If you want to achieve financial independence, every investment we make serves one purpose: to buy back our time. Time is infinitely more valuable than any object, experience, or luxury. Given how short our lives are, we should use our money not just to accumulate more, but to buy freedom. Once you have freedom, you can more easily craft the life that you want.
And when times are good, as they are now, with roaring stock market returns and risk assets surging, it’s worth pausing to ask: How much time have my investments actually bought in the past year?
If you can start thinking about your financial gains in terms of time saved from doing things you don't want to do, not just dollars earned, you’ll begin to see your financial independence journey in a much more tangible and motivating way.
Let’s go through a practical exercise to calculate how much time your investment returns have bought you, whether you’re already retired or still grinding toward financial freedom.
The Philosophy: Converting Returns Into Time
Before diving into numbers, it helps to reframe what your investments represent. Every contribution to your portfolio is a deposit into your future time bank. Every dollar earned in returns is a slice of freedom – time you no longer need to spend working for someone else.
But many of us never translate this connection. We look at percentage returns, net worth trackers, or balance increases without ever considering the human side – the hours, months, or years of labor those returns could save.
Here’s the framework:
- Choose your ideal safe withdrawal rate (SWR) in retirement: 3 – 5% is recommended.
- Compare your annual investment returns to that SWR.
- Convert the difference into years (or fractions of a year) of time bought or lost.
We’ll approach this from two perspectives:
- The Retiree, who’s already living off investments and other income like Social Security.
- The Worker, who’s still on the path to financial independence.
For The Retiree: How Much More Can You Spend?
We know from decades of research (e.g., the Trinity Study, Bill Bengen, etc) that a 4% withdrawal rate has historically allowed retirees to sustain their portfolios for 30+ years without running out of money. If you earn any supplemental income (Social Security, pension, part-time work), your safe withdrawal rate (SWR) can rise to 5% or even higher.
But let’s simplify. Suppose you’ve retired and you’re living entirely off your investments. You’ve budgeted to withdraw 4% per year. What happens when markets surge?
Let’s run some numbers.
| Annual Portfolio Return | Safe Withdrawal Rate | “Extra Years” of Retirement Gained |
|---|---|---|
| 8% | 4% | 1 year |
| 12% | 4% | 2 years |
| 16% | 4% | 3 years |
| 20% | 4% | 4 years |
If your portfolio returns 8% and you’re only withdrawing 4%, your investments effectively grew by one year’s worth of spending. A 12% return gives you two extra years of retirement funding, and so on.
More optimistically, you could say that an 8%, 12%, 16%, or 20% portfolio return effectively buys you two, three, four, or five years of annual living expenses, respectively.
If you are an active investor trying to outperform the S&P 500, as I am, you can also calculate how much additional time you have gained through outperformance. For example, I noted in my 2025 review that by outperforming the S&P 500 by roughly 5%. The outperformance percentage is not huge, but the time saved is. I effectively bought a little more than one year of regular living expenses for my family of four.
This is a powerful mental model because it turns abstract returns into something deeply tangible: time.
What To Do With The “Time Surplus” (Investment Outperformance)
Now that you’ve “bought” additional years of retirement, you have a few options:
1) Spend more in the coming year.
Increase your withdrawal rate slightly – say, from 4% to 5% – and enjoy the fruits of your discipline. Maybe you finally remodel that kitchen or take a family trip to Cambodia and Vietnam.
For those of you on the FIRE path, being intentional about budgeting for fun and occasional splurges is important. If you are always disciplined about saving and investing for the future, you may never leave enough space for enjoyment in the present. Ultimately, you will likely die with a surplus of capital, thereby wasting much of the time and stress you spent accumulating that capital when you were younger.
Most retirees err on the side of being too conservative. Despite the “4% rule,” many retirees only withdraw 2–3% because they’re afraid of running out. I am one of those early retirees who instituted a 0% withdrawal rate since 2012 because of scars from the global financial crisis and a desire to grow my family. But by actively quantifying your surplus years, you gain the emotional permission to actually spend and enjoy life.
2) Build a larger financial buffer.
