How do I calculate my FIRE number?
Your FIRE number is your expected annual retirement spending multiplied by 25, assuming a 4% withdrawal rate. For example, if you plan to spend $50,000 per year in retirement, your FIRE number is $1,250,000. Adjusting to a 3.5% rate for early retirement raises it to approximately $1,430,000.
Formula
FIRE Number = (Annual Spending − Guaranteed Annual Income) ÷ Withdrawal Rate Simplified at 4%: (Annual Spending − Guaranteed Income) × 25
Example
Annual spending: $70,000. Social Security (future, inflation-adjusted): $15,000. Net portfolio-funded spending: $55,000. FIRE number at 4%: $55,000 × 25 = $1,375,000. At 3.5% (for retiring at 40): $55,000 ÷ 0.035 = $1,571,429.
How it works in detail
Calculating your FIRE number is a four-step process: 1. Estimate annual retirement spending. Start with your current take-home pay or itemize expected costs. Remove work-related expenses (commuting, work clothes, lunches) and add leisure, healthcare, and travel. Most planners use 70–90% of pre-retirement spending as a baseline, though Lean FIRE targets less and Fat FIRE targets more. 2. Decide your withdrawal rate. The classic 4% rule (Bengen, 1994; Trinity Study, 1998) supports 30-year retirements. For retirements lasting 40–50 years, researchers including Wade Pfau recommend 3.5% or lower. Use 4% if retiring near 60; consider 3.5% or 3.3% if retiring in your 30s or 40s. 3. Apply the formula. Divide annual spending by your chosen withdrawal rate. At 4%, multiply by 25. At 3.5%, multiply by approximately 28.6. 4. Adjust for guaranteed income. Subtract any reliable income streams (Social Security, pension, rental income) from annual spending before multiplying, since those dollars don't need to come from your portfolio. Do not forget to account for inflation. Your spending figure should reflect future purchasing power, not today's dollars. Monte Carlo simulation is the most rigorous way to stress-test your final number across thousands of possible market scenarios.
Run your personalized FIRE number calculation — including Social Security offsets and adjustable withdrawal rates — in Rightmont's FIRE calculator.
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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 safe withdrawal rate for early retirement (40+ years)?
For retirements lasting 40+ years, research suggests 3.25–3.5% is safer than the traditional 4%. A $2M portfolio at 3.5% provides $70,000/year. With dynamic spending (cutting 10–15% in down markets), you can safely withdraw 4–4.5% even over 50 years.
How much money do I need to retire on a lean budget?
A Lean FIRE number is typically $500,000–$800,000, based on annual spending of $20,000–$32,000 and the 4% safe withdrawal rate. To find yours, multiply your planned annual spending by 25. Most Lean FIRE practitioners target spending well below the U.S. median household income.
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