📌 How to Use This Calculator
- Estimated Annual Expenses: Enter the amount of money you expect to spend per year once you stop working. Do not use your current income; use your projected spending.
- Current Invested Assets: Input the total value of your current retirement accounts, brokerage accounts, and other investments.
- Annual Investment Contribution: How much new money are you investing every year?
- Expected Real Return: Enter the expected stock market growth minus inflation. (Historically, a 7% real return is a standard baseline for index funds).
- Safe Withdrawal Rate (SWR): The standard is 4%, based on the Trinity Study. If you want to be extremely conservative, lower it to 3.5%.
Understanding the 4% Rule
The 4% rule is the mathematical backbone of the FIRE movement. Created from the famous "Trinity Study," financial researchers looked at decades of historical stock and bond market data to find a "Safe Withdrawal Rate."
They concluded that if a retiree withdraws 4% of their portfolio in year one, and adjusts that amount for inflation every year after, they have an incredibly high probability of never running out of money over a 30-year span. Because you only withdraw 4%, the remaining 96% of your portfolio stays invested and continues to grow, effectively replenishing what you took out.
Standard FIRE (4% Rule)
Annual Expenses: $50,000
$50k × 25
Conservative FIRE (3.3% Rule)
Annual Expenses: $50,000
$50k × 30.3
💡 The Secret to FIRE: It is not about earning a massive salary; it is about keeping your expenses low. Every $1,000 you permanently cut from your annual spending reduces your required FIRE number by $25,000!
Frequently Asked Questions About FIRE
What does FIRE stand for?
FIRE stands for Financial Independence, Retire Early. It is a financial movement defined by aggressive savings and low-cost index fund investing, allowing people to retire decades before the traditional age of 65.
What is the 4% rule?
The 4% rule is a rule of thumb based on historical stock and bond market data (The Trinity Study). It states that you can safely withdraw 4% of your total invested portfolio in your first year of retirement, and adjust for inflation in subsequent years, without running out of money over a 30-year period.
How do I calculate my FIRE number?
To calculate your FIRE number using the 4% rule, simply multiply your expected annual retirement expenses by 25. For example, if you plan to spend $40,000 per year in retirement, your FIRE number is $1,000,000 ($40,000 x 25).
What is the difference between Lean FIRE and Fat FIRE?
Lean FIRE means retiring with a minimalist, low-expense lifestyle (usually requiring a portfolio under $1M). Fat FIRE means retiring with a high budget for luxury and travel, often requiring a portfolio of $2.5M to $5M or more. Regular FIRE sits in the middle.
How does my savings rate affect my time to retirement?
Your savings rate is the most important metric in FIRE. If you save 10% of your income, you have to work 9 years to buy 1 year of retirement. If you save 50% of your income, every year you work buys you 1 year of retirement, drastically cutting your timeline.
Where should I invest my money for FIRE?
The vast majority of the FIRE community invests in broad-market, low-cost index funds (like VTSAX or VTI) because they provide instant diversification across the entire stock market, have extremely low fees, and historically yield consistent long-term growth.