Keep your withdrawal rate the same and roll that surplus into a buffer for future bear markets. You’ll thank yourself when a down year comes along and you can continue spending confidently without selling assets at a loss.
However, all for the sake of total financial security, you might get hooked on building buffers for your financial buffers. If you never stop building buffers, then you will have failed at consumption smoothing.
One sign of intelligence is being able to craft your ideal life. There are plenty of people out there who have enough, but who still can't break free from a suboptimal job or life due to the one more year syndrome that never ends.
3) Reinvest for legacy goals.
If you already feel content, consider reinvesting any surplus for your children or your favorite causes. You could build a custodial investment account, match your children’s Roth IRAs, or set up a donor advised fund for charitable giving. Compounding time for future generations is one of the most generous gifts you can leave.
To hedge against an uncertain future, I invested $198,000 of my home sale proceeds into Fundrise Venture to gain exposure to the AI boom for my children. If AI performs well over the next decade, my private AI investments will likely do well too, and help my kids launch. And if AI turns out to be overhyped, at least my children may still benefit from better job opportunities in a world shaped by AI.
Adjusting for Market Cycles
When returns decline or turn negative, the framework works in reverse.
Suppose your portfolio grows only 4% in a given year. If you withdraw 4%, you are essentially flat. If your portfolio declines 4%, you have effectively lost a year of time. But it is actually worse than that, because you still need to fund the current year’s expenses, meaning you have effectively lost two years. In other words, you have borrowed time from your future.
Although this sounds discouraging, it is also normal. Down years are baked into long term market averages. Both the 4% Rule and the more flexible 5% Rule already account for corrections and bear markets. What matters most is tracking your cumulative surplus or deficit over time.
A simple spreadsheet can help you visualize how much time cushion you have built over the years and whether you are ahead or behind schedule. Alternatively, you can use several excellent retirement planning tools, such as Boldin and ProjectionLab.
For The Worker: Measuring How Much Time You’ve Saved
Now let’s flip to the accumulation phase, for those of you still working toward financial independence.
Roughly 70% of workers report being disengaged from their jobs, meaning most would retire sooner if given the choice. If that’s you, then your primary mission is to convert as much of your income and investment gains into saved time from working as possible.
Let's use the classic 60/40 portfolio as the stock / bond asset allocation retirement portfolio benchmark. This is the asset allocation Bill Bengen used for retirees to come up with the 4% Rule in the first place. The more you can beat the average historical return of 8% for a balanced 60/40 portfolio, the faster you can exit the rat race.
Here’s how to measure your progress.
Step 1: Compare Your Returns to the 8% Benchmark
Start by comparing your portfolio’s annual return to an 8% long-term benchmark.
If your investments earn 12% in a year, subtract the 8% benchmark and you’re left with a 4% surplus. Assuming a 4% withdrawal rate, that surplus represents one full year of living expenses. In other words, you’ve effectively bought yourself one extra year of freedom or one year less you need to work.
If your portfolio returns 16%, that’s an 8% surplus, which translates into two years of living expenses saved. You didn’t just grow wealth, you meaningfully compressed your working timeline by 24 months.
On the flip side, if your portfolio only returns 4%, you’re running a 4% deficit relative to expectations. That shortfall represents one year of lost time, as your portfolio failed to grow enough to support both future spending and progress toward financial independence.
Step 2: Translate Surplus (or Deficit) Into Time
Here’s the simple rule of thumb: Every 4 percentage points of surplus equals one year of living expenses saved if we assume you have enough money invested. If not, then you must calculate your surplus divided by your average monthly that expense to get a more exact figure of time saved.
Once you think in time instead of percentages, the math becomes intuitive:
- 4% surplus = 1 year saved
- 2% surplus = 6 months saved
- 1% surplus = 3 months saved
- 8% surplus = 2 years saved
Likewise, deficits work the same way in reverse.
This framework helps you appreciate the value of even modest outperformance. A few extra percentage points in a good year don’t just pad returns, they can translate into entire years of reclaimed life, especially when compounded over time.
Just don't forget the first rule of financial independence: don't lose tons of money. If you give up your gains and lose lots of money, you will ultimately sacrifice tremendous time to get back to even.
