What is the Rule of 25 for retirement?
The Rule of 25 states you need to save 25 times your annual expenses to retire safely. For example, if you spend $60,000 per year, you need $1,500,000 invested. It is the inverse of the 4% safe withdrawal rate from the 1994 Bengen study.
Formula
Retirement Number = Annual Expenses × 25
Example
A couple spending $80,000 per year needs $80,000 × 25 = $2,000,000 to retire under the Rule of 25. If they receive $20,000 per year in Social Security, their gap drops to $60,000, reducing their required portfolio to $60,000 × 25 = $1,500,000.
How it works in detail
The Rule of 25 is a quick-estimate framework for calculating your retirement number based on the landmark 1994 research by William Bengen, who found that a 4% annual withdrawal from a balanced portfolio had never been depleted over any historical 30-year period. Since 4% is one-twenty-fifth of your portfolio, your target nest egg is simply 25× your annual spending. The rule assumes a 50–75% stock / 25–50% bond allocation, a 30-year retirement horizon, and inflation-adjusted withdrawals. It does not account for Social Security income, pensions, or part-time work — all of which can reduce your required multiple. If you plan to retire before 55 and need a 40- or 50-year portfolio, researchers like Wade Pfau and Michael Kitces recommend a more conservative 28–33× multiple (roughly a 3.0–3.5% withdrawal rate) to account for the additional sequence-of-returns risk over a longer horizon. Use the Rule of 25 as a fast sanity check, not a final plan. Your actual number depends on healthcare costs, tax strategy, asset allocation, and whether you're willing to flex spending in down-market years. Run a Monte Carlo simulation to pressure-test any specific target.
Use Rightmont's FIRE Number Calculator to apply the Rule of 25 to your exact spending and income.
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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 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.
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.
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