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Here is where I’m going to jam in all of the common calculations for “magic numbers” and calculations that I use throughout my posts. This way, I can just link from the post to here instead of explaining every time.

# The 300 Rule

This means that you can multiply a monthly expense by 300 to get the amount of money that you would need to save in order to afford that monthly expense after retirement, assuming a 4% withdrawal rate. If you take X as your retirement funds…say, $650,000. Get 4% of that.

$650,000 * 0.04 = $26,000 / yr

Now divide by 12 to get your monthly income

$26,000 / 12 = $2,167 / mo

Outstanding. Now, we could have gotten there just as easily by dividing $650k by 300, because 0.04 (4%) / 12 = 300.

$650,000 / 300 = $2,167 / mo

Incidentally, this is also how you can determine your monthly income that your fund will generate.

To go from a monthly expense to the funding needed, *multiply* the monthly expense by 300. Let’s take a Spotify subscription.

$9.99 * 300 = $2,997

So there you are. If you want to have a Spotify subscription in your retirement, you’re going to have to save $2,997.

# The 173 Rule

This means that you can multiply *monthly expenses* by 173 and the result will be the amount of money that it would grow to if you invested that money for 10 years, assuming 7% interest. It’s not an exact science; it’s more to give you a ballpark number without having to bust out Wolfram Alpha. So, let’s compare the two results.

$50 every month * 173 = $8,650

Here is Wolfram Alpha’s calculation: $8552.59

Error percentage: (8650-8552.59)/8650 = 1.12% error

That’s pretty damn good! I think it’s safe to continue to use that number to estimate the future value.