Step 3: Adjust Risk and Strategy Based on Your Desire to Work
Your portfolio shouldn’t exist in isolation. It should reflect your energy level, risk tolerance, and how much longer you actually want to work.
If you’re burned out and close to your financial independence number, consider dialing down risk. Locking in freedom matters more than squeezing out extra returns. Once you have enough, the goal shifts from maximizing wealth to preserving time.
If you’re still energized and enjoy what you do, maintaining, or selectively increasing, risk for a few more years can expand your safety margin and buy even more optionality.
If you’re behind, the most reliable lever isn’t taking more investment risk, it’s increasing income. Job-hopping, negotiating raises, or building side income will almost always move the needle faster than trying to consistently beat the market.
Avoid the gambler’s mindset of “doubling down to catch up.” That approach often destroys capital and costs even more time. You can’t reclaim freedom by taking reckless risks through margin trading etc. In the long run, discipline, not desperation, is what buys your life back.
Building A Personal “Time Ledger”
To make this more concrete, build a Time Ledger spreadsheet that tracks:
- Starting portfolio value
- Annual return (%)
- Surplus or deficit vs. 8% benchmark
- Equivalent years (or months) of time saved or spent
- Cumulative time balance
For example:
| Year | Return | Surplus vs. 8% | Time Gained/Lost | Cumulative Time Saved |
|---|---|---|---|---|
| 2025 | 12% | +4% | +0.5 years | +0.5 years |
| 2026 | 16% | +8% | +1 year | +1.5 years |
| 2027 | 5% | -3% | -0.375 years | +1.125 years |
Seeing your “time account” compound over time provides tremendous motivation. It transforms investing from an abstract numbers game into something deeply human: gaining control over your life.
Saving Time Is The Ultimate Objective
Everyone’s FI journey is different. Life throws constant curveballs – health issues, family additions, job loss, pandemics, market crashes. It’s impossible to predict them all. But consistently running the numbers and thinking in time gives you clarity and control amid uncertainty.
Most people don’t measure progress in time. They don’t have a plan for when to dial back risk or how to translate returns into lifestyle improvements. They just keep accumulating, often without realizing they’ve already “won the game” or ultimately will at a much faster pace than expected.
But if you’re reading this, you’re not average. You’re deliberate about your finances, curious about optimization, and willing to think differently. Understanding your true risk tolerance is also about estimating how much time you're willing to lose to grind back your losses.
I’ve been jotting down my thoughts on Financial Samurai since 2009, but I started thinking about escaping corporate America a decade earlier in 1999. The 5:30 a.m. – 7 p.m. work hours were brutal, and I knew I couldn't survive for 20+ years. The single biggest difference-maker was shifting from a money mindset to a time mindset. Once I began seeing investments as time bought, not money earned, my courage to reclaim my life by leaving work grew.
Don’t just keep accumulating for accumulation’s sake. Use your financial gains to buy back more time with family, more time for creativity, and more time to live life on your terms.
One day, the bull market will end. It always does. When that happens, you’ll be glad you converted at least some of your paper gains into real freedom. Time you can never lose is the best asset of them all.
Reader Questions
- How much time have your recent investment returns bought you?
- Are you spending enough of your “time surplus” or hoarding it out of fear?
- What steps could you take today to accelerate your journey toward time freedom?
Stay On Top Of Your Investments To Save Time
One tool I’ve consistently relied on since leaving my day job in 2012 is Empower’s free financial dashboard. It remains a core part of how I track net worth, monitor investment performance, and keep cash flow honest.
If you haven’t taken a hard look at your portfolio in the past 6 months, this is a sensible time to do so. Through Empower, you can also get a complimentary portfolio review and analysis if you have more than $100,000 in investable assets linked. You’ll gain clearer insight into your asset allocation, risk exposure, and whether your investments truly match your goals for the years ahead.
Staying proactive isn’t about over-optimizing, it’s about avoiding preventable mistakes. Small improvements today can meaningfully compound into greater financial freedom over time.
Empower is a long-time affiliate partner of Financial Samurai. I’ve personally used their free tools since 2012 to help manage my finances and investments. Further, I did some part-time consulting for them in person from 2013-2015. Click here to learn more.
