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.
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?
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