FIRE Calculator — Find Your Financial Independence Number
What is a FIRE Number?
Your FIRE (Financial Independence, Retire Early) number is the total amount of invested money you need to cover your living expenses indefinitely. Once your portfolio reaches this threshold, the returns generated by your investments should be enough to sustain your lifestyle without needing to actively work.
Most FIRE calculations are based on the 4% Rule (originating from the Trinity Study). This rule suggests that you can safely withdraw 4% of your initial portfolio value each year, adjusted for inflation, with a high probability that your money will last for at least 30 years.
How to Calculate Your FIRE Number
The simplest way to determine your target is to multiply your annual expenses by 25. For example, if you spend $40,000 per year:
- $40,000 × 25 = $1,000,000 FIRE Number
If you want to be more conservative and use a 3% or 3.5% withdrawal rate, you would multiply your expenses by 33.3 or 28.5, respectively.
Tips to Reach Financial Independence Faster
Reaching your FIRE number is a function of three main levers: how much you spend, how much you earn (and therefore save), and the return on your investments.
- Increase your savings rate: Your savings rate is the most powerful predictor of when you will reach financial independence. A higher rate means you are both saving more and learning to live on less.
- Optimize your expenses: Focus on the "Big Three" — housing, transportation, and food. Cutting costs in these areas yields the highest impact on your bottom line.
- Invest consistently: Time in the market beats timing the market. Automate your investments into low-cost, broad-market index funds to capture long-term growth.