What is the FIRE number?
Your FIRE (Financial Independence, Retire Early) number is the investment portfolio size needed to cover living expenses indefinitely. Using the 4% rule, multiply your annual expenses by 25. For example, $50,000/year in expenses requires a $1.25 million portfolio to achieve financial independence.
Formulas & Methodology
FIRE Number
FIRE Number = (Annual Expenses − SS Income) × (1 ÷ SWR) At a 4% safe withdrawal rate the FIRE number equals 25× effective expenses. Social Security income reduces the required portfolio directly.
Coast FIRE
Coast = FIRE Number ÷ (1 + real return)^years to retirement The current portfolio value that will grow to the FIRE number by retirement with zero additional contributions.
Years to FIRE
n = ln[(FV × r + S) / (PV × r + S)] ÷ ln(1 + r) Where FV = FIRE number, PV = current savings, r = real return, S = annual contribution.
Real Rate of Return
Real Return = (1 + Nominal) ÷ (1 + Inflation) − 1 Adjusts investment returns for inflation to express growth in today's purchasing power.
Key Terms
- FIRE Number
- The total investment portfolio needed to fund retirement indefinitely. Calculated as 25× annual expenses at 4% SWR, reduced by any Social Security income.
- Safe Withdrawal Rate (SWR)
- The percentage of your portfolio you can withdraw annually. The classic 4% rate comes from the Trinity Study.
- Coast FIRE
- When existing investments compound to your full FIRE number by traditional retirement without any additional savings.
- Barista FIRE
- A hybrid approach where you semi-retire and work part-time. The portfolio only needs to cover ~60% of expenses.
- Sequence of Returns Risk
- The danger that poor market returns early in retirement deplete your portfolio faster than expected.
- Savings Rate
- The percentage of gross income saved. FIRE adherents typically target 50–70% savings rates to accelerate the timeline.
Worked Examples
Standard FIRE Path
Profile: Age 30, $50k saved, $120k income, $45k spending, 7% return, 3% inflation.
FIRE Number: $45,000 × 25 = $1,125,000. Real return = 3.88%. Annual savings ≈$75k. Reaches FIRE in approximately 11 years (age 41).
Social Security Boost
Profile: Same as above, but with $2,000/mo SS at age 67.
Effective expenses: $45k − $24k = $21k/yr. FIRE Number: $21,000 × 25 = $525,000 — less than half the original target.
Lean vs. Fat FIRE
Lean: $30k/yr × 25 = $750k needed — faster but requires frugal lifestyle.
Fat: $120k/yr × 25 = $3M needed — 4× more. Often adds 10–15 years to the timeline.
FIRE Variant Comparison
| Variant | Annual Budget | Target Portfolio | Savings Rate | Timeline |
|---|---|---|---|---|
| Barista FIRE | Part-time supplements | 50–70% of FIRE | 30–40% | 8–12 yrs |
| Lean FIRE | $25k–$40k | $625k–$1M | 50–60% | 10–15 yrs |
| Regular FIRE | $40k–$60k | $1M–$1.5M | 50–65% | 12–17 yrs |
| Fat FIRE | $100k+ | $2.5M+ | 60–75% | 15–25 yrs |
| Coast FIRE | N/A (milestone) | Varies by age | High then flexible | 5–10 yrs to coast |
The Complete Guide to Financial Independence
Understanding FIRE Mathematics
The FIRE movement rests on a simple mathematical principle: if your investment portfolio generates enough passive income to cover annual expenses, you no longer need employment income. The 4% rule, derived from the Trinity Study, suggests a diversified portfolio can sustain a 4% withdrawal rate for 30+ years. This means roughly 25× annual expenses saved and invested to achieve financial independence.
The Power of Savings Rate
Your savings rate is the single most important lever — more important than investment returns or income. Someone earning $60k with a 60% savings rate will reach FIRE faster than someone earning $200k at a 20% rate. A high savings rate simultaneously increases the amount invested while decreasing the lifestyle your portfolio must eventually replace. The savings rate gauge in Tab 1 gives you instant visual feedback on where you stand.
State Taxes and Social Security
Two often-overlooked factors dramatically change FIRE outcomes. State income tax can consume 5–10% of gross income, meaningfully reducing annual savings. This calculator models all 50 states with accurate flat/blended rates. Social Security, when eligible, can reduce your required portfolio by $500k or more — because it reduces the annual draw from your investments, directly shrinking the FIRE target.
Stress Testing Your Plan
The biggest risk to early retirees is sequence of returns risk — a major crash in the first years of retirement. Withdrawing from a declining portfolio creates a downward spiral no recovery can fix. Tab 2 lets you run Monte Carlo simulations and stress-test against historical crashes like 2008 or the dot-com bust. The Goal Seeker in Tab 3 helps you work backwards from a retirement age target to find the precise monthly savings needed.