Geographic arbitrage calculator
What a cheaper place does to your retirement date: a lower target and higher savings at once, at 10% to 40% lower costs.
Same life, cheaper place
Nothing is saved. Assumes the move happens now, the difference is invested every month, a 6% annual return, and a withdrawal rate that drops the earlier you retire.
How much cheaper is the new place?
Stay put, retire at
age 54
$1,392,000 FI number
Move now, retire at
age 46
$974,400 FI number
A 30% cheaper life frees $1,200 a month to invest and lowers the target by $417,600. Together that moves retirement 8 years earlier.
What geographic arbitrage is
Geographic arbitrage means earning in one place and spending in a cheaper one. This geographic arbitrage calculator shows what that does to your retirement date. A cheaper place helps in two ways at once: you need less to retire, because your spending is lower, and you can invest more each month, because you keep the difference.
How to use this calculator
Enter your age, what a month costs today, what you have invested and what you add each month. Then pick how much cheaper the new place is: 10%, 20%, 30%, 40% lower costs. Use your total spending, not just rent, for the comparison. The calculator assumes the move happens now, your income does not change, the whole difference is invested every month, and a 6% annual return. It runs in your browser and saves nothing.
A worked example
Say you are 34, spend $4,000 a month, have $150,000 invested and add $2,000 a month. Staying put, you reach a FIRE number of $1,392,000 at age 54. Move somewhere 30% cheaper and spending falls to $2,800 a month. The FIRE number falls to $974,400, and the $1,200 a month you no longer spend brings your contribution to $3,200. Together that moves retirement to age 46, 8 years earlier.
How to read the result
Two things change at once, so it helps to separate them. In the example, the lower target alone, with none of the savings invested, gets you to age 49. Investing the $1,200 a month takes it to 46. The result is an upper bound for the lever, because it assumes every dollar saved is invested and the move costs nothing.
Common mistakes
- Comparing rent only. The percentage should describe your total cost of living in the new place.
- Assuming income is unchanged when it depends on where you live.
- Leaving out the cost of the move, healthcare, and trips back home.
- Assuming every dollar saved gets invested. The calculator does; real life may not.
- Reading the percentage as a promise. It is a what-if for sizing the lever.
Frequently asked questions
- What is geographic arbitrage?
- Geographic arbitrage is earning in one place and spending in a cheaper one, for example working remotely for an employer in a high-cost city while living somewhere that costs less.
- How much cheaper does a place need to be to change my retirement date?
- Try the four steps the calculator offers. With the example inputs, retirement moves from age 54 to 51 at 10% cheaper, 48 at 20% cheaper, 46 at 30% cheaper, 44 at 40% cheaper.
- Why does a cheaper place help twice?
- It lowers the FIRE number, because you need less to cover lower spending, and it frees money to invest now. In the example, 30% cheaper lowers the FIRE number from $1,392,000 to $974,400 and frees $1,200 a month.
- Does the calculator include moving costs?
- No. It assumes the move happens now, your income stays the same, and the money you no longer spend is invested every month. Moving costs, income that depends on where you live, and costs that rise in the new place are not modeled.
- What if I do not invest the savings?
- The lower target still helps. In the example, a 30% cheaper life with none of the savings invested reaches FI at 49, instead of 54. Investing the difference as well brings it to 46.
The calculator starts from a typed spending figure and a guessed reduction. Reign can start from what your accounts show you spend. See this with your real numbers
The idea behind it: Geo-arbitrage: the retirement lever that works twice