How to calculate your FIRE number

Your FIRE number — the portfolio target for financial independence — converts an estimated annual spending figure into a savings goal. The math looks precise: divide spending by a withdrawal rate and you get a target balance. But that apparent precision hides uncertain assumptions about future spending, investment returns, taxes, and how long you need the portfolio to last. Treat the FIRE number as an organizing figure you refine over time, not a single immutable finish line.

Start with annual spending, not current income

FIRE planning begins with how much you expect to spend once work is optional — not how much you earn today. Include housing, food, transportation, insurance, taxes, healthcare, travel, and irregular costs like home maintenance or vehicle replacement. If you plan to relocate, pay off a mortgage, or reduce work-related expenses, adjust spending accordingly. Underestimating healthcare before Medicare eligibility is a common reason FIRE projections fall short.

Track actual spending for several months or use a budget tool to ground your estimate. The budget calculator can help categorize expenses and identify a realistic annual total.

Choose a withdrawal rate — and understand its limits

Divide annual spending by a chosen withdrawal rate to get your portfolio target. At $50,000 per year and a 4% withdrawal rate, the FIRE number is $1.25 million. A lower rate — say 3.5% — produces a larger target but may offer more resilience against bad markets and long retirements. No single percentage works for every horizon, allocation, and spending pattern. Read our guide on safe retirement withdrawals for context on sequence risk and flexible spending rules.

The FIRE calculator combines spending, savings rate, expected return, and withdrawal rate to estimate when you might reach your target.

Keep dollars and returns consistent

Mixing real and nominal assumptions distorts timelines. Real returns subtract expected inflation; nominal returns include it. Pair real returns with today’s-dollar spending, or pair nominal returns with inflation-adjusted future spending — not both at once. The SEC emphasizes that long-term planning should account for inflation’s effect on purchasing power.^[2]

The compound interest calculator and SEC planning tools illustrate how contribution rate and return assumptions interact over decades.^[1]

Account for other income sources

Social Security, pensions, rental income, or part-time work reduce the portfolio withdrawals you need. Many FIRE plans target covering baseline expenses from investments while treating Social Security as a later-life buffer. Benefit amounts depend on earnings history and claiming age.^[4] The Social Security calculator helps estimate benefits at different claiming ages.

The Coast FIRE calculator models a related milestone: when existing savings might grow to your full FIRE target without further contributions.

Stress-test and revisit the target

Run scenarios with higher spending, lower returns, longer horizons, and delayed retirement dates. Test what happens if you spend 10% more in the first decade or if markets deliver below-average returns early on. Retirement planning tools from regulators and nonprofits encourage periodic review rather than one-time calculation.^[3]

The retirement projection calculator projects balances under varied contribution and return assumptions. Update your FIRE number when income, spending, family size, or tax situation changes. Financial independence is a moving target — the value of the exercise is disciplined saving and realistic expectations, not hitting a round number on a specific date.