How to Calculate Your FIRE Number
Your FIRE number is the portfolio that could cover your living costs indefinitely. Here's how to estimate it in four simple steps.
Step 1: Estimate your annual expenses
Your FIRE number is built on one input above all: how much you expect to spend per year. Add up your essential and discretionary spending to get a realistic annual figure.
Step 2: Multiply by 25
Multiply your annual expenses by 25. This reflects a 4% initial withdrawal rate (see the 4% rule) and gives a rough target portfolio — your FIRE number.
Example
$40,000 annual spending × 25 = a FIRE number of about $1,000,000.
Step 3: Adjust for your situation
- Subtract reliable income sources such as a pension.
- Add a safety margin for healthcare, taxes and surprises.
- Consider a lower withdrawal rate if retiring very early.
Step 4: Build the plan to reach it
Once you know the target, raise your savings rate and invest consistently. See how to create a long-term savings plan to put it into action.
This is an educational estimation method, not personalised advice. A qualified professional can help refine it for your circumstances.
References
Frequently asked questions
Why multiply by 25?
Because 25 is the inverse of 4%. If you withdraw 4% per year, your portfolio needs to be 25 times your annual expenses.
Should I use a number other than 25?
Some very early retirees prefer a larger multiple (for example 28–33x) to use a more conservative withdrawal rate and add a margin of safety.