How to Calculate Your FIRE Number

Your FIRE number is the single most important target on your path to financial independence. It is the amount of money you need invested so that your portfolio can sustain your lifestyle indefinitely — or at least for several decades. Once you hit this number, work becomes a choice, not a necessity.

The good news: calculating it is surprisingly simple. The challenge is understanding the assumptions behind the math so you can adjust them for your specific situation.

The 25x Rule

The most widely used formula in the FIRE community is the 25x rule: multiply your annual expenses by 25. That is your FIRE number.

If you spend $40,000 per year, your FIRE number is $1,000,000. If you spend $60,000, it is $1,500,000. If you spend $100,000, it is $2,500,000.

The logic is straightforward: a portfolio of 25 times your annual expenses can sustain a 4% annual withdrawal rate. At 4%, you are pulling out 1/25th of your portfolio each year, which historically has been sustainable over 30-year periods.

The 4% Rule: Where It Comes From

The 25x rule is the inverse of the 4% rule, which originated from William Bengen's 1994 research. Bengen studied every 30-year retirement period going back to 1926 and found that a retiree who withdrew 4% of their portfolio in the first year — adjusting for inflation each year after — never ran out of money, even through the Great Depression, the 1970s stagflation, and every bear market in between.

The Trinity Study, published in 1998, confirmed and expanded these findings using different portfolio allocations. A 50/50 stock-bond portfolio had a 95% success rate over 30 years at a 4% withdrawal rate. A 75/25 stock-bond portfolio did even better.

Important caveats: the 4% rule assumes a 30-year retirement. If you are retiring at 35, you might need your money to last 50 or 60 years. In that case, many FIRE practitioners use a 3.5% or even 3.25% withdrawal rate, which translates to a 29x or 31x multiplier.

Worked Examples

Let us walk through three scenarios to make this concrete.

Example 1: Lean FIRE

Maria lives in a low-cost city and spends $28,000 per year. She is comfortable with frugality and plans to keep expenses low in retirement.

• Annual expenses: $28,000
• FIRE number (25x): $700,000
• Conservative FIRE number (30x): $840,000

If Maria saves $2,000 per month and earns a 7% average annual return, she reaches $700,000 in about 17 years. That is Lean FIRE — a smaller target that is reachable faster, with the trade-off being a tighter budget in retirement.

Example 2: Traditional FIRE

James and his partner spend $55,000 per year. They want to maintain a similar lifestyle without major cutbacks.

• Annual expenses: $55,000
• FIRE number (25x): $1,375,000
• Conservative FIRE number (30x): $1,650,000

At $4,000 per month in combined savings with 7% returns, they reach $1,375,000 in about 17 years. A larger salary and savings amount offsets the higher target.

Example 3: Fat FIRE

Priya earns well and wants to retire with a $120,000-per-year lifestyle — travel, dining out, generous charitable giving.

• Annual expenses: $120,000
• FIRE number (25x): $3,000,000
• Conservative FIRE number (30x): $3,600,000

Fat FIRE requires a much larger portfolio, but Priya's high income lets her save $8,000 per month. At 7% returns, she hits $3,000,000 in about 18 years.

Variations: Calculating Your Lean, Fat, and Coast FIRE Numbers

Lean FIRE Number

Take only your essential expenses — housing, food, healthcare, transportation, insurance — and multiply by 25. This is the bare-minimum portfolio that could sustain you if you cut all discretionary spending. It is useful as a "floor" number that gives you a sense of security even if you have not reached full FIRE.

Fat FIRE Number

Take your current spending and add the lifestyle upgrades you want in retirement — more travel, better healthcare, hobby budgets — then multiply by 25. This is your aspirational target.

Coast FIRE Number

Coast FIRE requires a different formula. You need to calculate how much you need today so that compound growth alone will get you to your full FIRE number by your target retirement age.

The formula: FIRE number / (1 + growth rate) ^ years until retirement.

For example, if your FIRE number is $1,500,000 and you are 30 years old targeting retirement at 55, with 7% expected returns: $1,500,000 / (1.07)^25 = approximately $276,000. If your invested assets are above $276,000 today, you have reached Coast FIRE. You could stop contributing entirely and still retire comfortably at 55.

Adjusting for Your Situation

The 25x rule is a starting point, not a commandment. Here are the most common adjustments people make:

• Healthcare costs. If you are retiring before Medicare eligibility (65 in the US), budget $500 to $1,500 per month for health insurance. This alone can add $150,000 to $450,000 to your FIRE number.
• Social Security or pension income. If you expect $20,000 per year from Social Security starting at 67, you can reduce your FIRE number by $20,000 x 25 = $500,000 for the post-67 phase. Many FIRE planners use a two-phase model: a higher withdrawal rate before Social Security kicks in, and a lower one after.
• Geographic arbitrage. Moving to a lower-cost area — whether a different city, state, or country — can dramatically reduce your annual expenses and therefore your FIRE number. A move from San Francisco to Lisbon could cut your required portfolio in half.
• Part-time income. If you plan to earn $15,000 per year from part-time work or a side business, you can subtract that from your annual expenses before applying the 25x multiplier. This is essentially the Barista FIRE approach.
• Inflation assumptions. The 4% rule already accounts for inflation in withdrawals. But if you expect your personal inflation rate to be higher than average (healthcare costs, for instance), consider using a 3.5% withdrawal rate instead.

Why Your FIRE Number Will Change — and That Is Fine

Your FIRE number is not carved in stone. It changes as your life changes. Getting married, having children, paying off a mortgage, relocating — all of these shift your annual expenses and therefore your target. This is exactly why regular tracking matters. Recalculating your FIRE number once or twice a year keeps your plan grounded in reality rather than a spreadsheet you made five years ago.

For a deeper look at how to monitor your progress month by month, see our guide on how to track your FIRE progress.

How Totala Helps You Calculate and Track Your FIRE Number

Totala makes it easy to connect your FIRE number to your actual financial data:

• Set your FIRE number as a net worth goal. Enter your target amount and Totala will show your progress as a percentage, updated every time you log your balances.
• See your estimated arrival date. Based on your real pace of net worth growth — not a theoretical projection — Totala estimates when you will reach your goal. This adjusts automatically as your savings rate and returns change.
• Track expenses implicitly. By monitoring the non-investment side of your balance sheet, you can spot when lifestyle inflation is creeping up and pushing your FIRE number higher.
• Multi-currency support. If your portfolio spans multiple currencies, Totala converts everything to your base currency automatically so your FIRE progress is always accurate.

Create a free account to set your FIRE number and start tracking your real progress, or try the demo to see how it works.

For the complete picture on the FIRE methodology, check out our FIRE movement guide.