FIRE, financial independence, retire early, comes down to one target and one speed. The target is the portfolio that can fund your expenses indefinitely; the speed is how fast your savings and returns get you there. Both are set by your expenses far more than your income, which is why the savings rate is the number that matters.
How it is calculated
- FIRE number = annual expenses ÷ safe withdrawal rate. At the classic 4% rule that is 25 times expenses: $48,000 a year needs $1.2 million.
- Annual savings = income − expenses; savings rate = savings ÷ income.
- Real return = (1 + return) ÷ (1 + inflation) − 1. Working in real terms keeps the target in today’s money, so a $1.2 million goal means the purchasing power of $1.2 million today.
- Each year the portfolio grows by the real return and the annual savings are added, until it reaches the FIRE number.
Example
Age 30, $80,000 after tax, $48,000 expenses, $60,000 invested, 7% return, 3% inflation, 4% withdrawal rate. Savings $32,000 a year, a 40% savings rate. FIRE number $1.2 million. Real return about 3.9%. The target is reached in about 22 years, at 52. At a 50% savings rate (expenses $40,000) the target drops to $1 million and arrives in about 17 years.
About the 4% rule
The rule comes from the Trinity Study and Bengen’s work: a portfolio of stocks and bonds survived 30-year retirements in almost every historical period when withdrawals started at 4% of the initial balance and rose with inflation. For retirements of 40–50 years, many planners use 3.25–3.5%, which raises the target to about 30 times expenses. The safe withdrawal rate field lets you choose.
What the model leaves out
Taxes on withdrawals, healthcare costs before state pension age, social security or state pensions (which reduce the target), sequence-of-returns risk in the first retirement years, and the very real possibility that expenses change. Treat the result as a planning horizon, and rerun it every year.
Frequently asked questions
What is a FIRE number?
The portfolio size at which withdrawals at a safe rate cover your expenses. With the 4% rule it is 25 times annual expenses: $40,000 a year needs $1 million.
How long does it take to reach FIRE?
It depends almost entirely on savings rate. At 10% it takes 40+ years; at 30% about 25; at 50% about 15; at 70% under 10. The table above shows the years for your income and starting savings.
Is the 4% rule still safe?
For a 30-year retirement it has held up historically. For longer horizons, lower valuations at the start or no flexibility, 3.25–3.5% is more conservative. Most people also adjust spending in bad years, which improves the odds considerably.
Should I use a real or nominal return?
The calculator takes a nominal return and inflation separately and works in real terms, so the target and income are in today’s money. If you already have a real return in mind, enter it with inflation set to 0.
What counts as expenses?
Everything you spend in a year, including housing, but not savings and not income tax on employment (which stops). Retirement expenses may differ: no commute, but possibly more travel and healthcare.
Read more
- Lean FIRE vs Fat FIRE vs Coast FIRE: the numbers behind eachLean, regular and fat FIRE differ in one number, what you spend, and Coast and Barista FIRE are not spending levels at all. The target for each, how long it takes at different savings rates, and where the labels come from.
- How much do you need invested to live on dividends?The capital behind $1,000, $2,000 or $5,000 a month, at yields from 2% to 7%, and what it takes to build it from a normal salary. With the arithmetic laid out and the catch in the high-yield column explained.
Sources
- Bengen WP. Determining Withdrawal Rates Using Historical Data. Journal of Financial Planning, 1994
- Cooley, Hubbard, Walz. Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable (Trinity Study), 1998
- Mr. Money Mustache: The Shockingly Simple Math Behind Early Retirement
By Calcelate Team. Formula from the sources above.
- 2026-09-14 · Formula and texts checked