How to Calculate Your FIRE Number (Formula + Examples)

Your FIRE number is your annual retirement spending multiplied by 25. Spend $48,000 a year and you need $1,200,000 invested. The 25 comes from the 4% rule: withdraw 4% of the portfolio in year one, raise that amount with inflation each year after, and historically the money lasted a 30-year retirement.

The formula takes ten seconds. The input is what decides whether your number is real, and almost everyone gets the input wrong on the first attempt.

I build a budgeting and net-worth app for a living, and the mistake I see most often is people calculating their FIRE number from their income rather than their spending. Those are different numbers, and only one of them retires you.

Where does the 4% rule actually come from?

Two pieces of research, both worth knowing by name.

William Bengen published Determining Withdrawal Rates Using Historical Data in the Journal of Financial Planning in October 1994. Testing withdrawal rates against real historical US market returns, he concluded that "a first year withdrawal of 4 percent, followed by inflation-adjusted withdrawals in subsequent years, should be safe" across a 30-year retirement — and that a 3% starting withdrawal was "absolutely safe," never producing a portfolio life under 50 years (a detailed walkthrough of the paper).

Four years later, three Trinity University finance professors ran the same question across every overlapping payout period from 1926 to 1995. Their table — Cooley, Hubbard and Walz, AAII Journal, February 1998, the study everyone calls the Trinity Study — found that with inflation-adjusted withdrawals at a 4% rate over a 30-year payout period, a 100% stock portfolio survived 95% of historical periods, a 75/25 stock-bond mix 98%, and a 50/50 mix 95%. (The 98–100% figures you often see quoted come from the study's other table, which holds withdrawals fixed and ignores inflation — the inflation-adjusted table is the one that matches how people actually retire.)

Invert 4% and you get 25. That is the entire derivation. If you want benchmarks instead of method — what these targets look like at different spending levels, and how a pension or Social Security shrinks them — see how much money you actually need to retire.

What is my FIRE number? It is the size of the invested portfolio that can fund your spending indefinitely without a paycheck. Calculate it in three steps. First, work out what you truly spend in a year — take twelve months of bank and card statements and total the money that left, rather than guessing from your salary. Second, adjust that figure to the version of your life you will actually be living: subtract a mortgage that will be paid off and the costs of going to work, then add what retirement adds, usually healthcare and travel. Third, multiply the adjusted annual figure by 25, because 25 is simply the inverse of a 4% withdrawal rate. A household landing on $54,000 a year needs $1,350,000. Use 28 to 30 instead of 25 if you plan to retire very early, and subtract any guaranteed pension income from spending before you multiply.

Step 1: What do you actually spend?

Not what you earn. Not what you budgeted. What left your accounts.

Pull twelve months of statements — every current account, every card — and total the outflows. Twelve months, not one, because one month never contains the insurance renewal, the car service, the dentist, or Christmas. Those irregular bills are exactly the ones that break a FIRE calculation, and they are invisible in a typical month.

If you have never done this, brace yourself. There is almost always a gap between what people believe they spend and what the statements say, and in my experience it runs in one direction only.

This step is genuinely tedious, which is why I built transaction import and categorization into the app I use myself. A spreadsheet does the same job. The tool just meant I actually finished it. If you have never run a full month, start with a budget and let three months accumulate before you trust the number.

Step 2: Adjust for the retirement version of your life

Your current spending is not your retirement spending. Some costs vanish, others appear.

Subtract what stops. A mortgage that will be paid off before you retire is the big one, and for most households it is the single largest line on the statement. Commuting, work clothes, the daily lunch, childcare that ends when the children do. If you are still saving aggressively today, that contribution also stops, and it should never have been in the spending figure anyway.

Add what starts. Healthcare is the item people forget, and in the US it is not small: Fidelity's 2025 estimate puts lifetime health costs for a single 65-year-old retiring that year at $172,500, net of taxes, assuming Original Medicare and excluding long-term care. Spread across a 30-year retirement that is roughly $5,750 a year on top of everything else. In most of Europe the equivalent line is far smaller, but it is rarely zero — and if you retire before state pension age, private cover for the gap years is a real cost.

Then add the things retirement is for. Travel. Hobbies. Time costs money when you finally have it.

Step 3: Multiply

Adjusted annual spending × 25. Here is the whole grid, with two more conservative multipliers alongside:

Read across one row and you can see what the withdrawal-rate argument is actually about. At $5,000 a month, moving from 4% to 3% adds half a million dollars and years of working. That single assumption moves your number more than almost anything else you will decide.

A worked example, end to end

A household spends $5,200 a month today — $62,400 a year.

Adjusted spending: $54,000 a year.

FIRE number = $54,000 × 25 = $1,350,000.

Now the version nobody puts in the calculator. Say a pension will pay $1,200 a month — $14,400 a year — from age 67. The portfolio only has to cover the rest: $54,000 − $14,400 = $39,600, and $39,600 × 25 = $990,000. One guaranteed income stream cut the target by $360,000.

Starting from $250,000 already invested and $2,500 a month going in at a 7% real return — roughly what the S&P 500 has delivered after inflation since 1928 — that $1,350,000 arrives in about 15 years. Change any input and the date moves — which is the real point of running this properly rather than once on the back of an envelope.

Lean, fat, coast, barista: same formula, different inputs

All four are the same arithmetic with a different annual spending figure or a different finish line.

• Lean FIRE — a deliberately small spending figure, often under $30,000 a year, so the target lands near $750,000.
• Fat FIRE — the opposite: $100,000+ a year of spending, so the number runs past $2.5 million.
• Coast FIRE — you stop contributing once compounding alone will carry today's portfolio to your full FIRE number by 65. The nearest milestone for most people.
• Barista FIRE — part-time income covers part of the spending, so the portfolio only funds the remainder. Same pension trick as above, with a job instead of a pension.

New to the whole idea? Start with what FIRE actually is, then come back to the arithmetic.

When is 25× the wrong multiplier?

Three situations, and the first one catches most of this blog's readers.

You are retiring very early. Both Bengen and the Trinity Study tested a 30-year horizon. Retire at 45 and you may need the portfolio to survive 50 years. Bengen's own answer for indefinite longevity was 3%, which is a 33× multiplier; 3.5% (28.6×) is the common compromise. Morningstar's State of Retirement Income: 2025 puts its base-case starting safe withdrawal rate at 3.9% for a 30-year horizon at 90% success — down from 4.0% in 2023, up from 3.7% the year before — and explicitly names "an early retirement date that necessitates withdrawals over a longer time frame" as a factor that lowers the success rate.

You have pension income. Subtract it from annual spending before multiplying, as above. Anyone in Europe with a meaningful state or occupational pension is usually overstating their FIRE number badly by skipping this.

You are flexible about spending. The 4% rule assumes you take the same inflation-adjusted amount every year regardless of what markets do. Nobody actually behaves that way. Morningstar found that flexible withdrawal methods lifted the safe starting rate as high as 5.7%. Willingness to cut spending in a bad year is worth real money.

The honest summary: 25× is the right first answer, not the final one.

Getting your own number

Three steps, one afternoon. Twelve months of statements, one adjustment pass, one multiplication.

Then find out when you get there, because a target without a date is a wish. That is what our FIRE planner is for — it takes your spending, your current portfolio and your monthly contribution, and returns both the number and the year. Free, no signup.

The number is not the hard part. The twelve months of statements are. Do those first, and everything after is multiplication.