Is your Side Gig Worth It?: Time to Retirement Calculator

Time to Retirement Calculator with and without a side gig (assuming you are starting from scratch)

I am going to define “retirement” as hitting your “number,” which I will define as being a savings of 30 times your annual spending.

Maybe this is obvious, but the lower your savings rate, the bigger the influence your side gig will have.

Think about your hourly compensation that is going TOWARD SAVINGS:

A big chunk of your compensation from your job just goes to covering basic living expenses, and just allows you to survive and do the things you need to do to keep coming in to work. You should focus specifically on what you are saving / investing, since those investments are what will allow you to retire. If you make $30 per hour and spend 2/3 of your income, you are saving 1/3 and effectively making $10/hr that goes toward savings. You may be tempted to look at a side gig that pays $12/hr. and say, “It isn’t worth it. It only pays half of what I get in my main job,” but you are able to save ALL of that, so your side gig is effectively paying a higher rate ($12/hr.) into your savings accounts. Your main job allows you to have 100% savings efficiency from your side gig.

Extra Tax:

Things might get more complicated if the side gig income pushes you into a higher tax bracket and gets taxed at a higher rate. If that is a problem for you, maybe just funnel more into pre-tax accounts.

Too much info on how this calculator works:

I took this the equation the calculator uses from Jacob Lund Fisker: Time to grow funds = log (1 + interest rate*(savings target / annual spending) * (1-savings rate / savings rate)) / (log(1 + interest rate)). I set (savings target / annual spending) to be 30.

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