What is the 25x rule for retirement?
The 25x rule says you need to save 25 times your annual expenses to retire safely. It is derived from the 4% safe withdrawal rate: if you withdraw 4% of your portfolio each year, a portfolio 25x your expenses lasts 30+ years with high historical success rates.
Formula
FIRE Number = Annual Expenses × 25 (equivalent to: Annual Expenses ÷ 0.04)
Example
You spend $80,000 per year. $80,000 × 25 = $2,000,000 FIRE number. At 4% withdrawal, year-one withdrawal = $2,000,000 × 0.04 = $80,000, matching your spending exactly.
How it works in detail
The 25x rule is the most widely cited shorthand in retirement planning, originating from William Bengen's 1994 research and later popularized by the Trinity Study (Cooley, Hubbard, and Walz, 1998). Both found that a 4% annual withdrawal from a diversified stock-bond portfolio survived 30-year retirements in approximately 95% of historical scenarios. The math is simple: divide your annual spending by 0.04, which equals 25 times that amount. A household spending $60,000 per year needs $1,500,000 saved. Caveats matter significantly. The original research modeled 30-year retirements for people retiring at 65. Early retirees with 40- or 50-year horizons face meaningfully higher failure rates at 4%, which is why researchers like Wade Pfau and Michael Kitces suggest early retirees consider a 3.5% or even 3.3% withdrawal rate — implying a 28x to 30x rule instead. Sequence-of-returns risk is the main threat: a market downturn in the first five years of retirement can permanently impair a portfolio even if long-run returns are strong. The 25x rule is an excellent starting target, but retirees should stress-test it with Monte Carlo simulation and build in flexibility.
Use Rightmont's FIRE Number calculator to apply the 25x rule to your exact income and spending.
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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.
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.
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