How to Calculate Your FIRE Number (the 4% Rule, Explained)
Your FIRE number is the portfolio size that can fund your lifestyle indefinitely without you working. The shortcut: annual expenses × 25. Spend $48,000 a year? Your number is about $1.2 million.
Where 25× comes from: the 4% rule
The 25× multiple is the inverse of the 4% safe withdrawal rate (SWR). The Trinity Study examined 30-year retirements and found that withdrawing 4% of a balanced portfolio in year one, then adjusting for inflation, survived about 95% of historical periods. Withdraw 4% a year and you need 100 ÷ 4 = 25 times your annual spending.
Want to be more conservative? Lower the rate. A 3.5% SWR means 28.5×; a 3% SWR means 33×. Lower rates trade a larger target for more safety against bad markets.
Step 1 — Nail your real annual expenses
This is the number that matters, not your income. Add up housing, food, transport, utilities, healthcare, and everything else, then multiply by 12. Be honest — understating expenses is the most common way people miscalculate their FIRE number.
Step 2 — Subtract guaranteed future income
Pensions, Social Security, and annuities reduce how much your portfolio has to cover. A $2,000/month pension is worth $24,000/year — at the 4% rule that's equivalent to $600,000 of portfolio you don't need to save. Subtract that income from expenses before applying the multiple.
Step 3 — Apply the multiple
(Annual expenses − guaranteed income) × your multiple = your FIRE number. FinFire does this live and also computes Lean FIRE (a bare-bones budget), Fat FIRE (1.5× comfortable), and Coast FIRE (the point where you can stop contributing and let compounding finish the job).
Step 4 — Estimate your timeline
Your years-to-FIRE depends on three things: your current invested balance, how much you invest each month, and your assumed real return (5% inflation-adjusted is a conservative default; 7% nominal is the historical average). Your savings rate matters far more than your income — someone saving 50% of take-home reaches independence in roughly 17 years from zero; at 10% it's over 50.
A worked example
Expenses $50,000/year, a future Social Security benefit of $18,000/year, 4% SWR: ($50,000 − $18,000) × 25 = $800,000. With $200,000 invested and $2,000/month added at a 5% real return, that's roughly 16 years away.
Run your own numbers in FinFire →
Frequently asked questions
- How do I calculate my FIRE number?
- Multiply your annual expenses (minus any guaranteed income like a pension) by 25, which corresponds to a 4% safe withdrawal rate. For more conservatism, use a 3–3.5% rate, which means a 28–33× multiple.
- Is the 4% rule still safe?
- The 4% rule comes from the Trinity Study of 30-year retirements and succeeded about 95% of the time historically. Early retirees with 40–50 year horizons often use 3.25–3.5% for extra margin, or stay flexible by trimming spending in down years.
- What is Coast FIRE?
- Coast FIRE is the point at which your invested balance is large enough to grow into your full FIRE number by retirement age with no further contributions — you only need to cover current expenses from then on.