Quick Summary
A practical breakdown of FIRE math - how the 25x rule and 4% rule work, what different spending levels require, and how lean, regular, fat, coast, and barista FIRE compare.
The FIRE number is the single most important calculation in early retirement planning. It answers one question: how much do you need invested so that your portfolio covers your expenses without running out?
The FIRE Calculator runs this math instantly. No signup required.
The Core Formula
Two rules drive every FIRE calculation:
- The 4% rule [1] - withdraw 4% of your portfolio in year one, adjust for inflation each year after
- The 25x rule - multiply annual expenses by 25 to get the target portfolio size
These are two sides of the same coin. If you withdraw 4% of a portfolio, you need 25 times your annual withdrawal (1 / 0.04 = 25). The 4% rate comes from William Bengen’s 1994 research, later confirmed by the Trinity Study [2].
| Annual Expenses | FIRE Number (25x) | Monthly Withdrawal |
|---|---|---|
| $30,000 | $750,000 | $2,500 |
| $50,000 | $1,250,000 | $4,167 |
| $70,000 | $1,750,000 | $5,833 |
| $100,000 | $2,500,000 | $8,333 |
Every $10,000 in annual spending adds $250,000 to the target. That relationship is worth keeping in mind when evaluating recurring expenses.
A Worked Example
Person: Age 32, earns $90,000, spends $45,000/year, has $120,000 invested, saves $2,500/month.
- FIRE number: $45,000 x 25 = $1,125,000
- Gap: $1,125,000 - $120,000 = $1,005,000
- At 7% real returns with $2,500/month contributions: roughly 15 years
- Projected FIRE age: 47
Change the spending to $55,000/year and the target jumps to $1,375,000 - adding about 3 more years to the timeline. Spending is the variable that moves the needle most.
Five FIRE Variations
Not everyone aims for the same finish line. The community has developed several variations:
| Type | Annual Spending | Typical Target | Who It Fits |
|---|---|---|---|
| Lean FIRE | Under $40,000 | Under $1M | Minimalists, low-cost areas |
| Regular FIRE | $40,000 - $80,000 | $1M - $2M | Middle-of-the-road lifestyle |
| Fat FIRE | $100,000+ | $2.5M+ | No significant lifestyle cuts |
| Coast FIRE | Varies | Varies by age | Stop saving, let growth do the work |
| Barista FIRE | Varies | Partial target | Work part-time to cover the gap |
Coast FIRE means you have enough invested that compound growth alone reaches your retirement target by a traditional retirement age. The Coast FIRE Calculator can estimate this number for your situation.
Barista FIRE means your portfolio covers most expenses, but you work part-time (enough for health insurance and spending money) rather than saving aggressively.
Why Savings Rate Matters More Than Income
A person earning $200,000 and spending $180,000 has a harder path to FIRE than someone earning $80,000 and spending $40,000. The second person needs a smaller portfolio and saves a larger percentage of income.
| Savings Rate | Approximate Years to FIRE |
|---|---|
| 20% | ~37 years |
| 30% | ~28 years |
| 40% | ~22 years |
| 50% | ~17 years |
| 60% | ~12 years |
| 70% | ~8.5 years |
These assume starting from zero with 5% real returns. Your actual timeline depends on existing savings, return assumptions, and spending consistency.
The Edges Worth Knowing
Healthcare before 65. Individual health insurance can cost $500 - $1,500/month before Medicare eligibility. This is often the largest underestimated expense in FIRE planning.
Sequence of returns risk. A market crash in the first few years of retirement is far more damaging than one ten years in [2]. Some people hold 2-3 years of expenses in cash as a buffer.
Taxes still apply. Withdrawals from traditional 401(k) and IRA accounts are taxed as income. A Roth conversion ladder or careful tax-bracket management can reduce this, but ignoring taxes overstates how far a portfolio stretches.
Spending changes over time. Most retirees spend more in their 60s (travel, hobbies), less in their 70s, and more again in their 80s (healthcare). A flat spending assumption is a simplification.
Run Your Numbers
The FIRE Calculator shows your projected timeline based on current savings, monthly contributions, and spending level. The Retirement Calculator provides additional detail for traditional retirement scenarios.
For detailed year-by-year projections, the FIRE Calculator Template models multiple scenarios with your real numbers in a spreadsheet you own.
Sources
- William Bengen - Determining Withdrawal Rates Using Historical Data (1994)
- Trinity Study - Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable (1998)