The FIRE number is the foundational goal of the Financial Independence, Retire Early (FIRE) movement. It represents the total amount of money you need to have invested in a diversified portfolio so that your investments generate enough income to cover your desired annual expenses — allowing you to retire and live financially independent without relying on a traditional job.

Achieving this number signifies true financial freedom, offering the choice to work only if you want to be.

What is the FIRE Number?

The FIRE number is typically calculated using the 25x Rule, which is directly linked to the 4% Rule. To find your number, you first estimate your desired annual expenses in retirement and then multiply that figure by 25.

Formula:

FIRE Number = Annual Expenses × 25

Example:

If you estimate needing $48,000 per year to cover your living costs, your target investment portfolio (your FIRE number) would be:

$48,000 × 25 = $1,200,000

Explaining the 4% Rule and Why It Matters

The 4% Rule is the core principle that gives the 25× multiplier its power. It suggests that if you withdraw no more than 4% of your total investment portfolio’s value in the first year of retirement, and then adjust that dollar amount annually for inflation, your savings have a high probability (historically, over 95%) of lasting for 30 years or more.

Why It Matters

  • Trinity Study Origin:
    The 4% figure comes from the Trinity Study, a landmark piece of financial research that analyzed historical returns of investment portfolios (typically 60% stocks, 40% bonds) over various 30-year periods in the US market. The study found this withdrawal rate was consistently successful.

  • Safety and Sustainability:
    It provides a necessary margin of safety against market volatility, particularly against Sequence of Returns Risk — the risk that poor market performance early in retirement depletes your portfolio before it has a chance to recover.

  • Clarity:
    By setting a safe withdrawal rate (SWR), the rule gives you a clear, measurable goal for your investment accumulation phase.

Personalizing the Number

The standard 4% Rule assumes a 30-year retirement and a moderate-risk portfolio. For those aiming to retire much earlier (e.g., in their 30s) or those facing unique expenses, personalization is crucial.

Different FIRE strategies require different target numbers. Whether you're pursuing LeanFIRE, FatFIRE, CoastFIRE or BaristaFIRE, your withdrawal rate and portfolio size will vary significantly based on your lifestyle goals.

1. Adjustments for Your Risk Tolerance

Your retirement time horizon significantly impacts your required multiplier:

Withdrawal Rate (SWR) Multiplier (FIRE Number) Rationale
3.0% 33.3× Annual Expenses Very Conservative: Recommended for very long retirements (50+ years) or extremely low risk tolerance.
3.5% 28.6× Annual Expenses Conservative: Provides a higher margin of safety than 4%.
4.0% 25.0× Annual Expenses Standard: The classic FIRE number (assumes ~30 years).
4.5%+ 22.2× Annual Expenses Aggressive: Higher risk of running out of money; often used only if the retiree plans to work part-time (Barista FIRE) or has flexible spending.

2. Adjustments for Location and Expected Returns

  • Location / Lifestyle:
    Your estimated annual expenses should be realistic for your desired retirement location. If you plan to move to a lower cost of living (LCOL) area — a concept known as Geo-arbitrage — your annual expenses will drop, dramatically lowering your FIRE number.
    Ensure you accurately account for major non-negotiable costs, like healthcare premiums before Medicare eligibility.

  • Expected Returns & Other Income:
    If you anticipate receiving reliable guaranteed income (like a pension, social security, or passive real estate rental income), you can subtract that annual income from your desired annual expenses before applying the multiplier.
    This effectively lowers the total portfolio amount you need to save.

Example:

If you need $50,000/year but expect $10,000 from a rental property, you only need to multiply:

($50,000 - $10,000) × 25 = $1,000,000

Next Steps

Calculating your FIRE number is the first, most empowering step on your journey to financial independence. Now that you understand the 4% rule and the necessary adjustments, your focus should shift to execution.

  • Refine Your Expense Budget:
    Get a crystal-clear, detailed understanding of your current and future annual spending, especially incorporating costs like travel and early-retirement healthcare.

  • Model Your Scenario:
    The best way to finalize your plan is by using an advanced simulator.

Ready to see how fast you can get there?
Use a detailed, interactive online FIRE calculator that allows you to input custom withdrawal rates and model how your portfolio might perform across thousands of historical market simulations. This will help you manage risk and finalize your personal goal with confidence.