FIRE Calculator (Financial Independence, Retire Early)
FIRE Calculator (Financial Independence, Retire Early)
How much you need to be financially independent at a chosen withdrawal rate, and how many years of saving it takes from where you are now.
Years to financial independence
Expenses $6,00,000 a year, 4% withdrawal, $20,00,000 invested, adding $5,00,000 a year at 6% real
The FIRE number, and the years to reach it
- F
- the FIRE number
- S
- what you have invested now
- A
- what you invest each year
- g
- the real (after-inflation) annual return
Worked example
Expenses $6,00,000 a year, 4% withdrawal, $20,00,000 invested, adding $5,00,000 a year at 6% real
FIRE number = 6,00,000 ÷ 0.04 = $1,50,00,000
A ÷ g = 5,00,000 ÷ 0.06 = 83,33,333
(1,50,00,000 + 83,33,333) ÷ (20,00,000 + 83,33,333) = 2.2581
years = ln(2.2581) ÷ ln(1.06) = 14.0
In whole years: $1,37,06,925 after year 13, $1,50,29,341 after year 14, so the number is reached in year 14
What the 4% rule does and does not say
The FIRE number is annual spending divided by a withdrawal rate: at 4%, it is 25 times a year’s expenses. The 4% figure comes from US studies of historical stock and bond returns, which found that a retiree withdrawing 4% of the starting portfolio, raised each year for inflation, would not have run out of money over any 30-year period in the data. It was a finding about 30-year retirements in one country’s markets, not a law.
Two things follow for anyone retiring early or outside the US. A 40- or 50-year retirement needs a lower rate — many planners use 3 to 3.5% — and higher local inflation raises the bar, which is why this calculator asks for a real return and expenses in today’s money. The years figure assumes the same real return every year; in practice the order of good and bad years matters most in the first decade of withdrawals.
The chart follows the portfolio a year at a time, in today’s money, with each year’s investment added at the end of the year — the same assumption as the headline formula, which is why the two agree. It stops a few years after the FIRE number is reached, or at 60 years. In the example the headline is 13.98 years, so the portfolio is still short at the end of year 13 ($1,37,06,925) and passes $1,50,00,000 during year 14, ending that year at $1,50,29,341. The table separates your own money from growth; in the later years growth does most of the work.
To see how steady monthly investing builds towards the number, use the SIP calculator; to check what an existing portfolio has actually returned, the ROI calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
What is a FIRE number?
The amount you need invested so that withdrawing your withdrawal rate each year covers your expenses. At 4% it is 25 × annual expenses; at 3.5% it is about 28.6 ×.
Is the 4% rule safe?
It was sustainable for 30-year retirements in historical US data. For longer retirements, or markets with different returns and inflation, many planners use a lower rate.
Why use a real return?
Because expenses are entered in today’s money. Using the return after inflation keeps both sides in the same terms.
Why does the chart say year 14 when the headline says 14.0 years?
The headline is 13.98 years, shown to one decimal. The chart counts whole years, and the portfolio first passes the FIRE number during year 14. The chart’s year is always the headline rounded up.
Related calculators
References
- Bengen WP. Determining Withdrawal Rates Using Historical Data. Journal of Financial Planning. 1994;7(4):171–180.
- Cooley PL, Hubbard CM, Walz DT. Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable. AAII Journal. 1998;20(2):16–21.