Passive Income Calculator
See how much passive income your portfolio can generate through dividends, interest, and safe withdrawal rates.
Passive income is money earned with minimal ongoing effort — dividends, interest, rental income, and capital gains from investments. For FIRE seekers, passive income is the goal: when your portfolio generates enough to cover your expenses, you're financially free. This calculator shows how much income your current (or projected) portfolio can generate, using both expected returns and the safe withdrawal rate.
A $500,000 portfolio generates $35,000/year at 7% returns, or $20,000/year using the 4% safe withdrawal rate. It doubles every 10.3 years (Rule of 72).
4% is standard; use 3–3.5% for longer horizons
Passive income potential
Annual return
$35,000
Monthly return
$2,917
Safe annual withdrawal
$20,000
4% rule
Safe monthly withdrawal
$1,667
Years to double
10.3 yrs
Rule of 72
Portfolio
$500,000
How to use this calculator
Investment portfolio — Your total investable assets: brokerage, 401(k), IRA, HSA, etc. Don't include your home unless you plan to generate rental income from it.
Expected annual return — The total return you expect from your investments. S&P 500: ~10% nominal, ~7% real. A diversified portfolio: 6–8%. Bonds: 4–5%.
Safe withdrawal rate — The percentage you can safely withdraw annually without running out of money. 4% is the classic rule; 3–3.5% is more conservative for early retirees with 40+ year horizons.
Real-world examples
$500K portfolio, 7% return
Annual return: $35,000. Safe withdrawal at 4%: $20,000/year ($1,667/month). Not enough to live on, but a strong foundation. Another $250K gets you to $30K/year safe withdrawal.
$1M portfolio, 7% return
Annual return: $70,000. Safe withdrawal at 4%: $40,000/year ($3,333/month). This covers basic living expenses for many people — the classic FIRE milestone.
$2M portfolio, 5% return
Annual return: $100,000. Safe withdrawal at 3.5%: $70,000/year. A more conservative portfolio with a lower withdrawal rate still generates substantial income.
Formula & Methodology
Annual passive income
- Portfolio = Total invested assets
- Return Rate = Expected annual return (decimal)
Safe annual withdrawal
- SWR = Safe withdrawal rate (e.g., 0.04 for 4%)
Rule of 72 (doubling time)
- Return Rate = Annual return percentage (e.g., 7)
Assumptions & limitations
- Returns are assumed constant. Real investment returns fluctuate significantly year to year.
- Safe withdrawal rate is based on historical US data and may not hold in all future scenarios.
- Taxes on investment income are not included. Dividends and capital gains are taxed differently.
- Inflation is not factored into nominal returns. Use real returns (~7%) for inflation-adjusted projections.
Frequently asked questions
What is the 4% safe withdrawal rate?
Based on the Trinity Study, withdrawing 4% of your portfolio in year one (adjusted for inflation thereafter) had a ~95% success rate over 30-year periods. Many FIRE seekers use 3–3.5% for longer horizons.
What counts as passive income?
Dividends, interest, rental income, and capital gains from investments. Not included: salary, active business income, or side gigs.
Should I use expected return or safe withdrawal rate?
Expected return shows growth potential; safe withdrawal shows sustainable income. For planning living expenses, use the safe withdrawal rate — it accounts for market downturns and ensures your money lasts.
How do I get from $0 to generating passive income?
Start with index funds in tax-advantaged accounts (401k, IRA). Even $500/month at 7% grows to $90K in 10 years and $566K in 30 years. The earlier you start, the less you need to contribute.