Income Replacement Calculator
Capital to replace income.
Calculate capital needed to replace income for set years. Runs in your browser with a transparent formula — free and no signup.
What this tool does
This tool calculates capital needed to replace monthly income for a given number of years.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
How much capital is needed to replace your income for N years? Depends on monthly need, duration, inflation, and investment return. This calculator shows capital required using present value of growing annuity.
4,000/month for 25 years at 2.5% inflation and 4% return: real return 1.46%. Present value capital needed: 998,000. Roughly 25x annual income - matches 4% rule.
Use for life insurance needs or FIRE capital target. Lower return assumption = higher capital needed. Higher inflation assumption = higher capital needed. Conservative inputs give safe target.
A worked example
Try the defaults: monthly income target of 4,000, years needed of 25, inflation of 2.5%, investment return of 4%. The tool returns 998,938.49. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.
What moves the number most
The result responds to Monthly Income Target, Years Needed, Inflation, and Investment Return. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
The formula behind this
Real return = (1+r)/(1+i)-1. Present value of growing annuity at real return. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.
Using this as a check-in
Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
£4,000 £/mo × 25 yearsyrs at 2.5% inflation and 4% return = $998,938.49.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Real return = (1+r)/(1+i)-1. Present value of growing annuity at real return.
References
Frequently Asked Questions
Why use real return?
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