Find the portfolio behind your income goal
Passive Income Goal Calculator
Tell this calculator the monthly income you want, your expected yield, your current savings, and how much you can add each month. It works out the portfolio you need and how long it could take to get there.
Using A Passive Income Calculator To Turn Your Goals Into A Real Number
This passive income calculator helps you to get clarity on figuring out how far your current savings and monthly contributions are from getting you to your goal. This can also serve for retirement purposes. Most retirement planning starts with a vague feeling, something like wanting enough passive income to cover the bills without working. This passive income and retirement calculator turns that feeling into an actual dollar figure.
If you want two thousand dollars a month from a portfolio yielding four percent, you would need a portfolio worth six hundred thousand dollars, since twenty four thousand dollars a year divided by four percent works out to that number. Once you know the target, you can see exactly how far your current savings and monthly contributions are from getting you there.
The years to get there estimate assumes a modest six percent annual growth rate on top of your ongoing contributions, similar to the dollar cost averaging math used elsewhere on this site. It's not a guarantee, but a projection. However, it gives you a realistic sense of the timeline, instead of leaving the whole question open ended.
This approach borrows from what is often called the safe withdrawal rate framework. This is most famously the four percent rule that came out of retirement research in the 1990s. The idea is that withdrawing around four percent of a properly diversified portfolio each year has historically had a good chance of lasting through a typical retirement. This passive income calculator flips that same math around.
Instead of asking how much you can safely withdraw from a portfolio you already have, it asks how large a portfolio you would need to produce a specific income using that same yield assumption. Think of it as a financial independence calculator in miniature, one number at a time.
If you want to go deeper on how retirement planning works, the Securities and Exchange Commission's investor education page on retirement planning is a good, neutral place to start. It walks through the basics without trying to sell you anything, which is refreshing in a space full of products competing for your attention.
A Few Things Worth Knowing
Yield Assumptions Matter A Lot
A lower assumed yield means you need a much larger portfolio to hit the same income target, and a higher yield often comes with more risk. Try running a couple of different yield assumptions to see how much your target portfolio size shifts.
Inflation Is Not Factored In
Two thousand dollars a month will not buy as much twenty years from now as it does today. This calculator works in today's dollars, so it is worth revisiting your target income figure every few years as prices change.
Consistency Matters More Than The Math
This passive income calculator's portfolio needed and years to get there numbers are only as good as the contribution habit behind them. Missing a few months of deposits here and there can push your timeline out further than you might expect, since compounding rewards consistency more than the occasional large deposit. If your monthly contribution is not realistic, adjust the target income or the timeline, not the contribution number.
More Free Investor Tools
This passive income calculator is one of four free investor tools on ProfitingStocks.com. Try the investment return calculator to check how a past investment performed, run the dollar cost averaging calculator to project steady contributions over time, or use the dividend income calculator to see what a given portfolio pays right now.