Geographic Arbitrage Calculator
See how much you'd save and how much your FIRE target would shrink by relocating to a lower-cost city, using cost-of-living indices. Runs in your browser.
Geographic arbitrage
- Equivalent expenses in target
- $49,000/yr
- Annual savings from moving
- $21,000
- 10-year savings
- $210,000
- FIRE target reduction (25×)
- $525,000
Geographic arbitrage = earning/saving in a high-cost area (or keeping a remote salary) while living in a lower-cost one. Equivalent expenses = current × (target index ÷ current index); the FIRE target drops by 25× the annual saving. Indices are approximate composites — verify a current local index. Ignores taxes, moving costs, and quality-of-life. Informational, not financial advice.
About this tool
Geographic arbitrage is the strategy of earning at a high-cost-area pay scale — or keeping a remote salary — while living somewhere cheaper, capturing the difference as savings. This calculator quantifies the move. Using cost-of-living indices (US average = 100), it scales your current expenses to what the same lifestyle would cost in a target city, then shows the annual savings, a ten-year projection, and — the part that matters most for early retirement — how much smaller your FIRE nest egg target becomes, since every dollar of reduced annual spending cuts the target by 25× under the 4% rule. Moving from a top-tier metro to a mid-cost city, or abroad, can shave hundreds of thousands of dollars off the portfolio you need and pull financial independence years closer. The indices are approximate composites dominated by housing, which varies sharply by neighborhood, and a custom option lets you enter a specific figure. It ignores state and local taxes, moving costs, and quality-of-life factors, which all matter for a real decision. It is informational, not financial advice. Everything runs in your browser.
How to use it
- Enter your current annual expenses.
- Select your current city and a target city (or Custom with an index).
- Read the equivalent expenses, annual savings, and FIRE-target reduction.
- Factor in taxes, moving costs, and lifestyle before deciding.
Frequently asked questions
- What is geographic arbitrage?
- Living in a lower-cost location while maintaining higher-cost-area income — for example keeping a remote big-city salary while living in a cheaper city or country. The cost gap becomes savings, accelerating wealth building and financial independence.
- How is the savings calculated?
- Your expenses are scaled by the ratio of the two cost-of-living indices: equivalent expenses = current × (target index ÷ current index). The difference from your current expenses is the annual saving, and 25× that saving is the reduction in your FIRE target.
- Why does relocating shrink my FIRE number so much?
- Because the FIRE target is 25× annual spending (4% rule). Cutting living costs by, say, $20,000/year reduces the nest egg you need by about $500,000 — a huge effect that can move financial independence years earlier.
- How accurate are the indices?
- They are approximate composites and housing-dominated, so they vary by neighborhood and over time. For a real decision, look up a current index for both specific places (or use the Custom option) and price your actual housing and lifestyle.
- What does this leave out?
- State and local income taxes (which can differ dramatically), one-time moving costs, healthcare access, and quality-of-life and social factors. Arbitrage abroad also raises visa, banking, and tax-residency questions. Treat the savings as one input among many.
- Is this financial advice?
- No. It is an informational estimate. Consult a financial (and possibly tax) advisor before relocating for financial reasons.