FIRE number calculator for financial independence

Wetin be FIRE number?

FIRE mean Financial Independence, Retire Early. Your FIRE number na di total value of your portfolio wey go make your investments fit sustain your lifestyle for long, without you needing to work. Dem dey calculate am by dividing your yearly expenses by your safe withdrawal rate.

If you use 4% withdrawal rate, you need 25 times your yearly expenses. If na 3.5%, you need about 28.6 times. Di years-to-FIRE estimate dey use compound growth: e dey project say your current savings go grow with di expected return, plus monthly contributions, until you reach di FIRE number.

Types of FIRE

Lean FIRE

Retire with tight budget, usually under $40k/year. E need smaller portfolio but e no get plenty margin for unexpected expenses or lifestyle inflation. Lean FIRE dey work best for people wey truly like simple lifestyle and get low fixed costs like house wey dem don buy and no dependents.

FIRE

Retire comfortably with moderate lifestyle. Na di classic 25× expenses approach with 4% withdrawal rate. Most FIRE planning dey assume diversified index fund portfolio, low fees, and retirement horizon of 30 to 40 years.

Fat FIRE

Retire with better lifestyle, usually $100k+/year for spending. E need bigger portfolio but e give more flexibility, security, and ability to handle big expenses like private healthcare, children education, or property without spoiling your retirement plan.

Barista FIRE / Coast FIRE

Hybrid approaches wey you stop full-time work before you reach your full FIRE number. For Barista FIRE, part-time or low-stress work dey cover your current living expenses while your portfolio dey grow reach full FIRE. For Coast FIRE, your portfolio don big reach level wey compound growth alone — without any extra contributions — go reach di FIRE number by a target retirement age. You still need cover expenses through work, but you no need save again.

Di 4% rule: where e come from and im limits

Di 4% rule come from di Trinity Study (Cooley, Hubbard, and Walz, 1998), wey analyse historical US stock and bond returns from 1926 to 1995. Di study find say portfolio wey get 50/50 stock-to-bond split survive 4% yearly withdrawal for 30-year period for 95% of historical scenarios. Di rule later popular for FIRE communities as "25× your annual expenses."

Key limitations of di 4% rule:

• Dem design am for 30-year retirements, no be di 40 to 50-year horizons wey early retirement dey common. Longer time horizons fit need lower withdrawal rate of 3% to 3.5%.
• E base on US market returns, wey historically strong. International portfolios or future environments wey returns dey lower fit behave differently.
• E no account for flexibility. Most retirees fit reduce spending for bad market years, wey dey improve portfolio survival odds well compared to rigid fixed-rate withdrawals.
• Sequence of returns risk: bad market returns early for retirement dey more harmful than di same average returns wey spread more evenly, because early withdrawals dey reduce di portfolio before e fit recover.

How to calculate your FIRE number

FIRE number = annual expenses ÷ safe withdrawal rate

For 4%: FIRE number = annual expenses × 25 For 3.5%: FIRE number = annual expenses × 28.6 For 3%: FIRE number = annual expenses × 33.3

Example: If you dey spend $60,000 per year, your FIRE number for 4% na $1,500,000. For 3.5%, na $1,714,286. Di difference between 4% and 3.5% withdrawal rate add $214,000 to di target — big increase wey fit add some years to di accumulation phase.

Years to FIRE

How long e go take you reach your FIRE number depend on three things: your current savings, your annual contribution rate, and your expected portfolio return. Di compound growth formula dey project these forward. Higher savings rates dey reduce years-to-FIRE well — person wey dey save 50% of im income usually reach FIRE in 15 to 17 years from zero start, no matter how high im income be.

Savings rate dey matter pass income because e dey determine both di accumulation speed (how fast di portfolio dey grow) and di FIRE number itself (higher savings rate = lower expenses = lower target).

Wetin to include for yearly expenses

Include all recurring costs: housing, food, transport, healthcare, insurance, subscriptions, and reasonable estimate for irregular costs like repairs, travel, and gifts. Many FIRE planners dey add 10–20% buffer to their current spending to account for lifestyle changes for retirement and di gradual increase for healthcare costs as age dey go up.

No include di savings and investment contributions themselves — those ones go stop for retirement. But include any costs wey your employer dey cover now, like health insurance premiums, wey you go need fund by yourself.