What is FIRE?
FIRE stands for Financial Independence, Retire Early. Financial independence (FI) means your investments can cover your living costs, so working becomes optional. Whether you actually retire early is up to you; the calculator shows when you'd have the choice.
Your FI number and the 4% rule
Your FI number is the portfolio size that can support your yearly spending. It comes from your safe withdrawal rate, the share of the portfolio you spend in the first year:
FI number = yearly spending / withdrawal rate
= $48,000 / 0.04 = $1,200,000 (the same as 25 × spending)
The 4% figure comes from historical studies of U.S. stock and bond returns, most famously the 1998 "Trinity study". They found that withdrawing 4% in the first year, then raising the amount with inflation, lasted at least 30 years in most historical periods. For retirements longer than 30 years, many planners use a more cautious 3–3.5%.
How to use this calculator
- Invested Savings: money in retirement and brokerage accounts that you'd live off. Leave out your home and emergency fund.
- Monthly Investing: what you add each month. The calculator assumes you raise it with inflation, so it keeps the same buying power.
- Yearly Spending: what you expect to spend per year once you stop working, in today's dollars.
- Investment Return and Inflation: used to work out your real, after-inflation return. Everything is shown in today's dollars, so the results are easy to compare with your current budget.
Worked example
Using the default inputs: age 30, $50,000 invested, investing $1,500 a month, planning to spend $48,000 a year, with 7% returns, 3% inflation and a 4% withdrawal rate.
- FI number: $1,200,000 in today's dollars.
- Real return: 3.88% a year.
- Time to FI: 30 years 7 months, reaching FI at age 60.
- In future dollars, the target at that point is about $2,963,373, the same buying power as $1.2 million today.
What moves the date the most:
| Change | FI age |
|---|---|
| Default plan | 60 |
| Invest $2,000 a month instead of $1,500 | 56 |
| Spend $40,000 a year instead of $48,000 | 57 |
| Use a more cautious 3.5% withdrawal rate | 63 |
Cutting spending works twice: it lowers the FI number and frees up more money to invest.
How the calculation works
Real return = (1 + return) / (1 + inflation) - 1
Monthly rate = (1 + real return)^(1/12) - 1
Each month portfolio = portfolio × (1 + monthly rate) + monthly investing
The calculator repeats the monthly step until the portfolio reaches your FI number, or for up to 100 years. Working in today's dollars means the FI number stays fixed while your portfolio grows toward it.
Assumptions and limitations
- Steady returns: real markets have good and bad years. A downturn right before or after you stop working (known as sequence-of-returns risk) can change the outcome a lot.
- No taxes or fees: withdrawals from pre-tax accounts are taxed, and investment fees reduce returns. Build both into your spending estimate.
- No other income: Social Security, pensions or part-time work would lower the portfolio you need.
- Healthcare: retiring before Medicare eligibility means paying for your own health insurance. Include it in your yearly spending.
Frequently asked questions
Is the 4% rule safe?
It held up for 30-year periods in most of U.S. history, but it isn't a guarantee, and future returns may be lower than in the past. Many people plan for 3.5% or less for early retirements, or stay flexible by spending less in bad market years.
Why is everything in today's dollars?
Because $1.2 million in 30 years won't buy what it buys today. Using the after-inflation return keeps the FI number in terms you can compare with your current budget. The "future dollars" line shows the nominal amount you'd see on a statement.
Should I count my home?
Usually not, since you live in it and it doesn't pay for groceries. If you'll own it outright, your spending will be lower without a mortgage or rent, which lowers your FI number instead.
What are Lean FIRE and Fat FIRE?
Informal terms for spending levels: Lean FIRE means financial independence on a minimal budget, and Fat FIRE means a more generous one. Enter the yearly spending that matches the life you want.