The formula, and why it’s about expenses
FIRE number = annual expenses ÷ withdrawal rate. At a 4% input, that’s 25 times your annual spending; at 3.5%, about 28.5 times. Notice what’s not in the formula: your income. The formula deliberately starts from the portion of retirement spending expected to be funded by the portfolio.
Reading your “years to FIRE” honestly
The projection assumes a constant return, but markets deliver their average in lurches — positive years, losses, and flat periods. The year shown is one constant-return scenario, so rerun it across several real returns and contribution amounts. Keep the units consistent by pairing a real return with expenses stated in today’s dollars. Housing changes can affect future spending, but only an actual reduction entered above changes this target: see the rent vs. buy calculator and early payoff options.
Method, example, and sources
How this calculator works
The target divides annual retirement spending by the selected withdrawal rate. Starting assets then compound monthly at the entered inflation-adjusted annual return, with the contribution added at each month-end, until the target is reached or the projection cap is hit.
Worked example
With $40,000 of annual spending and a 4% withdrawal-rate scenario, the target is $1,000,000. Starting from $100,000, adding $2,000 per month, and assuming a constant 5% real annual return reaches that target after 228 months, or 19 years.
What the estimate leaves out
- The withdrawal rate is a user-selected planning scenario, not a guarantee; the tool does not simulate portfolio withdrawals, longevity, or sequence-of-returns risk in retirement.
- The accumulation path uses one constant real return and excludes market volatility, investment fees, taxes, and contribution interruptions.
- Social Security, pensions, healthcare changes, one-time expenses, changing spending, and changes to the withdrawal strategy are excluded.
Primary sources
Frequently asked questions
What is a FIRE number?
A planning target calculated as annual portfolio-funded expenses divided by a selected withdrawal rate. At 4%, $40,000 of annual spending corresponds to $1,000,000. That arithmetic does not establish that the portfolio will last or account for taxes, other income, or changing spending.
Where does the 4% rule come from?
William Bengen’s historical-data research is a source of the widely used 4% benchmark. Its results depend on the tested asset mix, historical periods, withdrawal adjustments, and retirement horizon. This calculator lets you change the rate because no single percentage is guaranteed for a future portfolio.
Why do expenses matter more than income?
In this formula, lower retirement spending reduces the target. At a 4% input, a $1,200 annual reduction changes the arithmetic target by $30,000. Whether current spending can be reduced, saved, or sustained in retirement is outside the model.
What is Coast FIRE?
A separate planning concept in which existing assets are projected to reach a later retirement target without new contributions. This calculator does not calculate a Coast FIRE age or guarantee that returns will follow the required path.
Does this account for inflation?
Yes, when used as labeled: enter expenses in today’s dollars and use a real return after inflation. The 5% default is a planning assumption, not a forecast. Keeping both the target and the growth rate inflation-adjusted avoids mixing future nominal dollars with today’s spending.