How to use the FIRE Calculator (Financial Independence)
- Enter the yearly spending you want your portfolio to cover.
- Choose a withdrawal rate. 4% is the best-known starting point, and many people consider lower rates for longer retirements.
- Enter what you have invested and how much you add each year.
- Enter an expected return after inflation, then read your target, progress and time to reach it.
Formula used
FI number = annual expenses ÷ withdrawal rate. Years to reach it: n = ln((N × r + c) ÷ (S × r + c)) ÷ ln(1 + r), where N is the FI number, S your savings, c the yearly addition and r the real return.
Worked example
Here is the FIRE Calculator (Financial Independence) worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Annual expenses in retirement | $40,000 |
| Safe withdrawal rate | 4 % |
| Invested so far | $100,000 |
| Amount you add each year | $20,000 |
| Expected return after inflation (per year) | 5 % |
| Result | |
| FI number (portfolio needed) | $1,000,000 |
| Time to reach it | 21 years 1 month |
| Progress so far | 10% |
| Monthly spending covered | $3,333 |
FI number by withdrawal rate
For default spending of 40,000 a year.
| Safe withdrawal rate | FI number (portfolio needed) | Time to reach it |
|---|---|---|
| 3 % | $1,333,333 | 25 years 6 months |
| 3.5 % | $1,142,857 | 23 years 1 month |
| 4 % | $1,000,000 | 21 years 1 month |
| 4.5 % | $888,889 | 19 years 5 months |
| 5 % | $800,000 | 17 years 11 months |
The FI number
Your financial independence number is annual spending divided by the withdrawal rate. At $40,000 a year and a 4% rate, it is $1,000,000, which is 25 times your yearly spending. At 3% it is $1,333,333, and at 5% it is $800,000.
The monthly spending this supports is $3,333. Because the target is a multiple of your spending, cutting spending helps twice: it lowers the target and it raises the amount you can save.
Time to reach it
Starting with $100,000, adding $20,000 a year and earning 5% above inflation, the default plan takes about 21 years 1 month. You are 10% of the way there. Doubling the yearly addition to $40,000 cuts the time to 14 years 2 months.
If you already have $2,000,000, the calculator says "already there", since the portfolio exceeds the target. All figures use a real return, so they are in today’s money and need no separate inflation adjustment.
What the 4% rule is and is not
The 4% rule comes from US research on 30-year retirements (the Trinity study), which found that withdrawing 4% of the starting portfolio, then adjusting for inflation each year, historically lasted 30 years in most periods. It is a rule of thumb, not a guarantee.
People retiring early face a longer horizon, uncertain returns and sequence risk, which is a poor market early in retirement. Many planners therefore discuss lower rates, flexible spending, or part-time income as safety margins.
Using the result well
Treat the output as a rough plan. Real returns vary, taxes and fees reduce them, healthcare and housing costs change, and expenses are rarely flat. Revisit your numbers every year, and try a few withdrawal rates and returns to see how sensitive the timeline is.
This tool is for illustration and is not financial advice. A qualified adviser can help with taxes, pensions and risk for your own situation.
Frequently asked questions
What is the 4% rule?
A guideline that you can withdraw about 4% of your starting portfolio a year, adjusted for inflation, with a good chance it lasts 30 years.
How much do I need to retire?
Divide your yearly spending by your withdrawal rate. At 4%, multiply spending by 25.
Why use a return after inflation?
It keeps everything in today’s money. Subtract expected inflation from the return you expect.
Is a lower withdrawal rate safer?
Generally yes. A lower rate means a larger portfolio is needed but it is more likely to last longer.
Does it include pensions or other income?
No. Lower your annual expenses by any guaranteed income, such as a pension, to see the portfolio you still need.
Is this financial advice?
No. It is a simple illustration based on fixed assumptions.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.