This simple chart can show you how close you are to early retirement

Before you go, we thought you'd like these...
Before you go close icon

To some, early retirement is a holy grail. More and more people are going to great lengths to achieve financial freedom in their 30s, sharing their tips, spreadsheets, and saving strategies along the way.

Financial website Four Pillar Freedom has added another nifty tool to the cache: an early retirement grid that breaks down how long you'll have to wait to quit working based on your current after-tax earnings and current spending — your income-spending gap.

early retirement chartFour Pillar Freedom

It's simple — it doesn't account for any previously saved money, debts, other assets, or the possibility of dramatic cost increases in retirement — but there's some brilliance in the simplicity. It essentially assumes you're starting at zero, and then inputs two key variables: a conservative 5% return on your savings (the S&P 500 has averaged an 11% annual return since 1966) and 4% withdrawals every year once you retire. Based on those rates, it then illustrates how long you'll need to save to hit retirement without worry of going broke.

51 PHOTOS
Average retirement age in every state
See Gallery
Average retirement age in every state

Alabama - Age 62

Via Smart Asset

Photo: Getty

Alaska - Age 65

Via Smart Asset

Photo: Getty

Arizona - Age 63

Via Smart Asset

Photo: Getty

Arkansas - Age 62

Via Smart Asset

Photo: Getty

California - Age 64

Via Smart Asset

Photo: Getty

Colorado - Age 64

Via Smart Asset

Photo: Getty

Delaware - Age 62

Via Smart Asset

Photo: Getty

Connecticut - Age 64

Via Smart Asset

Photo: Getty

Florida - Age 63

Via Smart Asset

Photo: Getty

Georgia - Age 62

Via Smart Asset

Photo: Getty

Hawaii - Age 63

Via Smart Asset

Photo: Getty

Idaho - Age 63

Via Smart Asset

Photo: Getty

Illinois - Age 63

Via Smart Asset

Photo: Getty

Indiana - Age 63

Via Smart Asset

Photo: Getty

Iowa - Age 64

Via Smart Asset

Photo: Getty

Kansas - Age 65

Via Smart Asset

Photo: Getty

Kentucky - Age 62

Via Smart Asset

Photo: Getty

Louisiana - Age 63

Via Smart Asset

Photo: Getty

Maine - Age 64

Via Smart Asset

Photo: Getty

Maryland - Age 64

Via Smart Asset

Photo: Getty

Massachusetts - Age 64

Via Smart Asset

Photo: Getty

Michigan - Age 62

Via Smart Asset

Photo: Getty

Minnesota - Age 63

Via Smart Asset

Photo: Getty

Mississippi - Age 63

Via Smart Asset

Photo: Getty

Missouri - Age 63

Via Smart Asset

Photo: Getty

Montana - Age 63

Via Smart Asset

Photo: Getty

Nebraska - Age 65

Via Smart Asset

Photo: Getty

Nevada - Age 63

Via Smart Asset

Photo: Getty

New Hampshire - Age 65

Via Smart Asset

Photo: Getty

New Jersey - Age 65

Via Smart Asset

Photo: Getty

New Mexico - Age 63

Via Smart Asset

Photo: Getty

New York - Age 64

Via Smart Asset

Photo: Getty

North Carolina - Age 63

Via Smart Asset

Photo: Getty

North Dakota - Age 63

Via Smart Asset

Photo: Getty

Ohio - Age 63

Via Smart Asset

Photo: Getty

Oklahoma - Age 63

Via Smart Asset

Photo: Getty

Oregon - Age 63

Via Smart Asset

Photo: Getty

Pennsylvania - Age 63

Via Smart Asset

Photo: Getty

Rhode Island - Age 64

Via Smart Asset

Photo: Getty

South Carolina - Age 62

Via Smart Asset

Photo: Getty

South Dakota - Age 63

Via Smart Asset

Photo: Getty

Tennessee - Age 63

Via Smart Asset

Photo: Getty

Texas - Age 64

Via Smart Asset

Photo: Getty

Utah - Age 65

Via Smart Asset

Photo: Getty

Vermont - Age 65

Via Smart Asset

Photo: Getty

Virginia - Age 63

Via Smart Asset

Photo: Getty

Washington - Age 64

Via Smart Asset

Photo: Getty

West Virginia - Age 62

Via Smart Asset

Photo: Getty

Wisconsin - Age 63

Via Smart Asset

Photo: Getty

Wyoming - Age 65

Via Smart Asset

Photo: Getty

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

Here's how Four Pillar Freedom breaks down the power of the income-spending gap:

"Clearly from this grid you can see the importance of making the gap between your income and spending as wide as possible. If you can earn $90,000 per year and only spend $20,000 you only need to work for 6 years to have enough money to support you for the rest of your life. But if you earn $90,000 and are spending $85,000 it will take you over 60 years to retire.

"I think the real value of this grid is within the $40,000 – $60,000 income range. This is where most income earners are. If you earn $50,000 per year and you are spending $40,000 per year, it will take you about 36 years to reach financial independence. But if you can cut your spending to $30,000 per year you would reach financial independence in 21 years. That's a 15 year difference! For people in the middle class, cutting spending by a mere $5,000 – $10,000 each year leads to a huge decrease in the amount of time it takes to reach financial independence."

Without the distractions of the many complicated variables that comprise your finances, this grid provides a pretty decent glimpse into how your spending is potentially delaying your retirement.

This is no substitute for a strong financial plan, but this chart can offer a quick reality check for anyone hoping to exit the rat race before their 60s.

NOW WATCH: BARBARA CORCORAN: When buying a house you should prepare for war

See Also:

SEE ALSO: A man who retired at 34 shares a spreadsheet that helped him get there

SEE ALSO: How I became a millionaire in 10 years without winning the lottery or picking stocks

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners