TALLIVOMethodology
How the FIRE Calculator works
How Tallivo works out when a portfolio covers your spending — and how it tests the withdrawal rate that target depends on.
The formula
target = annual spending ÷ withdrawal rate · months to target solves target = present(1+r)^n + monthly((1+r)^n − 1)÷r for n, with r the MONTHLY real return
Step by step
- The target is annual spending divided by the withdrawal rate. At 4% that is the familiar 25×. It keys off spending, never income — income only determines how fast you get there.
- Time to reach it solves the compound-growth equation for the number of months in closed form rather than looping, so an unreachable target returns 'never' instead of running forever.
- Everything is in REAL terms. The return input is already net of inflation, so the target is in today's money and no separate inflation assumption is needed.
- The default return is measured, not chosen: the long-run real total return of US large-cap stocks across the whole record since 1871, computed by the same engine the investment backtest uses.
- The withdrawal rate is TESTED rather than assumed. Every complete retirement window in the record is run withdrawing the rate on the starting portfolio, held constant in real terms, taken at the start of each month before that month's return — the conservative convention.
Assumptions & limitations
- A constant real return every month, which no real portfolio delivers. The ORDER of returns decides early retirements — a bad first decade is very hard to recover from while withdrawing — and that is exactly what the historical survival test measures and a smooth projection cannot.
- The survival test is 100% US large-cap equities. The classic safe-withdrawal work — Bengen (Journal of Financial Planning, 1994) and Cooley, Hubbard & Walz, the 'Trinity study' (AAII Journal, 1998) — models stock and bond mixes, and bonds change the answer. The committed record has no bond series and one will not be invented, so this answers a narrower question than those papers rather than reproducing them. No link is given for either because we could not verify a stable public URL for the original text.
- Historical survival rates describe retirements that have already elapsed. They are not probabilities about a future retirement, and they are one country's unusually good century and a half.
- Excludes taxes in retirement, healthcare before Medicare eligibility, Social Security, changes in spending such as a mortgage being paid off, and any income earned after leaving full-time work.
- Before fees. A one-percent fee is a direct subtraction from the real return and moves every figure on the page.
Sources
Recomputed whenever the market data file is updated; the series carries its own as-of month. Figures are planning estimates, not a loan offer — this is not financial advice.
Think one of these figures is wrong? Tell us and we'll check it — we verify against the primary source, not aggregator tables. How we build and check every calculator is documented in our editorial policy.