FIRE Calculator

How this is calculated

FIRE number = annual expenses × 25;  time = when savings + investing compound up to that number

Worked example: $40,000 of expenses → a FIRE number of $1,000,000; with $50,000 saved and $2,000/month at 7%, you reach it in the mid-teens of years. The lever that moves it most is your savings rate.

What the 25× rule is actually saying

A FIRE target of 25 times annual spending is the 4% withdrawal rule turned upside down: if you can live on 4% of a portfolio, then 25 times spending is the portfolio you need. Both numbers come from the same place — analyses of long historical periods, predominantly US market history, asking what withdrawal rate survived a 30-year retirement. That is a narrow evidential base for a plan that may need to last fifty years.

The critiques are worth knowing. A longer retirement lowers the safe rate, because there is more time for a bad sequence to arrive. Lower expected returns lower it further. International markets have performed worse than the US over the studied period, which makes the rule optimistic outside it. And the rule assumes rigid spending, whereas a real person who cuts back in a bad year can safely start higher.

The savings rate does almost all the work

Time to financial independence depends far more on the proportion of income saved than on the amount earned or the return achieved, because saving more simultaneously builds the portfolio faster and lowers the target it has to reach. Saving 10% of income implies working decades; saving 50% implies roughly seventeen years; saving 70% brings it under a decade. Those figures are robust across a wide range of return assumptions precisely because both sides of the equation move together.

Sequence risk is the thing that breaks plans

Two retirees with identical average returns can end very differently depending on the order in which those returns arrived. A severe fall in the first years, while you are selling assets to live, permanently reduces the capital that would have recovered. This is why cash buffers of one to three years, flexible spending rules, and a willingness to earn something in a bad year matter more than an extra percentage point of expected return.

What the number leaves out

Healthcare is the largest omission in most FIRE arithmetic, particularly where employment provides cover. Tax treatment differs sharply between accessible and retirement-restricted accounts, and money locked until 55 or 60 does not fund an earlier exit. Family circumstances change. And the least discussed risk is not financial: the identity and structure that work provides has to be replaced by something, and the people who do this well have usually planned the life before the number.