How to calculate your FIRE number

Your FIRE number is the size of the pot you're aiming for — the point where your investments can cover your life and work becomes optional. The good news: working it out is one line of maths. The interesting part is what moves the number, and what to do about it.

What a FIRE number is

Your FIRE number is the amount of invested money that, once you have it, could fund your spending more or less indefinitely.

It's not a salary or a net worth goal plucked from the air. It's tied directly to one thing: how much you spend each year. That's what makes it powerful — the target comes from your own life, not a headline figure someone else set.

If you're new to the whole idea, start with what FIRE is and come back. If you already know the concept, let's find your number.

The formula

Here it is:

FIRE number = annual spending ÷ withdrawal rate

At a 4% withdrawal rate, dividing by 0.04 is the same as multiplying by 25. So the shortcut most people use is:

FIRE number ≈ annual spending × 25

That 25× comes straight from the 4% rule — the idea that you can withdraw about 4% of your portfolio in the first year and, historically, not run out over a long retirement. Divide by a smaller rate and the multiple grows: at 3.5%, it's roughly 29×.

A worked example

Let's make it concrete. All numbers here are round and illustrative — swap in your own.

Say you spend $40,000 a year. That covers rent, food, transport, insurance, the odd holiday — your real life, not a stripped-down survival budget.

At 4%: $40,000 × 25 = $1,000,000
At 3.5% (more cautious): $40,000 × 28.6 = ~$1,143,000
At 5% (more aggressive): $40,000 × 20 = $800,000

So depending on how safe you want to be, your target sits somewhere between roughly $800k and $1.14m. The withdrawal rate is a dial, not a fixed setting — and moving it changes the finish line by hundreds of thousands.

Want to test your own spending against different rates in seconds? That's exactly what the FIRE calculator is for.

What changes your number

Two levers move a FIRE number, and one of them is far more powerful than most people expect.

Your annual spending. This is the big one, because it works twice. Cut your spending by $5,000 a year and you don't just need $5,000 less — you need $125,000 less (that's $5,000 × 25). Every dollar you permanently trim from your spending removes 25 from the target. That's why the FIRE crowd is obsessed with spending, not income.

Your withdrawal rate. Feeling cautious, or retiring young with a 50-year horizon? A lower rate (say 3.5%) buys a bigger safety margin but raises the target. Comfortable with a shorter horizon or some flexibility? A slightly higher rate lowers it. This is a judgement call about risk, not a fact.

A couple of things that don't belong in the basic number: a paid-off house you'll live in (it cuts your spending rather than adding to the pot) and future pensions or state benefits (they reduce how much your portfolio has to carry later on). Keep the core calculation simple, then adjust around the edges.

How compounding gets you there

The number can look enormous. Here's the part that makes it reachable: you don't have to save every dollar of it yourself. Your investments do a large share of the lifting through compound interest — returns earning returns, year after year.

Compound growthWhat your money grows on its own

Illustrative: a fixed amount invested every month for 30 years at 7% a year. The gold area is compound growth — returns on your returns.

The chart shows why time matters so much. The early years feel slow — most of the balance is money you put in. But give it a couple of decades and growth quietly overtakes contributions. Which is the real lesson of any FIRE number: starting early beats saving hard later, and your savings rate is the lever you control most directly.

Frequently asked questions

Should I use gross or net (after-tax) spending? Use what actually leaves your account — the money you truly spend, including any tax you'll owe on withdrawals. If withdrawals are taxed where you live, build that into the annual spending figure before you multiply.

Does my FIRE number include my house? A home you own and live in usually isn't part of the pot — it lowers your spending instead. Only investable assets that can generate income count toward the number.

What if my spending changes after I retire? It almost certainly will. That's fine — recalculate. Many people also spend more early in retirement and less later. The number is a target to steer by, not a life sentence.

Is 25× really enough? It's a well-supported starting point drawn from historical US data over 30 years. If you're retiring young or want more cushion, aim for 28–30× instead. Honesty matters here: it's a strong guideline, not a cast-iron guarantee.