How to Calculate Your FIRE Number

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What FIRE Is — and Why the Number Comes First

FIRE (Financial Independence, Retire Early) is the strategy of saving and investing a large share of income — often 50%–70% — until your portfolio can cover your living costs indefinitely, so that work becomes optional years or decades before 65. Everything in a FIRE plan hangs off one figure: the portfolio size at which that becomes true. That figure is your FIRE number, and it rests on the 4% safe withdrawal rate that came out of William Bengen's 1994 research and the later "Trinity Study": historically, a diversified stock-and-bond portfolio sustained an initial 4% withdrawal, raised each year for inflation, across 30-year retirements with a very high success rate. Four steps turn that rule into your number and your timeline.

Step 1: Calculate Your Annual Expenses

Your FIRE number is based on your spending, not your income. Before you can calculate your target, you need to know how much you actually spend in retirement. This isn't the same as your current expenses — it's your expected retirement spending, which may be higher or lower.

Common adjustments: housing costs often decrease (mortgage paid off, downsizing), but healthcare costs significantly increase before Medicare at 65. Travel often increases in early retirement. Work-related costs (commuting, professional clothing, convenience food) disappear. A reasonable starting estimate: 80%–90% of pre-retirement spending for most people, though FIRE practitioners often target 70%–80% through lifestyle optimization.

Budget Healthcare Explicitly If You'll Retire Before 65

For US early retirees, health insurance before Medicare eligibility is the biggest line item most FIRE plans underestimate. ACA marketplace premiums vary widely by age, location and income, and because premium subsidies depend on your modified adjusted gross income, many early retirees manage Roth conversions and capital gains to keep MAGI low. As a planning placeholder, budget roughly $15,000–$25,000 a year for a couple before Medicare, and assume healthcare costs rise faster than general inflation.

Step 2: Apply the 25× Formula

FIRE Number = Annual Retirement Expenses × 25

This comes from the 4% safe withdrawal rate (1 ÷ 4% = 25). At 25× your expenses, you can withdraw 4% annually (inflation-adjusted) with historically high odds of never depleting the portfolio over 30 years.

For early retirees with 40–50 year horizons, many practitioners use 28× (3.5% rate) or 31× (3.25% rate) for a larger safety buffer.

Step 3: Adjust for Social Security

Social Security income directly reduces how much your portfolio must generate. Every $1,000/month in Social Security reduces the required portfolio by $300,000 at the 4% rule. Even a modest $1,500/month benefit cuts $450,000 from your FIRE number.

Very early retirees (retiring at 35–45) typically ignore Social Security for their initial calculations — they'll need to self-fund for 20–30 years before claiming — but treat it as a floor that kicks in at 62–70. Someone retiring at 55 with a 15-year gap before Social Security at 70 needs a larger interim portfolio than their FIRE number at full retirement implies.

Step 4: Calculate Your Timeline

Time to FIRE is driven overwhelmingly by your savings rate. The math follows directly: your savings rate determines both how fast wealth accumulates and implicitly what your FIRE number is (lower spending = lower target). The dual effect is why savings rate is so powerful:

Two consequences follow. First, FIRE isn't only for high earners: a teacher earning $55,000 who saves 40% and lives on $33,000 is on the same roughly 22-year timeline as an engineer earning $150,000 who saves 40% and spends $90,000 — income only sets the size of the numbers. Second, measure your savings rate the way the table does: as a share of take-home pay (plus any pre-tax 401(k) or IRA contributions), because the model assumes that whatever you don't save, you spend.

Choosing Your FIRE Path

Every variant of FIRE uses the same formula; they differ in the spending target you plug into it, or in whether you need the full number at all.

LeanFIRE, Regular FIRE and FatFIRE

LeanFIRE (under $40K a year, a FIRE number under $1M) is the fastest to reach but the least forgiving: it usually relies on minimalism or geographic arbitrage, and an unexpected expense or a bad market year takes a bigger proportional bite. Regular FIRE ($50K–$80K a year, $1.25M–$2M) is the middle path. FatFIRE ($100K+ a year, $2.5M+) preserves a high standard of living and typically takes a household income of $150,000+ with a 40%–60% savings rate — but the larger portfolio leaves a real cushion against poor early returns and surprise costs.

Coast FIRE

Coast FIRE is the point at which you could stop contributing entirely and compound growth alone would still carry your portfolio to your full FIRE number by a traditional retirement age. After that, you only need to earn enough to cover current expenses. The test: Coast number = FIRE number ÷ (1 + real return)^{years to retirement}. If you need $1.5M at 67 and you're 35, that's 32 years of growth: about $232,000 invested today at a 6% real return, or about $172,000 at 7%.

Barista FIRE

Barista FIRE means leaving your main career for part-time or low-stress work that covers part of your spending, so the portfolio only has to fund the rest. The effect on the target is proportional: if part-time income covers half of a $60,000 budget, the portfolio only needs to produce $30,000 — 12.5× your total expenses ($750,000) instead of 25× ($1.5M). It's also one of the most effective defenses against a bad start to retirement, because it reduces or eliminates withdrawals when markets are down.

Stress-Test Your Number: Sequence-of-Returns Risk

The main danger to a FIRE plan isn't average returns over decades — it's a severe market drop in the first few years of retirement. Withdrawing 4% from a portfolio that has just fallen 30%–40% sells assets at the bottom and can permanently shrink what's left to recover. Early retirees face this risk for longer than traditional retirees, which is why many plan with a 3.5% rate (28.6×) and add at least one of these buffers:

• A cash reserve of one to two years of spending, so you're not forced to sell stocks in a downturn.
• Flexible withdrawals — for example, cutting spending by about 10% in years after the market falls.
• A small income stream (the Barista approach) that covers part of your costs in the early years.
• A 10%–20% spending buffer above your estimate, because budgets tend to drift up with moves, children, health or simply wanting more comfort after years of frugality.

Once you hit your FIRE number, the Retirement Income Calculator shows exactly how much monthly income that portfolio can sustainably generate at different withdrawal rates. For the accumulation side, the FIRE Number Calculator shows your target, timeline, and year-by-year progress.