Your savings rate is the percentage of total savings from your take-home pay.
This rate can be used as a rough estimate to when you'll reach financial independence. This assumes you'll maintain the same expenses in retirement. If your savings rate is 0%, you'll never be able to retire because you'll be living paycheck-to-paycheck forever. If your savings rate is 100%, you can afford to retire now. In between those extremes:
- at 10%, you can retire in 51 years
- at 25%, 32 years
- at 50%, 17 years
- at 75%, 7 years
- at 90%, under 3 years
Learn more about it from The Shockingly Simple Math Behind Early Retirement.
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