How much do I need to retire?
Multiply your annual spending by 25. If you spend $60,000/year, you need $1,500,000. This is the 4% rule from the Trinity Study (1998) — withdraw 4% annually with a 95%+ historical success rate over 30 years.
Formula
FIRE Number = Annual Spending × 25
Example
Spending $80,000/year → need $2,000,000. If you also expect $24,000/year from Social Security at 67, you only need to cover $56,000 from your portfolio → $1,400,000.
How it works in detail
The exact amount depends on three factors: your expected annual spending, how long your retirement will last, and your risk tolerance. The 4% rule assumes a 30-year retirement with a 50/50 stock/bond portfolio. For early retirees (40+ year retirements), many planners use 3.5% or $1M per $35,000 of spending. You should also factor in Social Security income (reduces the portfolio needed), pension income, healthcare costs before Medicare at 65, and inflation.
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What is the 4% rule for retirement?
The 4% rule says you can withdraw 4% of your portfolio in year one of retirement, adjust for inflation each year, and have a 95%+ probability your money lasts 30 years. It comes from William Bengen's 1994 research, later confirmed by the Trinity Study (1998).
What is a FIRE number and how do I calculate mine?
Your FIRE number is 25× your annual spending — the portfolio size where a 4% withdrawal covers your expenses indefinitely. If you spend $50,000/year, your FIRE number is $1,250,000. It's the threshold for financial independence.
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