4% rule, revised it to 4.7% based on historical data. This changes the multiplier from 25x to 21.3x annual spending. Example: $40k spend needs $1M at 25x, but only $851k at 21.3x.
- **Accounting for Social Security** [11:17] — Average Social Security benefit is ~$24,850/year. If spending $40k and receiving $25k from SS, portfolio only needs to cover $15k, reducing required nest egg to ~$322,695 at 4.7% withdrawal.
- **Using Compound Interest Calculator** [12:28] — Use moneychimp.com compound interest calculator. Input current investable assets as principal and annual savings as addition. Example: $500k with $50k annual addition at 8% grows to $1.5M in 8 years, much faster than zero-growth estimate.
- **Tracking and Reviewing Numbers** [13:23] — Keep the four numbers visible (e.g., in a spreadsheet). Regularly update and review trends to course-correct if needed. This system takes less than an hour per month.

### Conclusion

By tracking savings rate, annual spending, investable assets, and years to FI, you can systematically work toward early retirement. The key is consistency and awareness, not complex strategies.

## Transcript

years earlier than everybody else, it doesn't come down to picking the right stocks or timing the market or even how much money you make. It comes down to tell you that the people who actually
complicated. They just know their numbers and they check them regularly. the only four numbers you need for early retirement and how to calculate each you have this system down, it'll take you less than one hour per month to keep
you need to track is your savings rate. This is the number that actually drives everything else. In terms of a savings rate, you want to take the percentage of investing for the future. Not just saving in a bank account, but actually
putting that money to work. The formula for this is quite simple. It's your total amount invested divided by your take-home pay for the month. And that is your savings rate. So, for example, if I invested $500 this month and I make
$5,000 in take-home pay, my savings rate is therefore 500 divided by 5,000 or about 10%. The reason we want to use take-home pay instead of gross pay is that take-home pay accurately shows you how much money you're saving. If you
were to use gross pay, there's federal taxes, state taxes, FICA, and everything Technically, that's not your money at the end of the day. And using a gross great because it'll make you feel like you're underperforming even when you're
example numbers and situations, some of you might be wondering, "Well, Humphrey, what about 401k contributions?" If somebody is maxing out their pre-tax 401k contributions, those actually come out before the take-home pay. So, how do
here is to simply add your 401k contributions to your investments. I it is money coming out and it's going toward your future. So, it's okay to count it as part of your savings rate. As an example, if you make $75,000 a
year in income, that's about 57K after taxes. If you contribute 5K to a Roth IRA and 10K to 401k contributions, that's $15,000 total that you have invested divided by your 57,000 in take-home pay, giving you a total
savings rate of 26.3%. Okay, so now that you know how to calculate it, what should your savings rate be? Well, if you want to retire decades early, let me savings rate and early retirement using a net worthify online calculator. This
can plug in different variables and see how quickly or how soon you might be able to retire. So, assuming you make 75k gross per year, which is 57k take-home, if you have a savings rate of 50% and starting with zero portfolio
balance, you're looking at around 14.3 years to retire. Now, 50% is a lot and a So, if you are able to turn down your savings rate to 20%, it'll take you much longer to get there, 28.5 years. But again, that assumes you start with a
age of 25 right now, that means you'll still be able to retire at the age of 53 and a half, which is one decade earlier compared to normal retirement age. Okay. So, what happens if you turn your savings rate down to 5%, which is around
America? At that point, it will take you 47.6 years to retire. That means if starting your portfolio, you aren't retiring until at least the age of 72. I
below, but I think it's fun to play around with the numbers. And you can savings rate higher than the average American in order to retire any chance earlier. On this channel, I always like to say that our community here should
have a savings rate as a percentage of our take-home pay be around 10 to 20%. past that, I think the better. Mr. Money mustache is a personal finance blog online and he has a really famous article on early retirement and here's
one of my favorite quotes. If you are spending 100% or more of your income, you will never be prepared to retire unless someone else is doing the saving for you. So yes, basically the more you spend the less you have for later to
