FIRE Calculator

What is FIRE?

FIRE stands for Financial Independence, Retire Early. It's a movement focused on achieving financial independence—having enough wealth to live on investment returns without needing traditional employment. FIRE isn't just about retiring early; it's about having the freedom to choose how you spend your time.

Understanding Your FIRE Number

Your FIRE number is the amount of money you need invested to cover your living expenses indefinitely through investment returns. The most common calculation uses the 4% rule:

FIRE Number = Annual Expenses × 25

This formula comes from the 4% safe withdrawal rate, which research suggests you can withdraw annually from a balanced portfolio with a high probability of lasting 30+ years.

Examples:

• Annual expenses of $40,000 → FIRE number of $1,000,000
• Annual expenses of $60,000 → FIRE number of $1,500,000
• Annual expenses of $80,000 → FIRE number of $2,000,000

The beauty of FIRE is that your income level doesn't determine your timeline—your savings rate does. Someone earning $50,000 who saves 50% can reach FIRE faster than someone earning $200,000 who saves only 10%.

Different Types of FIRE

The FIRE community has several approaches based on lifestyle preferences:

• Lean FIRE: Achieving FI with minimal expenses, typically $25,000-$40,000 annually. Requires frugality and intentional living. FIRE number: $625,000-$1,000,000. Fastest path to FI but requires lifestyle sacrifices many find difficult long-term.
• Regular FIRE: Achieving FI with moderate expenses, typically $40,000-$75,000 annually. Balanced approach with reasonable comfort. FIRE number: $1,000,000-$1,875,000. Most common FIRE target.
• Fat FIRE: Achieving FI with higher expenses, typically $100,000+ annually. Allows for luxury spending and comfort. FIRE number: $2,500,000+. Takes longer but maintains or improves current lifestyle.
• Barista FIRE: Achieving enough wealth to cover most expenses, with part-time work covering the rest. Reduces stress while building toward full FI. Allows earlier transition from high-stress career.
• Coast FIRE: Saving enough early so compound interest will reach your FIRE number by traditional retirement age, without additional contributions. Provides career flexibility in middle age.

The Math Behind FIRE

Your savings rate is the key metric determining your path to FIRE. Here's approximately how long it takes to reach FI at different savings rates (assuming 7% real returns):

• 10% savings rate: ~51 years to FI
• 25% savings rate: ~32 years to FI
• 50% savings rate: ~17 years to FI
• 65% savings rate: ~10.5 years to FI
• 75% savings rate: ~7 years to FI

Notice the dramatic impact of higher savings rates. Going from 10% to 25% savings cuts your timeline by nearly 20 years. This is why FIRE enthusiasts focus intensely on increasing savings rate through both earning more and spending less.

Strategies to Accelerate Your FIRE Journey

1. Increase Your Savings Rate:

• Track every dollar spent to find waste and optimization opportunities
• Optimize the "big three": housing, transportation, and food (typically 60-70% of expenses)
• Avoid lifestyle inflation when income increases
• Consider geographic arbitrage (living in lower cost-of-living areas)

2. Optimize Investment Returns:

• Use low-cost index funds to minimize fees (expense ratios under 0.10%)
• Maximize tax-advantaged accounts (401k, IRA, HSA)
• Maintain appropriate asset allocation for your timeline
• Avoid market timing and trading fees through buy-and-hold strategy

3. Increase Income:

• Develop high-value skills to boost primary income
• Build side income streams (freelancing, consulting, online business)
• Invest in career development and strategic job changes
• Consider entrepreneurship if risk-tolerant

4. Reduce Expenses Strategically:

• Housing: Consider downsizing, house hacking, or relocating
• Transportation: Drive paid-off reliable cars, use public transit, bike
• Food: Cook at home, meal prep, shop strategically
• Insurance: Shop annually, increase deductibles, bundle policies
• Subscriptions: Audit regularly, share family plans, eliminate unused services

Common FIRE Pitfalls to Avoid

• Underestimating Healthcare Costs: Healthcare before Medicare eligibility (age 65) is expensive. Budget $500-1,500/month for ACA marketplace plans.
• Ignoring Inflation: Use real (inflation-adjusted) returns in calculations. Your FIRE number will need to grow with inflation.
• Sequence of Returns Risk: Market crashes early in retirement can deplete your portfolio. Consider a larger emergency fund or flexible withdrawal strategy.
• Not Planning for Taxes: Understand tax implications of different account withdrawals. Roth conversions and tax-efficient withdrawal strategies matter.
• Lifestyle Creep: Expenses often increase over time. Build in buffer or plan to reduce spending if needed.
• Retiring TO Something: FIRE requires purpose. Plan what you'll do with your time, not just what you're retiring from.

Is FIRE Right for You?

FIRE requires sacrifice, discipline, and delayed gratification. Consider:

• Are you willing to live significantly below your means for years or decades?
• Do you have or can you develop a high savings rate (30%+ ideally)?
• Are you comfortable with investment risk and market volatility?
• Do you have a vision for how you'd spend your time in FI?
• Can you maintain motivation during the long journey?

FIRE isn't binary—you can pursue financial independence without retiring ultra-early. Even increasing your savings rate to 25% builds wealth, provides security, and creates options. The principles of spending intentionally and investing aggressively benefit everyone, whether you retire at 40, 50, or 65.