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I really enjoyed this perspective because it reframes investing in a way that feels deeply personal instead of purely mathematical. I’ve always looked at returns in percentages and portfolio growth, but thinking of investment returns as “time saved” hit me in a completely different way. It makes the purpose of investing feel more human and intentional.
When you say that money is ultimately a tool to buy back our time, that really resonates with me. I’ve noticed in my own life that the moments I value most are not tied to things I bought, but to time I had — time with family, time to rest without stress, time to pursue interests without worrying about income for every hour. Seeing investments as a path toward more of that kind of time makes the discipline of saving and investing feel much more meaningful.
I also appreciate the reminder that financial independence isn’t just about reaching some big number. It’s about optionality. Even small increases in passive income or portfolio growth can translate into small pieces of freedom — like the ability to take a break between jobs, reduce working hours, or say no to work that drains you. Thinking this way makes progress feel more tangible and motivating.
Another thing that stood out to me is how this mindset shifts spending decisions too. If every dollar invested is future time gained, then impulse spending starts to feel like trading away hours of future freedom. That doesn’t mean never enjoying money, but it definitely encourages more mindful choices. I’ve started asking myself, “Is this purchase worth the time I’m giving up later?” and it’s surprisingly powerful.
Your point about crafting the life you want once you have freedom also feels very true. I’ve seen people retire with money but no clarity on how they want to spend their time. So the idea that we should be thinking not just about financial goals but also lifestyle and purpose along the way is a great reminder.
Overall, this article gave me a clearer emotional connection to why I invest in the first place. It’s not just about wealth — it’s about designing a life with more control, less stress, and more time for what truly matters. That’s a perspective I’m going to carry with me moving forward.
Perhaps the view of couple 69 & 72 retired since late 2015.
We live in Waikoloa Beach Hawaii May thru October to scuba dive with the water people and enjoy the perfect weather & ocean. The 2026 cost is $48k for rentals of condo, car and purchase of scuba pass & flights. Deals with owners reduced 2026 stay by 40% compared to 2025 stay. The 1M condo is 1000 steps to A bay. The annual condo HOA & taxes = our six month rent.
REBUY house is 250 years = $500k house/ $2k property & school taxes on Eastern Shore of Maryland. The SS & pension are $131k, own house and savings over $3M.
Early death, disability and sickness can not be predicted. based on the incorrect heath messages of the past 70 years. Enjoy your life and time when you already “won” .
Based on recent data from the Federal Reserve and the Employee Benefit Research Institute (EBRI), less than 1% of RETIRED American households have $3 million or more in retirement savings, excluding the value of their primary residence. A small percentage of retirees (3.2%) have $1 million or more in retirement accounts, and even fewer have $2 million (1.8%) or $3 million (0.8%).
The median annual income for those 65 and older was about $47,620.
The average or mean annual income for this group was roughly $75,254.
The median savings for those 65 to 74 is $200,000 X 4% = $8,000
The average or mean saving for 65 to 74 is $610,000 X 4% = $24,400
The average retiree in the USA has considerable wealth in home equity, with a median of $250,000.
Thanks for the sharing and insights. You did hit on a “trigger” of mine on the studies that quotes values of retirement savings. I am 61 and a year from retirement. I am part of those statistics and it says I have 1 mill in retirement savings because that is what my Fidelity 401k has. But I have 7 million in taxable brokerage which I have been adding to my hole working career…so actually 8M in retirement savings. Take retirement savings studies with a grain of salt. Then there are millions of kids of baby boomers who are in their 50s with “only” 300k in retirement savings in those studies but will get 5-10 million or more when their parents die.
Sam,
The timing of this post is so personally timely that it is kind of scary. As I retiree I certainly practice the exercise of doing the money / time analysis.
The simple analysis is great, but I think there are two nuances to consider. One is a benefit to the long-term outcome, the other isn’t. The beneficial one is that after taking yearly gains or losses and withdrawal rates into account we haven’t added any years onto our life and our future life expectancy has decreased by a year. The non-beneficial one is the impact of inflation, to stay “even” by the simple analysis I believe that the return rate should be the withdrawal rate plus the inflation rate, all else being equal.