says the following. If you are spending 0% of your income, so let's say you live this after retirement, you could technically retire right now. So your working career can be equivalently zero. Therefore, there's a relationship
retire. So if you're able to save more, it actually makes it a lot easier to technically less. But all of these calculations around savings rates are just one piece of the puzzle because all of the calculators online, they all
the same throughout your entire life. We know that that's not statistically very second number to track today is your annual spending number, which is how much your life actually costs per year. As I mentioned earlier, this number will
it will also help us figure out what your FIRE number needs to be. In order to calculate your annual spending, this is what you need to do. I want you to statements from the last 3 months and then add up everything. So, every single
transaction, rent, groceries, dining out, subscriptions, everything that you down. You then want to figure out what your day-to-day life costs you. So, bills, your rent, your transportation, groceries, and even discretionary
purchases. Once you have that number, let's pretend it's $3,000 a month. You want to figure out what you spend on average on the bigger one-off purchases. Everyone has these random one-off big purchases, like a laptop, a trip to
Pokémon card. These are one-time purchases that are hard to account for on a regular basis. You want to add up all of your one-off purchases for the say it's 3 months. You add it all up and get an average spend per month for those
one-off purchases. If your one-off purchases are increasing your spend by may want to address, but that's for another video. Ideally, you figure out these bigger purchases. Let's pretend
just add it to your earlier number. So, in our case, that was $3,000 for our $3,200 per month that we were spending. an approximation of how much you spend on an annual basis. Hopefully, that made
recurring transactions plus what you spend on one-off big purchases, and what's interesting. Research from the found that people who check their financial numbers regularly, they save
than half of the people who check their retirement balance daily save over 10% of their income. People who check weekly or monthly were about 30% more likely to hit that 10% savings mark than people who only checked quarterly or annually.
check their finances, only 10% of them saved more than 10%. So, you can see that that's a pretty straightforward correlation of how often someone checks they actually save. So, a simple and effective habit is just to check your
like if you weigh yourself at the gym every day, if you see that scale, you decisions about your food throughout the day and the week. And I really do think The awareness itself will change your behavior around your own finances. So, I
really don't think you need a complex budgeting system. So far, we've talked annual expenses. But now, let's get into today, and that is your investable assets number. Investable assets just
refers to anything that you can actually generate a return on. So, for example, a balance in a 401k, a balance in an IRA, perhaps a taxable brokerage account. That all counts. The way that I would do this is once a month or once a quarter,
of your retirement accounts, brokerage accounts, and any cash that you might That is your total investable assets number. And it does not include some notable things such as your car, your house, any collectibles you might own,
include those things is that if you just added up all of your assets in addition to your investable assets, that would just be your net worth number. While net in general, I just don't think it's the best thing to track if you're trying to
retire decades earlier. And the reason is that a lot of that money is not liquid. So, let's say you have a home worth 500K, an emergency fund of $50,000, and then a retirement account of $450,000.
You technically have a million in net worth or total assets. And that sounds and you might think, "Okay, I'm really close to being done here. I think I can your house. And it's not like you can
not like you can say, "Hey, I'm going to sell one of my bedrooms to cover my yearly expenses. You either have to sell your house or you don't." In general, I going to be selling their homes in order to fund their retirement because they
you're planning on selling your home and downsizing completely, that equity that you have in your house is typically going to be locked up. Therefore, our actual investable assets in this scenario is around $450,000, which is
account. So, while I think it's good to have a pulse on what your net worth is, earlier, I think that if you look at your total assets, it does inflate what your progress looks like because some of those assets you just can't touch.
