How to Calculate Your FIRE Number
To calculate your FIRE number, divide your expected annual expenses by your safe withdrawal rate. At the classic 4% rate, that's simply 25 times your annual spending. This one number is the finish line of financial independence: once your invested assets reach it, your portfolio can cover your lifestyle indefinitely. Here's how to work it out.
Key takeaways
- FIRE number = annual expenses ÷ safe withdrawal rate.
- At 4%, that equals 25× your annual expenses.
- Every $1,000 you cut from yearly spending drops the target by ~$25,000.
- A lower withdrawal rate (3.5%, 3.25%) means a bigger, safer number.
Step 1: Estimate your annual expenses
Start with what you'll actually spend in a typical retirement year, in today's dollars. Add up housing, food, transportation, insurance, healthcare, and discretionary spending. Adjust for known changes — maybe the mortgage is gone, but travel or health costs rise. This number matters more than your income: FIRE is built on spending, not earning.
Step 2: Pick your withdrawal rate
The safe withdrawal rate is the share of your portfolio you'll draw each year. The benchmark is 4%. If you're retiring early and want more cushion for a 40–50 year horizon, use 3.5% or 3.25%.
Step 3: Do the math
Worked examples at different spending levels and a 4% rate:
- $40,000 expenses ÷ 0.04 = $1,000,000
- $50,000 expenses ÷ 0.04 = $1,250,000
- $80,000 expenses ÷ 0.04 = $2,000,000
Switch to a 3.5% rate and $50,000 of expenses needs about $1,430,000 instead — the safety margin has a price.
Why expenses are the biggest lever
Because the multiplier is 25×, cutting expenses is unusually powerful. Trim $4,000 from your annual spending and your FIRE number falls by roughly $100,000 — and you also free up cash to invest, so you reach the lower target faster. That double effect is why frugality accelerates FIRE more than a raise of the same size.
Frequently asked questions
How do you calculate your FIRE number?
Divide your expected annual expenses by your safe withdrawal rate. At a 4% withdrawal rate this equals 25 times your annual spending. For example, $50,000 ÷ 0.04 = a $1,250,000 FIRE number.
Should I use current or future expenses?
Use the annual expenses you expect in retirement, in today's dollars. Adjust for changes you anticipate — a paid-off mortgage, healthcare, travel — then let inflation be handled by the withdrawal rule.
What withdrawal rate should I use?
4% is the traditional benchmark and gives a 25× target. Early retirees with a 40-plus year horizon often use 3.5% (about 29×) or 3.25% (about 31×) for a larger safety margin.
Related: What Is the 4% Rule? · What Is a Good Savings Rate? · FIRE Calculator