The Rules of 25 and 72

Mortgage and Lending with EstaR Mortgage NMLS #241125
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Here are two easy-to-remember formulas that can be very useful as you budget for retirement:


The Rule of 25 – How much “critical capital” do I need?

According to this formula, if you multiply the annual income you need by 25, that’s approx. how much money you need to save in order to retire.  This would allow you to live off your retirement assets without dipping into principal.  This assumes your after-tax rate of return during retirement is 4%. 

For example, if I want to generate $60,000 per year in after-tax retirement income, I would need to save a total of about $1,500,000 ($60,000 x 25).  That’s because $1,500,000 would produce an annual after-tax income of about $60,000 per year without reducing the principal of my investment.


The Rule of 72 – How many years will it take to double my investment?

According to this formula, if you divide the number 72 by your annual compounded rate of return on investments, you can figure out how many years it will take for your investment to double.

For example, if I earn 7% per year on investment, and I keep reinvesting that money each year, it will take me approx. 10 years to double my money (72 / 7 = 10.29).  If I earn 5% per year, it will take me approx. 14.4 years to double my investment (72 / 5 = 14.4).




As always, I’m more than happy to help you run some numbers and evaluate how your mortgage and home equity scenario can help you budget for retirement!  Please call or email me if you have any questions.


Chris Freck MBA CMPS
Chris Freck MBA CMPS
NMLS: 241125
EstaR Mortgage

(510) 463-1003
2413 Webb Avenue, Suite E,
Alameda, California 94501
Corporate NMLS: 1547521
Mutzig Management, Inc dba EstaR mortgage is California Bureau of Real Estate license #2020370. Christopher A. Freck, California BRE license #1454795 with an MLO Endorsement. This material is not from HUD or FHA and has not been approved by HUD or a government agency.         

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Norma J. Elkins
Elite Realty Group - Morristown, TN
Realtor - Elkins Home Selling Team

Retirement is something not too far off for my husband and I so this is good info to have.  Thanks for sharing!

Jan 28, 2019 08:51 AM #1
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Chris,

I have never heard of these rules. Very easy to remember and apply for a quick calculation.

Jan 28, 2019 09:03 AM #2
Chris Freck
EstaR Mortgage - Alameda, CA
EstaR Mortgage, A Bilingual Brokerage

For more information, we can be reached at 510-463-1003


Thank you!

Jan 29, 2019 06:58 AM #3
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EstaR Mortgage, A Bilingual Brokerage
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