How to Calculate Your FIRE Number in 3 Steps
Work out your FIRE number in three moves: total your annual expenses, pick a safe withdrawal rate, then divide one by the other. At the standard 4 percent rate, dividing is the same as multiplying expenses by 25 — so a $4,000-a-month lifestyle ($48,000 a year) needs a portfolio of about $1,200,000. Choose a more cautious 3.5 percent and the target rises to about $1,371,429. This page walks through each step with a full worked example.
The short answer
Your FIRE number is the portfolio that can cover your living costs indefinitely. Getting to it takes three steps:
- Total your annual expenses — what you will actually spend in a year, not what you earn.
- Pick a safe withdrawal rate — 4 percent is the baseline; early retirees often use 3.5 or 3 percent.
- Divide expenses by that rate — at 4 percent, that is simply expenses × 25.
Skip the arithmetic: the FIRE calculator takes your expenses and savings rate and returns both the number and an estimated timeline to reach it.
Step 1: total your annual expenses
Everything else scales off this figure, so it is worth getting right. Add up what a full year of your life costs — housing, food, transport, insurance, health care, travel, everything — and be honest about the irregular items people forget: car repairs, replacing a laptop, gifts.
Two adjustments matter. Use retirement spending, not today's: commuting costs and the savings contributions themselves disappear, while health care often grows. And include the tax you expect to owe on withdrawals, because the money you take out is gross.
If you budget monthly, multiply by 12. A $4,000-a-month lifestyle is $48,000 a year.
Step 2: pick a safe withdrawal rate
Your safe withdrawal rate is the share of the portfolio you plan to take each year. It decides how big the portfolio has to be:
| Withdrawal rate | Multiple of expenses | Best suited to |
|---|---|---|
| 5% | 20× | Short horizons, or with other income to fall back on |
| 4% | 25× | The classic baseline, tested against ~30-year retirements |
| 3.5% | 28.6× | Early retirees needing 40+ years of portfolio life |
| 3% | 33.3× | Very long horizons or a wide safety margin |
The 4 percent figure comes from research into historical US market returns over roughly 30-year retirements. Retire at 40 rather than 65 and the money may need to last far longer, which is why the FIRE community often leans lower. The safe withdrawal rate guide covers where the number comes from and what it does not protect against.
Step 3: divide (or multiply by 25)
Now put the two together:
At a 4 percent rate, dividing by 0.04 is identical to multiplying by 25 — hence the well-known 25x rule. Here is the same $48,000 budget at each rate:
| Withdrawal rate | Calculation | FIRE number |
|---|---|---|
| 5% | $48,000 ÷ 0.05 | $960,000 |
| 4% | $48,000 ÷ 0.04 | $1,200,000 |
| 3.5% | $48,000 ÷ 0.035 | $1,371,429 |
| 3% | $48,000 ÷ 0.03 | $1,600,000 |
Note how much the rate matters: the same lifestyle needs $960,000 or $1,600,000 depending purely on how cautious you choose to be.
A full worked example
Say you spend $4,000 a month and want the standard 4 percent rate:
- Step 1 — annual expenses: $4,000 × 12 = $48,000.
- Step 2 — withdrawal rate: 4 percent, so the multiple is 25.
- Step 3 — FIRE number: $48,000 ÷ 0.04 = $1,200,000.
That $1,200,000 portfolio would support $48,000 of withdrawals in your first year, adjusted for inflation thereafter. If you trimmed spending to $3,500 a month ($42,000 a year), the target drops to $1,050,000 — which is why cutting recurring costs is the most efficient lever in the whole calculation. It lowers the finish line and frees up more to invest at the same time.
For the target across many spending levels at once, see FIRE number by expenses.
How long will it take?
The number is only half the question; the other half is when you reach it. That depends on what you already have, how much you add, and your return.
Starting with $100,000 invested and adding $2,000 a month at a 7 percent annual return, a $1,200,000 target arrives in roughly 17.9 years. Raise the monthly amount and it shortens; lower your expenses and it shortens twice over, because the target itself falls.
Model your own path: the FIRE calculator estimates your timeline, and the future value calculator shows how contributions compound toward the target.
Assumptions
- Annual convention. Withdrawal rates and the 25x rule are defined as yearly figures — that is the standard here, unlike the monthly compounding this site uses for growth projections.
- Expenses stay roughly constant in real terms. The target reflects your spending level; large lifestyle changes move it.
- Taxes and health care are inside your expenses. Withdrawals are gross, so tax comes out of them.
- A guideline, not a guarantee. Safe withdrawal rates come from historical data; a poor run of early returns can still require flexibility.
Frequently asked questions
The bottom line
Three steps, and only one of them is really work: know your annual expenses, choose a withdrawal rate you trust, and divide. A $48,000 budget at 4 percent means $1,200,000 — and every dollar you cut from annual spending removes $25 from the target.
Run your own figures in the FIRE calculator, and read what is FIRE for the strategy behind the number.
Disclaimer: This page is for general educational purposes only and is not financial advice. The 4 percent and 25x rules are historical guidelines, not guarantees; actual safe withdrawal rates vary with markets, inflation, taxes and how long a retirement lasts. Consider speaking with a qualified financial professional before making decisions about your own money.