Somebody with a $1.2 million house and $80,000 in investments has a pretty high that someone that's renting an apartment with $500,000 in investable assets, that person is way closer to financial independence. Tracking your investable
assets is going to get you way closer to financial independence and our fire number which we will talk about next. Now the fourth number to track today is the number of years to FI or financial independence. This is how all the other
three numbers work together and they all converge into this question which is kind of like if you're going on a road trip and you load up your GPS and you're driving somewhere, you have an ETA or an estimated time of arrival. Your years to
FI number is exactly that. It's just an ETA of when you're going to retire. For us, we are looking to arrive as quickly as possible. So, you want this number to be as low as possible. If your savings rate goes up, guess what? That lowers
But if your spending goes up, then perhaps your years to FI number goes up, which is not ideal. To calculate this number, you need to know what your FIRE first, and then we will use the other three numbers from today's video to
figure this out. FIRE stands for financial independence retire early. And at the core of this number is the rule of 25. That's where you take your annual today's video, and we multiply it by 25. The reason it's 25 is that it's because
it's built on the 4% rule, which is the idea that you can withdraw 4% of your retirement, adjust for inflation each year after, and not run out of money over a 30-year period. So, if your annual spending is $40,000, multiply
that by 25, your fired number is 1 million. If you spend 60,000, it's 1.5 million. And if you've gotten your spending down somehow to $30,000 per year, your FIRE number is only $750,000. Now, here's where it gets interesting.
The founder of the 4% rule, William Ben, has actually changed his own 4% number to 4.7%. Ben started to notice that retirees were dying before spending down closer, he said that, quote, he created this 4% rule based on an imaginary
investor who retired in October of 1968 and ran into a terrible perfect storm. market returns and very bad inflation. So he says that you can actually revise it to 4.7% of a withdrawal rate. And that actually changes quite a lot. At
4.7% you need about 21.3 times your annual spending amount. So on a $40,000 spend, that's the difference between needing a million with the rule of 25 versus needing $851,000 to hit your FIRE number. And it gets
Security or a pension. The average social security benefit is around 2071 per month per retiree, which is around $24,850 per year. If you're spending 40k a year in retirement, but you're receiving
about 25k from social security, then you only need your portfolio to cover $15,000. At a 4.7% withdrawal rate, that's a nest egg of around $322,695. So once you have your fire number either based on the 25x rule or the 21.3x rule,
financial independence number and that is quite straightforward. So let's million. You want to simply take that and subtract your current investable assets. So let's pretend that's $500,000. That means your gap between
FIRE and what you have right now is $1 million that you need. Now to estimate you want to take that gap and divide it by how much you're investing per year. If you're saving $50,000 a year, that's going to be roughly 20 years of saving
with assuming zero growth to fill that gap. But of course, that doesn't happen because your money is actually growing. Your existing 500k that you have is invest starts compounding as well. So, the real years to financial independence
than this. And you can use a compound interest calculator. I like this one from moneychimp.com. You can input your current investable assets into the current principal and the amount that you are saving per year into the annual
addition column. $500,000 with a $50,000 annual addition per year means that in 8 years at 8% it will grow to $ 1.5 million. So with this calculator, I like current variables and see what it would take to get to my fire number. In our
case, let's say we have $500,000 in investable assets and then we add 50K to it every single year. That means in 8 years it'll grow to $1.5 million assuming an interest rate of 8%. That's almost 11 to 12 years faster than the
simple math that I suggested where we're getting zero growth. That's the compound we're basically using all the three numbers that we found in today's video years to financial independence. And in our case it was eight. Once you're
keep them somewhere visible and somewhere accessible. I personally put mine in Oliver's spreadsheet somewhere along with my net worth tracker. And update the four numbers and ask myself how these numbers are trending. Are they
all moving towards the right direction? Or do I need to course correct because I money this month? If you know your savings rate, your annual spending, the what your years of financial independence are. These are the only
enjoyed this video, make sure to check out my next video on if 250K, 500K, 750K, or a million dollars is enough to retire. And I will link it right here. video or a future one on the channel. Thank you for being here again.