Our Commitment to Accuracy
Should I Quit Now is a planning tool for serious financial independence research. We believe transparency about our methodology is fundamental to earning your trust. This page documents the exact formulas, regulatory sources, and modeling assumptions behind every calculation.
We update our regulatory inputs annually (Social Security bend points, 401(k) limits, IRA limits, Medicare thresholds) and revise our models when new research on safe withdrawal rates or Monte Carlo methodology is published.
FI Number Formula
Your Financial Independence Number is calculated using the 25× Rule, which inverts the 4% safe withdrawal rate:
Guaranteed Income = Social Security + Pension + Other reliable income streams
Example: $5,000/month desired, $1,500/month SS = $3,500/month from portfolio = $42,000/year × 25 = $1,050,000 FI Number
For conservative planning (early retirements of 40+ years), we also display the 3.5% rate equivalent (28.5×), consistent with current Morningstar (2024) and Wade Pfau research. The calculator presents both scenarios in the premium report's sensitivity analysis.
Portfolio Growth Model
We model portfolio growth using the Future Value of a Growing Annuity formula, applied annually:
- Starting balance: Sum of 401(k) + IRA + taxable brokerage balances entered
- Annual contributions: 401(k) contribution + employer match + IRA contribution + taxable contribution (income-growth-adjusted each year)
- Return rate: User-specified expected annual return (default 7% — consistent with US equity market historical real return)
- Inflation adjustment: Contributions grow with the user-specified income growth rate; expenses grow with the inflation rate
During retirement, we model annual withdrawals against portfolio balance:
- Annual withdrawal: (Desired monthly income − Social Security − Other income) × 12, inflation-adjusted each year
- Healthcare adjustment: Pre-Medicare healthcare costs applied at user-specified monthly rate; post-65 costs reduced automatically (Medicare)
- Portfolio depletion test: We project year-by-year until portfolio balance = $0 to find maximum portfolio longevity
- Sensitivity bands: We run parallel projections at ±1% and ±2% return assumptions to generate the chart sensitivity bands
Social Security Modeling
Social Security calculations use 2025 official SSA parameters, updated annually from the Social Security Administration's published data:
- FRA benefit: User-entered directly, or auto-estimated from current income using SSA bend point formulas (2025 bend points: $1,226 / $7,391)
- Early claiming reduction: 5/9 of 1% per month for the first 36 months before FRA; 5/12 of 1% per month beyond 36 months
- Delayed credits: 8% per year (2/3% per month) for each year claimed after FRA up to age 70
- Full Retirement Age: 67 for anyone born 1960 or later (per SSA)
- Break-even calculation: Cumulative lifetime benefits compared across 62, FRA, and 70 claim ages; displayed in the SS Strategy chart
- COLA assumption: Not modeled in breakeven comparison (same COLA applies to all claim ages); mentioned in report notes
The SSA's actual benefit calculation uses your top-35 earning years to compute your AIME (Average Indexed Monthly Earnings) and applies bend point formulas. Our auto-estimate approximates this from current income — for an accurate figure, check your actual SSA statement at ssa.gov/myaccount.
Monte Carlo Simulation
The Premium Report's Monte Carlo analysis runs 1,000 independent retirement simulations, each with a randomly generated annual return sequence drawn from a distribution calibrated to historical market data.
- Return distribution: Log-normal distribution with mean = user's expected return and standard deviation = risk-profile-based (Conservative: 8%, Moderate: 12%, Aggressive: 16%)
- Inflation: Fixed at user-specified rate (not randomized — consistent with most planning literature)
- Success definition: Portfolio balance ≥ $0 at end of user's modeled lifetime
- Success rate: Percentage of 1,000 simulations where portfolio survived; displayed as the Monte Carlo success rate
- Percentile bands: P10 (10th percentile = worst 10% of outcomes), P25, P50 (median), P75, P90 (best 10%) displayed on the outcome chart
- Sequence sensitivity: Returns are drawn year-by-year independently, capturing sequence-of-returns risk naturally
Readiness Score Calculation
The Retirement Readiness Score (0–100) is a composite of five weighted sub-scores, each measured against benchmarks from financial planning research:
| Sub-Score | Weight | What It Measures |
|---|---|---|
| Income Replacement | 25% | Projected monthly income ÷ desired monthly income at target retirement age |
| FI Number Progress | 25% | Current portfolio ÷ FI Number required; trajectory at retirement age vs. target |
| Portfolio Longevity | 20% | Years portfolio survives in decumulation relative to life expectancy + safety buffer |
| Savings Rate | 15% | Annual savings ÷ gross income vs. FI community benchmarks (25–50%+) |
| SS Optimization | 15% | Whether claimed SS age maximizes lifetime benefit relative to break-even analysis (US mode only) |
Each sub-score is scaled 0–100 using piecewise linear functions bounded to the achievable range. The composite score uses a weighted average of all five components, rounded to the nearest integer.
