What Is the FIRE Number and How Do I Calculate Mine?
Learn what FIRE means, how to calculate your personal FIRE number using the 25x rule, and whether early retirement is realistically achievable for you.
FIRE in Plain English
FIRE stands for Financial Independence, Retire Early. It describes a lifestyle and financial goal pursued by people who want to achieve financial independence — having enough invested wealth to live without needing employment income — ideally well before traditional retirement age.
The FIRE movement became popular in the 2010s, partly through blogs and online communities that documented real people's journeys from regular jobs to financial independence in their 30s, 40s, or even late 20s. The core insight is simple: if you save a large enough percentage of your income aggressively, you can accumulate enough wealth to live off investment returns far earlier than the conventional retire-at-65 path.
FIRE is not about deprivation or extreme frugality for its own sake. It is about spending intentionally, saving aggressively, and building wealth quickly enough that paid work becomes optional. Some FIRE adherents retire completely. Others continue working but only on projects they choose, freed from the financial pressure to earn a specific income.
How to Calculate Your FIRE Number
Your FIRE number is the total investment portfolio value you need to sustain your lifestyle indefinitely through investment returns. The standard formula is based on the 4% safe withdrawal rate: multiply your expected annual living expenses by 25.
If you expect to spend $40,000 per year in retirement, your FIRE number is $1,000,000. At $60,000 per year, it is $1,500,000. At $80,000 per year, it is $2,000,000.
The 25x rule derives directly from the 4% rule. A $1,000,000 portfolio with 4% annual withdrawals generates $40,000 per year. Research suggests this withdrawal rate has historically sustained portfolios for 30-plus years in virtually all historical market scenarios, making it the standard benchmark for FIRE calculations.
The Two Assumptions That Drive the Calculation
The first key assumption is your annual spending in retirement. This is the number most within your control. Reducing your projected spending from $60,000 to $50,000 reduces your FIRE number from $1.5 million to $1.25 million — a $250,000 difference in what you need to save, which might represent two to four fewer years of work.
The second key assumption is the safe withdrawal rate. The 4% rate assumes a diversified stock and bond portfolio earning sufficient returns to sustain inflation-adjusted withdrawals for 30 years. For early retirees who might be retired for 40 or 50 years, some FIRE adherents use a more conservative 3% or 3.5% rate, which multiplies expenses by 33 or 29 instead of 25.
Investment returns between now and your FIRE date also matter, though you have limited control over them. Using a conservative projected return assumption — 5% to 6% annually after inflation — in your planning gives you a more robust estimate than assuming high historical returns continue.
Is Early Retirement Actually Achievable?
Early retirement is achievable for a meaningful number of people, particularly those with above-average incomes and below-average expenses. The math is straightforward: savings rate determines timeline more than income. Someone saving 50% of a $70,000 income can reach FIRE faster than someone saving 10% of a $150,000 income.
Healthcare is the biggest practical challenge for early retirees in the United States. Before Medicare eligibility at 65, individuals are responsible for their own health insurance costs, which can be substantial. Early retirees must budget for healthcare as a significant line item and plan for how to access coverage.
The concept of Coast FIRE offers an intermediate goal: save enough that compound growth alone will carry you to traditional retirement security, without additional contributions. Someone who saves $250,000 at age 35 in an account earning 7% annually will have approximately $1.9 million at age 65 without adding another dollar. Reaching Coast FIRE means you can work less, take a lower-paying job you enjoy, or reduce financial stress while still building long-term security.