TikTok Star Says His Formula Is Essential to Early Retirement — Could It Work for You?
Written by
Laura Beck
Edited by
Molly Sullivan
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TikTok star Austin Hankwitz has built quite a following by breaking down complicated financial concepts into easy-to-digest bite-sized videos. His latest viral content focuses on a surprisingly simple formula for early retirement that he says, “might be easier than you think.” The question is: Is it? And could it work for you?
Well, according to Hankwitz, most people overcomplicate what retirement actually means. “Retirement means your portfolio income is more than your essential spending. That is it. That is what retirement means,” he explained.
His example makes it sound almost too simple: “If your portfolio generates $70,000 a year and your essential spending is $60,000 a year, congrats, you are retired by definition, right? You’re spending $5,000 a month. Your portfolio pays you $6,000 a month. You are retired.”
Let’s see if the math adds up.
The FIRE Framework
Hankwitz is promoting what’s known as the Financial Independence Retire Early (FIRE) movement, which “lays out how practically anyone can retire early.” His step-by-step breakdown focuses on two key calculations that form the foundation of early retirement planning.
“Step number one is to quantify your annual essential spending and then multiply that number by 20,” Hankwitz said. Using his $60,000 annual spending example, he multiplies by 20 to get $1.2 million. “This $1.2 million figure is how much you need to save and invest to retire before 65.”
The math behind this “multiply by 20” rule comes from a 5% withdrawal rate theory. If you can safely withdraw 5% of your investment portfolio annually without depleting it, then having 20 times your annual expenses saved should theoretically fund your retirement indefinitely.
The Investment Timeline
Hankwitz claims the path to early retirement is more achievable than people think. He said that “if you started at zero dollars at 30 years old, for 17 years, investing $1,800 a month, you would get to that $1.2 million figure.”
This calculation is much more realistic than typical get-rich-quick schemes. Investing $1,800 monthly for 17 years totals $367,200 in contributions. Reaching $1.2 million would require an average annual return of roughly 12%-13%, which is higher than the historical stock market performance over long periods.
Also, $1,800 invested per month represents $21,600 annually — no small feat. This type of financial commitment would require either a large income or major cost-cutting for most Americans.
The Portfolio Strategy
Hankwitz offered some practical advice about portfolio management during the wealth-building phase versus retirement. “Now that we have $1.2 million invested, we need to switch our portfolio from growth to income to cover your annual essential spending,” he explained.
He specifically mentioned FIRE Funds Wealth Builder ETF, noting that its wealth builder ETF is up about 5% this year, compared to the S&P’s only 0.8%.
The concept of switching from growth-focused investments during accumulation to income-focused investments during retirement is sound financial planning, though individual circumstances vary significantly.
Does This Formula Actually Work?
The FIRE movement has legitimate success stories, but Hankwitz’s simplified presentation glosses over several critical factors:
Income requirements: To consistently invest $1,800 monthly, you’d likely need a household income of $80,000-plus after accounting for taxes and basic living expenses.
Stock market performance: To reach $1.2 million based on the suggested contributions, you would need pretty high returns — higher than usual.
Healthcare costs: Early retirees lose employer health insurance, which can easily cost $1,000-plus monthly for coverage. It’s an expense that’s not covered in the calculations.
Market volatility: Retiring early means your portfolio has less time to recover from market downturns, making sequence-of-returns risk a concern.
Lifestyle inflation: The calculation assumes you can maintain the same spending level indefinitely, but costs like healthcare typically increase with age. (And that’s not even touching on regular inflation.)
Economic uncertainty: The formula assumes consistent market returns and stable employment for 17 years — which is often a dangerous assumption.
The moral of the story is, no retirement strategy is one size fits all. If you think this could work for you, great. If not, there are plenty of other paths to financial freedom in retirement.
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