How It Works

Your FIRE number is the amount you need invested to live off your portfolio indefinitely. It’s based on the 4% safe withdrawal rate - if you can live on 4% of your portfolio, you’ve reached financial independence.

The Formula

=annual_expenses * 25

Or more flexibly:

=annual_expenses / withdrawal_rate

The 25x multiplier comes from 1 ÷ 0.04 = 25.

Example

Your Situation:

Annual Expenses: $48,000
Desired Withdrawal Rate: 4%

FIRE Number:

=$48,000 * 25 = $1,200,000

With $1.2 million invested, you can withdraw $48,000/year (4%) indefinitely.

FIRE Number by Expense Level

Annual Expenses	FIRE Number (25x)
$30,000	$750,000
$40,000	$1,000,000
$50,000	$1,250,000
$60,000	$1,500,000
$75,000	$1,875,000
$100,000	$2,500,000
$120,000	$3,000,000
$150,000	$3,750,000

Building a FIRE Calculator

Input	Value
Monthly Expenses	$4,000
Annual Expenses	=B1*12
Desired Withdrawal Rate	4%
Current Savings	$250,000
Annual Savings	$40,000
Expected Return	7%

Output	Formula
FIRE Number	`=B2/B3`
Progress	`=B4/B7`
Remaining	`=B7-B4`
Years to FIRE	`=NPER(B6, -B5, -B4, B7)`

Types of FIRE

Lean FIRE

Living on minimal expenses - typically $25,000-$40,000/year.

=$35,000 * 25 = $875,000

Regular FIRE

Comfortable middle-class lifestyle - typically $50,000-$75,000/year.

=$60,000 * 25 = $1,500,000

Fat FIRE

Abundant lifestyle with no compromises - typically $100,000+/year.

=$120,000 * 25 = $3,000,000

Barista FIRE

Enough invested that part-time work covers expenses while portfolio grows.

=((expenses - part_time_income) * 25)

Example: $50K expenses, $20K part-time job

=($50,000 - $20,000) * 25 = $750,000

Withdrawal Rate Sensitivity

Your multiplier changes with different withdrawal rates:

Withdrawal Rate	Multiplier	$50K Expenses
3.0%	33.3x	$1,667,000
3.5%	28.6x	$1,429,000
4.0%	25x	$1,250,000
4.5%	22.2x	$1,111,000
5.0%	20x	$1,000,000

Formula for multiplier:

=1/withdrawal_rate

Conservative vs. Aggressive Approach

Approach	Withdrawal Rate	Best For
Very Conservative	3%	Early retirees (40s), long horizon
Conservative	3.5%	Planning 40+ year retirement
Standard	4%	Traditional FIRE, 30-year horizon
Moderate	4.5%	Flexible spending, other income
Aggressive	5%	Short horizon, pension backup

Adjusting for Other Income

If you’ll have other income sources, your portfolio needs decrease:

=((expenses - other_income) / withdrawal_rate)

Example: $50K expenses, $18K Social Security expected

=(($50,000 - $18,000) / 4%) = $800,000

Rental Income

Example: $50K expenses, $12K net rental income

=(($50,000 - $12,000) / 4%) = $950,000

Pension

Example: $60K expenses, $25K pension

=(($60,000 - $25,000) / 4%) = $875,000

FIRE Number Breakdown

What’s actually in your FIRE number?

Category	Monthly	Annual	25x Target
Housing	$1,500	$18,000	$450,000
Food	$600	$7,200	$180,000
Healthcare	$800	$9,600	$240,000
Transportation	$400	$4,800	$120,000
Utilities	$250	$3,000	$75,000
Insurance	$200	$2,400	$60,000
Entertainment	$250	$3,000	$75,000
Total	$4,000	$48,000	$1,200,000

Reducing any category by $100/month = $30,000 less needed.

The Power of Expense Reduction

Each $1 of monthly expense reduction:

Saves $12/year
Reduces FIRE number by $300 (at 4%)

Monthly Reduction	Annual Savings	FIRE Number Reduction
$100	$1,200	$30,000
$250	$3,000	$75,000
$500	$6,000	$150,000
$1,000	$12,000	$300,000

Cutting expenses works double - you save more AND need less.

Progress Tracking

Calculate how far along you are:

=current_investments / fire_number

Progress	Status
0-25%	Starting out - focus on savings rate
25-50%	Building momentum - stay consistent
50-75%	Halfway there - compounding accelerates
75-100%	Home stretch - consider derisking
100%+	Financially independent!

Milestone FIRE Numbers

Track progress with percentage milestones:

Milestone	% of FIRE	$1.2M Target
Coast FI	~40%	$480,000
Half FI	50%	$600,000
Lean FI	~65%	$780,000
FI	100%	$1,200,000
Fat FI	150%+	$1,800,000+

Accounting for Inflation

Your FIRE number should be in future dollars:

=todays_expenses * (1 + inflation)^years * 25

Example: $48K expenses, retiring in 15 years, 3% inflation

=$48,000 * (1.03)^15 * 25 = $1,869,000

Alternatively, use inflation-adjusted returns (real returns ≈ 4-5%) and today’s dollars.

Geographic Arbitrage

Location affects your FIRE number significantly:

Location	Cost Factor	$48K Base → Adjusted
NYC/SF	1.6x	$76,800 → $1,920,000
Major Metro	1.2x	$57,600 → $1,440,000
Average US	1.0x	$48,000 → $1,200,000
Low-Cost US	0.8x	$38,400 → $960,000
Southeast Asia	0.4x	$19,200 → $480,000

Moving can dramatically accelerate FIRE.

Healthcare Considerations

Healthcare is often the wildcard in FIRE planning:

Age	Healthcare Option	Annual Cost
Pre-65	ACA Marketplace	$6,000-$20,000
Pre-65	COBRA (temp)	$15,000-$25,000
Pre-65	Health Share	$4,000-$8,000
65+	Medicare + Supplement	$3,000-$8,000

Budget generously for healthcare in your expense estimate.

Pro Tips

Track actual expenses - don’t guess; use 6-12 months of real data
Include one-time costs - average in car replacements, home repairs, etc.
Build in margin - round up your expenses or use a lower withdrawal rate
Consider sequence of returns risk - first years of retirement matter most
Plan for lifestyle changes - retirement spending often changes over time (higher early, lower middle, higher late)

Common Errors

Using income instead of expenses - FIRE is about replacing spending, not salary
Forgetting healthcare - can be $10-20K/year before Medicare
Ignoring taxes - withdrawals from traditional accounts are taxed
Too aggressive withdrawal rate - 4% is standard; early retirees may need 3-3.5%
Not accounting for inflation - your expenses will grow over time

FIRE Number Calculator