How to Make Deferred Spending Feel Tangible Today

I love my job. Part of that love is that I also hate it sometimes. Maybe 10% of the time.

In the moments that make up the 10%, I’m usually bugged out about things like  tech issues or someone sending the wrong report. When that happens, I tend to remind myself of a little early retirement trick I developed a few years ago.

To my surprise, Mr. Money Mustache employed this same trick back when he was working his IT job. Maybe I’m not alone in this approach.

So, what’s the trick?

Figure out how many days of retirement you are earning with each day of work.

Work becomes much more bearable — especially when you’re deep in the trenches — if at the end of the day you can say, “Alright! 25 more days of retirement!

(That’s our actual number and feels AMAZING each day!)

This post might be a bit math heavy, but I promise, the end result is you’ll be able to know not only how many days of retirement you’re earning, but also, what a day of retirement at 65 costs you today.

(If you want access to an online site that handles the calculations for you – check out the comments where Loan Analyzer built a tool that let’s you put in your numbers. If you’re not quite sure what to make of it, read below and you’ll gain a clearer understanding of what the numbers mean.)

For us, the cost today for one day of retirement at 65 is $11.79.

Knowing that number makes it incredibly easy to spend wisely when we know, with certainty, what our opportunity cost is.

If you stick with me here, I’ll walk you through calculating what your numbers are.

First, let me go over 3 built-in assumptions to my formula:

3 Built-in Assumptions to the Formula

1. Our annual budget in retirement at age 65 is set at $40,000, excluding any potential income from outside sources such as Social Security. $40,000 is pretty high (in my option), given that the majority of retirees wish they had as much.

2. We have inflation increasing the cost of living each year at 2%. If I had more time I would explain how having a separate level of inflation for medical costs makes sense, especially in the United States, but for now, I’ll have 2% overall.

3. Annualized returns from our savings are at 8%, reflecting a large equity position gaining 6%, with ~2% dividends each year.

Okay, now that those assumptions are out of the way, let’s look at the formula.

How to Make Deferred Spending Feel Tangible Today

There are five steps to figure out the, “day worked earns X days of retirement,” calculation.

First, take the expected savings from this month and divide by the number of working days in the month, say 20. For us, we are taking our expected savings from the entire quarter over 60 working days.

Next, we take our annual budget and divide by 365. Our $40,000 budget turns into a cost of $109.59 per day.

Okay, the next two steps are tricky, but I promise, the final one is easy and liberating!

We need to build out two two different equations (tricky), then divide one over the other (easy)

Step three is take the result from step one, our savings per day, and multiple it by (1+i)^n, where i = expected market return and n = number of years to 65. Here’s a picture of our calculation:

Make Deferred Spending Feel Tangible Today - Photo 1


This number represents the future value of our savings today invested at the 8% return mentioned in the assumptions.

Step four is to take the cost of living per day today, and multiple it by (1+r)^n, where r = inflation and n = number of years to 65. Here’s our calculation:

Make Deferred Spending Feel Tangible Today - Photo 2

This value represents our expected cost of living, based on the 2% inflation assumption from earlier.

The final step, as promised, is easy. Take the results from step three and divide by the results from step four.

Make Deferred Spending Feel Tangible Today - Photo 3

This number is the number of extra days of retirement we earn per working day.

For us, that means everyday we come home from work, we have just saved enough money to comfortably afford another 24.9 days of retirement!

If our quarter shapes up as expected, that means we will have saved enough money for at least 1,494 days or 4.09 YEARS of retirement. All in ONE quarter!!!

Let’s take it back for a second to that moment I felt crummy at my job. You can now see how gratitude is only a thought away. Being aware of these numbers helps me to appreciate the power of frugality.

That’s how you make deferred spending feel more tangible today.

How to calculate the cost today for one day of retirement at 65.


Only one step here. Take the expected cost per day in the future, or step four above, and divide it by (1+i)^n, where i = expected market return and n= number of years to 65. Here’s our calculation (notice the picture says Step 3 in the numerator, but it should read, “Step 4”:

Make Deferred Spending Feel Tangible Today - Photo 4

Our cost per day at 65 is $11.79!

It makes it a lot easier to forgo that impulse purchase when we realize $12 buys us an entire day of retirement!

Okay, I apologize for all the math. This was actually more math than I use in my job as a CPA!

Make Deferred Spending More Tangible Today - Photo 5
Does it help to know how your savings today translate to physical days of financial freedom? Do you feel less inclined to spend impulsively when you know that same purchase can secure multiple days or weeks of your retirement?

Master Distiller

P.S. Thanks to Loan Analyzer in the comment for putting together an online tool that handles the math for you!

21 comments… add one
  • Financial Panther Oct 17, 2016, 9:56 am

    That’s an awesome way to think about each day, and one I hadn’t thought of before. I’ll definitely need to do some math and figure out what a day of my retirement costs. It’s a powerful motivator, for sure.

