🎯Time to FI Calculator
Monte Carlo simulation to estimate years to Financial Independence
Time to FI Calculator – Your Canadian Path to Freedom
Calculate how many years until you reach Financial Independence (FI) in Canada. This tool considers your savings rate, Canadian investment returns, and helps you estimate your FI date by accounting for RRSP/TFSA benefits and the specific Canadian cost of living.
Expert Guidelines
Savings Rate: The Key Driver
In the Canadian FI community, your savings rate—the percentage of your net income you save—is the most important metric. Statistics Canada notes that while the average household saving rate is often low, those pursuing FI aim for 30% to 50%+. Using this tool to increase your savings rate by just 5% can reduce your 'Time to FI' by several years, regardless of your absolute CAD income level.
Statistics Canada – Household Saving Ratio
Bridging the Gap to CPP and OAS
Achieving FI early in Canada means you need a 'bridge fund' to cover expenses before government benefits like CPP and OAS start at age 60 or 65. Our calculator helps you determine if your private portfolio (RRSP, TFSA, non-registered) is large enough to sustain you during these early decades. Planning for this gap is a pillar of the Canadian FI strategy.
Service Canada – Public Pensions
The Impact of Canadian Tax Efficiency
The speed at which you reach FI in Canada is heavily influenced by tax efficiency. Using a TFSA for high-growth assets and an RRSP to lower your current tax bracket can accelerate your compounding. The Financial Consumer Agency of Canada (FCAC) emphasizes that 'it's not what you earn, but what you keep.' Our tool allows you to simulate these tax-advantaged growth paths.
Financial Consumer Agency of Canada (FCAC)
Frequently Asked Questions
What is the 'FI Number' for an average Canadian?
The standard FI number is 25 times your annual expenses (the 4% rule). If your Canadian household spends $60,000 per year, your FI target is $1.5 million CAD. However, many in the Canadian FI community use a more conservative 3.3% withdrawal rate (30x expenses) to account for Canada's unique economic cycles and potential higher cost of healthcare in later years.
How do 'House Hacking' speed up FI in Canada?
With high housing costs in provinces like Ontario and BC, many FI seekers use 'house hacking' (renting out a basement or room) to reduce their largest expense. By lowering your monthly CAD outflow, you simultaneously increase your savings rate and lower your final FI target. Our calculator shows the dual benefit of this strategy on your timeline to independence.
Can I reach FI on a median Canadian salary?
Yes. Financial Independence is a math problem, not an income problem. A Canadian earning the median salary who maintains a high savings rate through frugality and smart tax planning can reach FI in 15-20 years. This tool helps you map out that journey, showing how small, consistent Canadian dollar investments in low-cost index funds lead to long-term freedom.
What is the Time to FI Calculator?
This calculator uses Monte Carlo simulation to estimate how long it will take you to reach Financial Independence (FI). Unlike simple calculators, it runs thousands of simulations accounting for market volatility, giving you a realistic view of possible outcomes.
How Monte Carlo Simulation Works
Monte Carlo simulation runs thousands of scenarios with randomized market returns based on historical data. Each simulation projects your portfolio growth over time, accounting for your contributions, withdrawals, and market volatility.
Understanding Safe Withdrawal Rate
The Safe Withdrawal Rate (SWR) is the percentage of your portfolio you can withdraw annually without depleting your funds. The famous "4% rule" suggests you can withdraw 4% per year with low risk of running out of money over 30 years.
Frequently Asked Questions
Why are the 10% and 90% percentiles important?
They show the range of possible outcomes. If the 10th percentile shows 8 years and 90th shows 15 years, it means in 80% of simulations you reached FI between 8-15 years.
What volatility should I use?
Historical stock market volatility is around 15-20%. More conservative portfolios might use 10-12%.
What if I never reach FI?
The "Never Reach FI" percentage indicates scenarios where your portfolio doesn't hit the target. If it's high, consider increasing savings or reducing expenses.
Financial Accuracy
Disclaimer: This calculator provides estimates for informational purposes only. This is not financial, tax, or legal advice. Please consult a qualified financial advisor for advice specific to your situation.