What is FIRE?
FIRE — Financial Independence, Retire Early — is the idea that once your portfolio is large enough to sustainably fund your annual spending, you can stop working for money. The classic rule of thumb: your "FI number" equals 25× your annual spending, which corresponds to a 4% annual withdrawal.
The 4% rule, briefly
Based on the Trinity Study (Cooley, Hubbard, & Walz, 1998), a 4% inflation-adjusted withdrawal from a 60/40 portfolio had a high probability of lasting 30 years across historical sequences. Modern research (Bengen, Kitces) suggests 3.5-4% is reasonable for early retirees with 40-50 year horizons.
Limits of this calculator
- Uses real (after-inflation) returns, so all dollar figures are in today's purchasing power.
- Assumes constant returns and savings — real life is volatile, especially sequence-of-returns risk near retirement.
- Does not model healthcare costs, social security, pensions, or one-time expenses.
- For a more rigorous projection, run a Monte Carlo simulation (e.g., FIRECalc, cFIREsim).