    • Distilled Dollar Oct 18, 2016, 4:54 am

      Exactly – it is another weapon we can add to our “early retirement/financial independence” arsenal.

  • The Green Swan Oct 17, 2016, 2:09 pm

    I think it is great to have that perspective. Not every day is going to be rainbows and kittens, so it is helpful to remember just how much that day or week buys you in terms of retirement.

    And it is good to bust out some math every now and then just to prove you still got it, right!? I’m hoping to retire early, age 40 or sooner ideally, so I’ll have to take a stab at it myself. Thanks, Matt!

    • Distilled Dollar Oct 18, 2016, 4:57 am

      Yes! Haha, it helps to keep those math skills sharp. Just in case!

      Thanks for the comment JW and hopefully you can hit your early retirement day before 40. You’re definetly on a great track.

  • Jay Oct 17, 2016, 6:15 pm

    Thanks for this awesome little brain-hack. I too am lucky enough to work in a job I like. But every now and then I’m in a bad mood, or something just rubs me the wrong way. Like you said, it’s usually little things. And if I changed jobs I would still run into the same problem. This is a great trick for helping me cope with these “10%” kind of moments. Thanks again!

  • PatientWealthBuilder Oct 17, 2016, 8:55 pm

    I have an excel spreadsheet which I update with my years to financial freedom. When I get really frustrated I look at it, update it, and then get back to work. Seems like having that firm goal out there is enough motivation for me. I don’t really intend to stop working when I reach financial freedom but it is an exciting prospect to no longer “need” to work.

    • Distilled Dollar Oct 18, 2016, 4:53 am

      Same here as well! I love seeing that future date and I agree. Retirement to me is how Ben Franklin utilized the concept by retiring early at the age of 42. He didn’t know 100% what he wanted to do, but he had specific hobbies he enjoyed (science and politics) so he was free to pursue them freely.

      I can’t imagine not working as we receive a lot of benefits from work, outside of the money. I do imagine myself working a very different capacity though.

  • Mrs Groovy Oct 18, 2016, 2:48 pm

    Although my eyes glazed over on the math I love the psychology. 25 days of retirement from 1 day of work sounds very liberating!

    • Distilled Dollar Oct 22, 2016, 8:17 am

      Let me know if you decide to piece your number together. The liberating feeling is worth it! 🙂

  • Dennis @ NestEggRx Oct 18, 2016, 10:40 pm

    Great idea, thanks for sharing.

  • Money Gato Oct 24, 2016, 11:37 pm

    Great post! Should that last calculation use Step 4 as the numerator instead of Step 3?

    • Distilled Dollar Oct 25, 2016, 5:52 am

      Nice catch! Yep – the last step should use the result from step 4 as part of the calculation. Sorry for any confusion!

  • Loan.alyzer Oct 26, 2016, 2:36 pm

    For those that don’t like do the Math – Here is a Calculator in Honor of this Post, Distilled Dollar, and the Cubs – – Distilled Dollar let us know if we are close or if you suggest any changes.

    • Distilled Dollar Oct 27, 2016, 10:44 pm

      Awesome!!! Thanks for putting this together – I’ll make an edit in the article and mention you guys put together this calculation.

      • Loan.alyzer Oct 28, 2016, 10:23 am

        Thank you Matt – No problem – this was fun – we will make the Distilled Dollar Retirement Calculator an official part of the Loan.alyzer Financial Calculators and Tools. We are always open to suggestions and improvements to our existing tools and on the hunt for ideas for future tools.

  • TheTirelessWorker Nov 1, 2016, 6:44 pm

    Interesting take on present value and future value to calculate retirement. Definitely a great booster for those days when you’re feeling down at work!

    • Distilled Dollar Nov 6, 2016, 10:07 am

      Thanks! You can tell I came up with these calculations in a lull period at work one day 🙂 It definetly helps!

  • Jeff Nov 22, 2016, 8:11 pm

    I went from, “This is gimmicky”, to, “This is actually really cool!”. Nicely done and very inspirational. I do vaguely remember MMM covering this method, but your nerdy equations made it for me. Now I want to set up a script to text myself for every month of retirement we put away. 🙂

  • Kirk Nov 22, 2016, 9:15 pm

    Remember to adjust the formula to show higher inflation and lower rates of return. Why? Well, with regard to inflation, it is very likely to be much higher than 2% given the amount of government debt that has to be devalued in the next 30-40 years. Also, consider that hedonic quality adjustments to inflation don’t really correspond to what your spending will be in your older future. The idea about placing a higher empahsis on healtcare spending is a good one.

    Even though earning 8% sounds like it’s no big deal given that the long-term average is a little north of 10%, most investors earn about 3% due to being emotional about their investing. hat average also considers what is a likely to be a very different interest rate environment than the post WWII to now era.

    Try the formula using 4% inflation and 6% rate of return. Find a range and save for the worst possible outcome (which I’d set at 4% inflation and 4% rate of return). That way, anything better is gravy (or frosting if you’re into sweets instead of comfort food).

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