Your “FIRE number” is the amount you need invested to cover your living expenses for the rest of your life. Financial independence (FI) means your investments generate enough to pay your bills; “retire early” (RE) is the optional part.
The 4% rule in one line
Take your annual expenses. Divide by your safe withdrawal rate. That is your FIRE number.
At the classic 4% rate, the math is simple: multiply annual spending by 25.
- Spend $40,000/year → need $1,000,000
- Spend $60,000/year → need $1,500,000
- Spend $100,000/year → need $2,500,000
What “safe withdrawal rate” actually means
The 4% rule comes from the Trinity study, which asked: if you withdraw 4% of your portfolio in year one, then increase that amount with inflation each year, how often would you avoid running out of money over 30 years? For a diversified portfolio, historically, very often.
The caveats matter:
- It is a historical result, not a promise.
- It assumes a 30-year horizon. For very early retirement (50+ years), many planners use 3–3.5% to be safer.
- It ignores taxes and fees, which you should model separately.
How to find your number
- Estimate real annual spending — not salary, but what you actually live on.
- Pick a withdrawal rate — 4% is a common default; go lower if you are conservative.
- Run the numbers — our retirement calculator does this and also projects whether your current savings and contributions are on track.
Closing the gap
If your projected savings fall short of your number, you have three honest levers: save more each month, work longer, or spend less in retirement. The most powerful of the three is usually time — which is why the compound interest calculator matters so much when you are decades out.
FIRE is not about deprivation. It is about knowing the number, then designing a life that gets you there.