Varied parameter
Income tax rate
0% → 30%
Income Tax Comparison
Software engineer in Madrid · Starting late
This page compares financial outcomes for a Software engineer living in Madrid, Spain, following the Starting late life scenario.
A financial life that begins later, leaving fewer years for compounding to work. Success relies on disciplined saving, steady income, and sustained focus over a shorter horizon.
Madrid concentrates many higher-paying roles and business opportunities, with a correspondingly higher urban cost structure.
The comparison focuses on how changing the Income tax rate influences long-term results, while all other assumptions remain constant.
Simulation Overview
Base scenario assumptions
- The simulation starts at age 40 and runs until age 65.
- The initial annual labor income is €27,720.
- Labor income grows annually at an average rate of 4%.
- The labor income tax rate varies between 0% and 30%.
- The saving rate is set to 20%.
- Minimum annual living expenses are €14,160.
- Savings are invested with stochastic annual returns.
- The average annual return is 5%, with year-to-year variability.
- All values are expressed in real terms, assuming average annual inflation of 2%.
- The simulation includes stochastic life events such as unemployment, and health issue.
- These events may temporarily affect income, expenses, or net worth.
- Financial independence is defined as having net worth equal to 25 times annual expenses.
- Bankruptcy is triggered if net worth remains below €0 for 2 consecutive years.
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Scenario Comparison
Results are shown as a realistic range. P10 represents a pessimistic outcome, while P90 represents an optimistic outcome. Most simulations fall between these two values.
| Scenario | Median Net Worth | P10 Net Worth | P90 Net Worth | FI Probability | FI Median Age |
|---|---|---|---|---|---|
| 0% | 384,729 | 266,737 | 549,605 | 65% | 62 |
| 10% | 344,035 | 238,764 | 488,542 | 48% | 62 |
| 20% | 303,150 | 209,910 | 428,484 | 31% | 63 |
| 30% | 260,706 | 180,642 | 369,903 | 14% | 63 |
How Your Financial Life Evolves
These charts show how each scenario affects long-term outcomes, including expected wealth, downside risk, and the likelihood of achieving financial independence.
Net Worth Median
Net Worth Range
Fi Probability
Fi Median Age
