The formula
How to calculate fIRE number
Your FIRE number is the portfolio large enough that withdrawals from it cover your spending indefinitely. At a 4% withdrawal rate it works out at 25 times your annual expenses — the single figure the whole financial independence idea rests on.
The 4% figure comes from the Trinity Study, which tested historical US market returns and found that a portfolio of stocks and bonds survived a 30-year retirement in the large majority of cases when the first year's withdrawal was 4% of the balance and then rose with inflation.
What to enter:
- Annual spending — what you expect to spend each year once you stop working
- Withdrawal rate (%) — 4% is the Trinity Study default; 3.25–3.5% is the cautious end
The result updates on every keystroke. The URL updates too, which makes the filled-in version easy to bookmark or send to someone else.
Worked example
Here is the calculation with the starting values:
- Annual spending: 40,000
- Withdrawal rate: 4 %
That gives:
- FIRE number: 1,000,000
- Years of spending: 25 ×
- Monthly income it supports: 3,333.33
Reading the result
Notice that the target is driven by spending, not income. Cutting £5,000 a year from your budget lowers the number by £125,000 at 4% — usually far easier than saving another £125,000.
Where this goes wrong. The 4% rule was built for a 30-year retirement. Retiring at 40 means planning for 50 years or more, and the sustainable rate at that horizon is closer to 3.25–3.5%, which raises the target by around 20%.
Because 25 is the reciprocal of 4%. Withdrawing 4% a year is the same as needing 25 years of spending in the pot, with market growth expected to replace what you take out.
No. A home you live in produces no income to withdraw. Include it only if you plan to sell and release equity, and in that case count the expected net proceeds, not the market value.
The answer it gives you is fIRE number. With 40,000 annual spending and 4 % withdrawal rate, that comes to 1,000,000. Change any field and the figure moves with it.