FIRE Number
Definition
The total amount of savings and investments needed to achieve Financial Independence and Retire Early, typically calculated as 25 times annual expenses.
Formula
FIRE Number = Annual Expenses × 25Your FIRE number is the portfolio size that allows you to stop working and live off investment returns indefinitely. The most common calculation multiplies your expected annual expenses by 25, which is derived from the four-percent safe withdrawal rate rule.
For example, if you spend $40,000 per year, your FIRE number is $1,000,000. Variations exist depending on lifestyle goals: Lean FIRE targets a minimalist budget, Fat FIRE aims for a comfortable or luxurious lifestyle, and Barista FIRE combines part-time work with partial portfolio withdrawals.
Reaching your FIRE number requires aggressive saving, typically 50 to 70 percent of income, combined with low-cost index fund investing. The journey emphasizes reducing expenses as much as increasing income, since every dollar cut from spending reduces your target by twenty-five dollars.
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Related Calculators
Related Terms
Safe Withdrawal Rate
financeThe percentage of a retirement portfolio you can withdraw annually without running out of money, historically established at four percent.
Compound Interest
financeInterest calculated on both the initial principal and the accumulated interest from previous periods, causing wealth to grow exponentially over time.
Net Worth
financeThe total value of all assets owned minus all liabilities owed, representing an individual's or company's overall financial position.
Roth IRA
financeA retirement account funded with after-tax dollars that allows tax-free growth and tax-free withdrawals in retirement.
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