How to Calculate Your FIRE Number with the 4% Rule
Estimate your FIRE number using annual expenses, safe withdrawal rates, inflation, and early retirement planning assumptions.
Key takeaway
Bottom-line answer
A FIRE number is the investment corpus needed to cover retirement expenses without relying on active work income.
What is a FIRE number?
A FIRE number is the investment corpus needed to cover retirement expenses without relying on active work income.
How do you calculate FIRE with the 4% rule?
Multiply annual retirement expenses by 25. For example, $40,000 of annual expenses implies a $1,000,000 FIRE target.
Should I use 4% or a lower withdrawal rate?
Use 4% as a starting benchmark, then test lower rates like 3.5% or 3% for longer retirements, volatile markets, or higher uncertainty.
Decision checklist
- 1.Estimate realistic annual expenses after retirement.
- 2.Choose a withdrawal rate and inflation assumption.
- 3.Include taxes, healthcare, housing, and emergency buffers.
- 4.Compare Lean FIRE, regular FIRE, and Fat FIRE targets.
Best for
People building a clear target for financial independence and early retirement.
Watch out
Long retirements, healthcare costs, and market sequence risk can make a simple 4% estimate too optimistic.
Test the numbers
Use the related VVmatrix calculator to test this decision with your own assumptions, then compare the result with official documents or a qualified adviser.