Bureau of Wealth

FIRE Calculator: Your Financial Independence Number

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter what you expect to spend each year, a withdrawal rate, what you have invested and what you add each year to see your FIRE number and roughly when you could reach it.

In today's money.

The share of your portfolio you plan to spend each year. 4% is a common starting point.

Check the highlighted fields to see your results.

What this calculator assumes

  • Everything is in today's dollars. Spending, contributions and your target keep their buying power because the return you enter is after inflation.
  • Your investments earn the same real return every year. Markets do not behave that way, and the order of good and bad years can change the outcome a great deal.
  • You add the same amount at the end of each year, after that year's growth. The years to reach your number are counted in whole years.
  • Fees and taxes are not deducted. Lower the return to allow for investment fees, and include the taxes you will pay on withdrawals in your yearly spending.
  • Social Security, pensions and other income are not included. If you expect some, you could reduce your spending figure by the part it will cover, bearing in mind when it starts.
  • The withdrawal rate is a planning assumption, not a guarantee that your money will last.

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How your FIRE number is worked out

FIRE stands for financial independence, retire early. Your FIRE number is the size of portfolio that could support your yearly spending at the withdrawal rate you choose. The calculator divides your spending by the rate: at 4%, that is 25 times your yearly spending.

To find how long it could take, the calculator starts with what you have invested so far. Each year it grows that balance by your real return, adds your yearly contribution and checks whether the total has reached your number. It stops at the first year it does, or reports that it would take over 100 years.

A worked example

Say you expect to spend $40,000 a year. At a 4% withdrawal rate your FIRE number is $1,000,000. You have $50,000 invested, which is 5% of the way there, and you add $20,000 a year. At a 5% real return, you reach your number in 24 years: the balance is $982,186 after 23 years and $1,051,295 after 24.

Small changes move that date a lot. Adding $30,000 a year instead of $20,000 brings it forward to 19 years. Cutting planned spending to $36,000 lowers the number to $900,000 and the time to 22 years. A 4% real return instead of 5% pushes it back to 26 years.

The 4% rule of thumb and its limits

A 4% withdrawal rate is a common starting point, not a promise. As usually described, it means spending 4% of your portfolio in the first year of retirement and adjusting that amount for inflation after that. Whether that lasts depends on things no calculator can know in advance.

The order of returns matters: a market fall early in retirement does more damage than the same fall later, because you are selling investments at low prices to cover spending. An early retirement can also last far longer than a traditional one, and a portfolio that has to last 40 or 50 years needs more margin. Fees and taxes take a share of every withdrawal too. To see the effect of a more cautious plan, try 3.5%: your number rises to $1,142,857 and the time to 26 years. At 3% it is $1,333,333 and 28 years.

Choosing a realistic return

Use a return after inflation, because your spending is in today's dollars. A rough way is to take the yearly return you expect and subtract the inflation rate you expect. Then subtract your investment fees. Investor.gov warns that even small ongoing fees have a big impact over time, and in this calculator a 1 percentage point lower return adds two years to the example above.

Retiring early also raises practical questions this calculator does not answer, such as how you will pay for health insurance before Medicare and how you will reach money held in a 401(k) or IRA. A fee-only financial planner can help test your plan against these.

Related calculators

To see in more detail how steady contributions grow over time, use the compound interest calculator. To check how much your fund and adviser fees could cost over the decades it takes to reach your number, try the investment fees calculator.

Frequently asked questions

What is a FIRE number?

It is the amount you would need invested to cover your yearly spending from withdrawals alone. At a 4% withdrawal rate it is 25 times the amount you expect to spend each year.

Is the 4% rule safe?

It is a rule of thumb, not a guarantee. Poor returns early in retirement, a very long retirement, high fees or taxes can all make 4% too high, so it is worth testing lower rates as well.

What real return should I use?

Take the yearly return you expect before inflation, subtract expected inflation and then subtract your fees. Try a cautious figure as well as a hopeful one, because the difference in years can be large.

Should my spending include taxes?

Yes. The withdrawal has to cover what you spend and any tax on the money you take out, which depends on the type of account it comes from.

What about Social Security?

The calculator ignores it. If you expect benefits later, your portfolio only needs to cover the gap until then and the smaller shortfall afterwards, so your real target may be lower than the figure shown.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.