2025 Regulatory Limits Used
| Parameter | 2025 Value | Source |
|---|---|---|
| 401(k) contribution limit | $23,500 | IRS Notice 2024-80 |
| 401(k) catch-up limit (age 50+) | $7,500 | IRS Notice 2024-80 |
| IRA contribution limit | $7,000 | IRS Notice 2024-80 |
| IRA catch-up limit (age 50+) | $1,000 | IRS Notice 2024-80 |
| HSA individual limit | $4,300 | IRS Rev. Proc. 2024-25 |
| HSA family limit | $8,550 | IRS Rev. Proc. 2024-25 |
| SS maximum monthly benefit (age 70) | $5,108 | SSA 2025 data |
| SS Full Retirement Age (born 1960+) | 67 | Social Security Act §216(l) |
| SS early claiming reduction (first 36 mo) | 5/9% per month | SSA |
| SS delayed credit (per year after FRA) | 8% | SSA |
| SS bend points (AIME) | $1,226 / $7,391 | SSA 2025 |
| Medicare eligibility age | 65 | 42 U.S.C. § 1395 |
| RMD start age | 73 | SECURE 2.0 Act (2022) |
| ACA subsidy cliff — single (400% FPL) | $60,240 | HHS 2025 FPL tables |
| ACA subsidy cliff — married (400% FPL) | $81,760 | HHS 2025 FPL tables |
| Standard deduction — single (2025) | $15,000 | IRS Rev. Proc. 2024-61 |
| Standard deduction — married (2025) | $30,000 | IRS Rev. Proc. 2024-61 |
| 0% LTCG bracket — single (2025) | $48,350 taxable | IRS Rev. Proc. 2024-61 |
| 0% LTCG bracket — married (2025) | $96,700 taxable | IRS Rev. Proc. 2024-61 |
Data Sources & References
| Source | What We Use It For | URL |
|---|---|---|
| Social Security Administration (SSA) | FRA, bend points, benefit reduction/credit formulas, maximum benefits | ssa.gov |
| IRS (Internal Revenue Service) | 401(k), IRA, HSA limits; tax brackets; standard deductions; capital gains rates; Roth rules | irs.gov |
| Healthcare.gov / HHS | Federal Poverty Level tables, ACA subsidy cliff thresholds | healthcare.gov |
| Bengen, W.P. (1994) | Original 4% safe withdrawal rate research — the foundation of the 25× FI Number formula | Journal of Financial Planning |
| Morningstar (2024) | Current safe withdrawal rate research (3.7% for 30-year retirement); Monte Carlo distribution calibration | morningstar.com |
| Wade Pfau (2025) | Safe withdrawal rate for 40–50 year retirements (3.3%); SORR research; Monte Carlo methodology | retirementresearcher.com |
| Vanguard "How America Saves" (2024) | Retirement savings benchmarks by age used in retirement-savings-by-age article; median/average balance data | vanguard.com |
| earlyretirementnow.com (Big ERN) | Sequence-of-returns risk quantification; safe withdrawal rate series for early retirees | earlyretirementnow.com |
| SECURE 2.0 Act (2022) | RMD age change to 73; catch-up contribution updates | Public Law 117-328 |
Limitations & Disclaimers
Key limitations to understand when interpreting our results:
- Tax modeling is approximate. We do not run a full federal or state tax engine. Outputs reflect pre-tax investment returns and approximate post-tax income scenarios. Consult a tax professional for precise tax planning.
- Social Security estimates are projections. The auto-estimate approximates your SSA benefit from current income. Your actual benefit depends on your complete 35-year earnings history. Always verify at ssa.gov.
- Market returns are not guaranteed. The calculator uses your specified expected return as a fixed rate for deterministic projections. The premium Monte Carlo simulation better reflects real-world uncertainty.
- Healthcare costs are simplified. Pre-Medicare healthcare costs are user-specified; post-65 Medicare costs reduce to a lower default. Actual healthcare inflation can vary significantly from general inflation.
- Social Security solvency. SSA trustees project the trust fund may be depleted around 2035, potentially reducing benefits by ~17–23%. We model your full stated benefit; users concerned about this risk should scenario-test with reduced SS inputs.
- The calculator does not model. Long-term care insurance, inheritance, divorce, disability, variable tax regimes, or non-standard investment structures (real estate portfolios, business equity).
About the Author
Feedback & Corrections
If you notice a calculation error, outdated regulatory value, or a methodology concern, please reach out via our About page. We take accuracy seriously and will investigate and correct any confirmed errors promptly, noting the correction date in this document.
Last updated: May 10, 2025 · Regulatory values verified against SSA, IRS, and HHS publications · Should I Quit Now is not affiliated with the SSA, IRS, or any government agency.