I am living and practicing the benefits of this in the present. Per my analysis incorporating returns, gains, inflation, and life expectancy, my retirement is about 30% richer going forward than when I retired three years ago. We just today committed to a new build relocation from one really low cost of living area to an only slightly higher cost of living area that will take our primary residence value percent of net worth from around 6.5% to around 8.5% to be closer to family…. I know this is way below your suggested home targets, but quite frankly we have all the house we need now, and the new one will be perfect for us going forward.
Thanks for all you share.
Any decent retirement planner like with Empower or Boldin will account for inflation when you input what you want to spend in retirement per year. So if you tell it you want to spend 250k per year starting at age 60 (retirement), its final success percentage for your plan is based on default 3% increase in spending each successive year. So at age 61 it assumes you will spend 257.5k and so on. You can also set it manually for higher inflation rates. IT also will incorporate an assumed tax rate. I really enjoy using those and have made me much more comfortable with where I am.
I left my corporate job in 2013 when my kids were 3 and 5–no IPO, inheritance or other windfall, just a 5 month severance. It coincided with our decision to start sending our kids to a private school. Even though I was already more involved than most working dads, my goal was to maximize my time with the kids before they left home. I wanted to test how little I could work going forward while keeping our household afloat. My wife kept her corporate job which kept us revenue neutral but we would stagnate financially.
Despite formerly being a highly analytical engineer, consultant and strategic planner, what helped me more than financial projections, withdrawal rates, side hustles, etc. was accepting how much hardship I would endure chasing this dream. Worst case scenario, my time off makes me unemployable, the market tanks, I pull my kids out of private school, I rent out my house to make ends meet and we move in with my mother-in-law. I was willing to accept the downside because that’s how much I valued time with my kids.
13 years later, I remain unemployed. I’ve spent as much time a modern parent can possibly spend with their kids. I’ve attended every recital, play, scout meeting, etc. I’ve taken extended vacations with the kids around the world. I’ve helped them on countless dioramas, science experiments, applications, etc. Within months the the first will be off to college and the other will follow in a year. My wife continues her job but her income has not even kept up with inflation. My time at home allowed me to focus on optimizing our investments, especially real estate.
The incredible growth in our NW was completely unexpected. It could not have been forecasted with all the analysis in the world. A safe withdrawal rate is irrelevant to me now. I did accurately forecast when my kids will be leaving for college.
I applaud your analytical rigor and encouragement of knowing when you’ve won the game. I would add that if time is really that important, one might need to quit before winning the game. Envision the worst case scenario where you could still be happy. For many of your readers, that’s probably going to require much less money than they will end up with.
Cool concept, Sam! You always have such novel ways of reframing financial numbers. I haven’t thought about it this way before; thanks for sharing!
I’m definitely in the “worker” section for now. I got a little confused with the text there, but the table example really “clicked” with me.
happy new year!
I’m glad the numerical examples clicked with you. It is really a magical time now, especially over the past three years with double digit annual returns each year. We need to cherish the good times and really appreciate how much time we were able to buy back because of the outsized gains.
Time is so precious! Thanks for incorporating it into how we think about our investments and savings. I like your approach and will think about this more as I plan out my investment strategy this year.
I like how you incorporate the importance of time into personal finance. It’s super relevant. And interestingly, it was not something I thought about too deeply when I was young and in the peak of my career. Time means less when we’re young because we simply have way more of it. More freedoms, fewer responsibilities, many more years ahead to earn/pivot/save/invest. The value of time goes way up as we age. And how powerful it is if young people can tap into its importance before they feel like time is slipping away from them and use it to their advantage.
That’s a great question about whether we’re spending enough of our time surplus vs hoarding it out of fear. I actually don’t know what my answer is. I tend to always feel like I am never doing enough, so I must lean toward the latter. At least I don’t splurge on expensive, unnecessary things. The most constant day to day thing I spend money on is groceries. Food inflation is so bad! At least my restaurant consumption is way down but groceries are still so much more expensive than they used to be.