FIRE number calculator: how much do you need

Or try it now: use the free interactive FIRE number & years-to-FI calculator. It runs in your browser, nothing is sent anywhere, and you can download the projection as a CSV. It is an educational tool, not financial advice.

What this article is, and what it is not

A FIRE number, as the term is commonly used, is an estimate of how large a portfolio someone might want before living on withdrawals from it. FIRE stands for “financial independence, retire early,” but the arithmetic is also used by people who have no plan to retire early and simply want a rough yardstick. This guide explains the usual formula, how a simplified calculator turns that formula into a time estimate, and why the result is not a promise.

It is a description of a tool. It is not financial, tax, or investment advice, not a forecast, and not a recommendation to retire, to invest, or to use any particular withdrawal rate or return. Withdrawals and investment returns are not guaranteed. If you need advice, speak with a qualified adviser who can look at your own situation.

The usual FIRE-number formula

The estimate people most often write down is:

• FIRE number = annual spending ÷ withdrawal rate

Annual spending is the amount you expect to spend in a year, in today’s currency, once work income is no longer the main source. The withdrawal rate is a percentage you type in, expressed as a decimal in a spreadsheet (4% is 0.04). Dividing spending by that rate gives a portfolio size which, in this simplified model, would support that spending if you could withdraw that percentage each year.

Illustration only, with fictional figures: if annual spending is 40,000 and the withdrawal rate you enter is 4% (0.04), the FIRE number is 1,000,000. If spending is 36,000 at the same rate, the number is 900,000. If you enter 3% instead of 4%, the same 40,000 of spending implies about 1,333,333. The sheet is doing division. It is not telling you that 4%, or any other rate, will last.

About the 4% figure you will see elsewhere

A 4% withdrawal rate is often mentioned because of historical research on US stock and bond portfolios, sometimes called the “4% rule” and associated with work such as the Trinity study. That research asked whether a given withdrawal rate would have lasted over long retirements in past market data. Past results are not a guarantee of future results. Markets, inflation, fees, taxes, and life expectancy can all differ from the conditions in a study.

Some people type a lower rate because they want a wider margin, or a higher one because they expect to spend flexibly. A calculator should not hide that this is your assumption. A reasonable workbook pre-fills 4% only as a common starting point and lets you change it. It should not present 4% as a recommended or safe rate.

Spending is the other half of the fraction, and it is the part you can observe more directly. A FIRE number based on a year that included a wedding and a new roof will be larger than one based on a quiet year. Many people use a planned annual budget, not last year’s unusual total. If your spending is still a guess, the number is a guess too. A monthly budget that you have actually kept for a while is a more solid input than a round figure you hoped was right.

From a number to a time estimate

Some calculators also estimate how many years it might take to reach the number, using three further inputs you type yourself:

• The current portfolio value (what you would include in that pot today)
• A monthly contribution you expect to add
• An expected annual return, as a percentage you assume, not one the file can know

A simplified model might apply the return once a year and add twelve contributions at the end of the year, or use a similar year-end shortcut. That is easier to follow than a full month-by-month simulation, and it is also less precise. Inflation is often left out. Taxes, fees, and changing contributions are often left out. A model like that can illustrate the direction of the arithmetic. It cannot tell you what your portfolio will do.

Illustration only: if the FIRE number is 1,000,000, the current portfolio is 100,000, the monthly contribution is 1,000 (12,000 a year), and you type an expected return of 5% as an example assumption, a year-end model would grow the pot and add contributions until the balance reaches or passes 1,000,000, then report the number of years. A different return, a different contribution, or a different spending figure will change the result, sometimes by a decade or more. If the return you enter is zero and contributions never catch the number, the estimate should come back blank or “not reached,” not a made-up date.

What the estimate leaves out

Real life is messier than a single rate. Inflation can raise future spending. Taxes on withdrawals depend on the account type and the country. Fees reduce returns. A sequence of poor market years early on can matter more than an average return. Housing, health costs, and family changes can move annual spending by more than a small change in the withdrawal rate. None of that means the formula is useless. It means the output is a sketch, and a sketch should be labelled as one.

It also helps to keep the portfolio used in the calculator consistent with how you track net worth. If your net-worth file includes a home you plan to keep living in, you may not want to treat the full net worth as a withdrawable portfolio. Many people use a narrower pot — investments intended for this purpose — as the calculator’s starting value. The spreadsheet will not know the difference unless you choose the starting figure with care.

How to set up a small calculator yourself

In a blank sheet, reserve input cells for annual spending, withdrawal rate, current portfolio, monthly contribution, and expected return, and label them as inputs. The FIRE number is spending divided by the rate (leave it blank if the rate is zero). A years-to-go estimate can be a schedule of year-end balances. Write next to it that inflation and taxes are not included and that the return is an assumption. If a workbook ships with an example return filled in, that number should be marked as an example; a blank file should leave it empty for you to type.

Use it as a check, then put the file away

The practical use of a FIRE calculator is to see how the number moves when spending moves, and how sensitive the time estimate is to the return you typed. That can be a reason to look more carefully at a budget, or to be cautious about a plan that only works at an optimistic rate. It is not a reason to change investments on the basis of a spreadsheet alone.

Keep the file modest: no bank or broker connection, and no account numbers or passwords stored in it. This remains a calculator you typed numbers into, not a plan prepared for you.