FIRE Calculator
Calculate your path to financial independence and early retirement
How to Use This Calculator
This FIRE calculator helps you map out your journey to financial independence by analyzing your current financial position and projecting when you can safely retire. Start by entering your current savings and investments, which should include retirement accounts (401(k)/IRA in the US, or RRSP/TFSA in Canada), taxable brokerage accounts, and any other investment holdings. Exclude your primary residence and emergency fund from this figure since those assets are not intended to generate retirement income.
Next, input your monthly investment contribution. This represents the amount you consistently add to your investments each month. The calculator uses this to project future portfolio growth alongside investment returns. Your annual expenses in retirement is perhaps the most critical input because it determines your FIRE target number. Be realistic here and consider both essential costs and discretionary spending you want to maintain.
The safe withdrawal rate defaults to 4%, which is based on the Trinity Study and represents the percentage of your portfolio you can withdraw annually with a high probability of never running out of money over a 30-year period. More conservative planners may use 3.5% while those comfortable with flexibility might use 4.5%. Adjusting this rate directly impacts your required FIRE number. A 4% rate means you need 25 times your annual expenses, while a 3.5% rate requires approximately 28.5 times your expenses.
Understanding FIRE
FIRE stands for Financial Independence, Retire Early, a movement that has transformed how millions of people think about work, money, and freedom. Unlike traditional retirement planning that assumes working until your mid-60s, FIRE challenges the notion that decades of mandatory employment are necessary. The movement gained mainstream attention through blogs like Mr. Money Mustache, which popularized the idea that aggressive saving combined with simple living could enable retirement in your 30s or 40s.
The Four Types of FIRE
Lean FIRE represents the minimalist approach, targeting a retirement lifestyle supported by approximately $40,000 or less annually. Practitioners embrace frugality and often live in lower cost-of-living areas. This path requires a smaller portfolio, typically under $1 million, making financial independence achievable faster.
Fat FIRE is for those who want financial independence without significant lifestyle compromises. Fat FIRE practitioners target annual spending of $100,000 or more, requiring portfolios of $2.5 million and beyond. This approach takes longer but provides more cushion for unexpected expenses and lifestyle flexibility.
Barista FIRE represents a middle ground where you accumulate enough investments to cover most expenses but continue working part-time. The name comes from the idea of working as a barista primarily for health insurance benefits. This strategy reduces the portfolio requirement while maintaining some income and benefits.
Coast FIRE involves front-loading your savings early in life so that compound growth carries your portfolio to your target without additional contributions. Once you reach Coast FIRE, you only need to earn enough to cover current expenses since your existing investments will grow to support retirement on their own timeline.
The 4% Rule Explained
The foundation of FIRE planning is the 4% safe withdrawal rate, derived from the landmark Trinity Study conducted by professors at Trinity University in 1998. Researchers analyzed historical market data to determine what withdrawal rate would have survived various 30-year periods including the Great Depression and stagflation of the 1970s. They found that withdrawing 4% of your initial portfolio value, adjusted annually for inflation, succeeded in approximately 95% of historical scenarios.
This 4% rate translates directly into the "25x rule" meaning you need 25 times your annual expenses saved to reach FIRE. If you spend $40,000 per year, your target is $1 million. Spend $60,000, and you need $1.5 million. The elegant simplicity of this formula makes FIRE planning straightforward to calculate and track.
Sequence of Returns Risk
One critical concept every FIRE practitioner must understand is sequence of returns risk. This refers to the danger of experiencing poor investment returns in the early years of retirement when your portfolio is at its largest and most vulnerable. Withdrawing from a declining portfolio can permanently impair your nest egg even if markets recover later. To mitigate this risk, many early retirees maintain flexibility to reduce spending during downturns, keep one to two years of expenses in cash, or pursue part-time income during the first few years of retirement.
FIRE Examples
Understanding FIRE becomes easier with concrete scenarios that illustrate different paths to financial independence.
Aggressive Saver: 10-Year Plan
Marcus, age 28, earns $85,000 annually and commits to an aggressive 65% savings rate. By keeping his expenses at $30,000 per year and investing $55,000 annually, he targets a FIRE number of $750,000 based on the 4% rule. Starting with $25,000 in investments and assuming 7% annual returns, Marcus reaches financial independence in approximately 10 years. By age 38, work becomes entirely optional, giving him decades of freedom to pursue meaningful projects.
Moderate Saver: 15-Year Plan
Sarah and Tom are a dual-income couple earning $140,000 combined. They maintain a comfortable lifestyle spending $56,000 annually while saving $50,000 per year for a 36% savings rate. Their FIRE target of $1.4 million requires 15 years to achieve starting from $80,000 in current savings. This moderate approach allows them to enjoy life while still retiring in their early 50s, more than a decade before traditional retirement age.
Coast FIRE Scenario
Elena aggressively saved in her 20s and accumulated $400,000 by age 32. She decides to pursue Coast FIRE, knowing that at 7% annual growth her portfolio will reach approximately $1.5 million by age 55 without another dollar contributed. Elena now works part-time as a freelance designer, earning just enough to cover her $35,000 annual expenses. She enjoys reduced stress and abundant free time while her investments compound toward her eventual full FIRE number.
The FIRE formula
FIRE Target = Annual Expenses x 25
Based on 4% safe withdrawal rate: 100% / 4% = 25
Example: $40,000 per year expenses = $1,000,000 target
The 25x multiplier comes from the 4% safe withdrawal rule, which research suggests allows portfolios to survive for 30 or more years in most historical scenarios. Some conservative planners use a 3.5% rate, requiring 28.5x expenses, while others comfortable with flexibility use 4.5% requiring only 22x expenses.
Frequently Asked Questions
Is the 4% rule still valid in today's economy?
The 4% rule remains a useful guideline but deserves scrutiny given current market conditions. The original Trinity Study analyzed data from 1926 to 1995, a period that included both tremendous growth and severe downturns. Recent research by financial planners like Wade Pfau suggests that lower expected returns from bonds and potentially lower stock returns may warrant a more conservative 3.5% withdrawal rate for very long retirements spanning 40 to 50 years. However, most FIRE practitioners maintain flexibility in their spending, which provides a significant safety margin that the rigid assumptions of the Trinity Study did not account for.
How much money do I actually need to retire early?
Your FIRE number depends entirely on your spending. Using the 4% rule, multiply your annual expenses by 25. Someone living on $30,000 per year needs $750,000, while someone spending $80,000 needs $2 million. The critical insight is that reducing expenses has a double benefit since it both lowers your target and increases how much you can save. Cutting $10,000 from annual spending reduces your FIRE number by $250,000 and adds $10,000 to your annual savings.
How do I handle healthcare in early retirement?
United States: Healthcare represents one of the biggest challenges for early retirees. Options include purchasing coverage through the Affordable Care Act marketplace where subsidies may be available depending on your income, joining a health sharing ministry, maintaining part-time employment specifically for benefits through the Barista FIRE approach, relying on a working spouse's employer coverage, or budgeting $15,000 to $25,000 annually for individual or family coverage.
Canada: Basic healthcare is covered by provincial health insurance regardless of employment status, making early retirement significantly easier. However, you should budget for items not covered by provincial plans: dental care, vision care, prescription drugs, and extended health services. Many early retirees purchase private supplemental insurance or budget $2,000-$5,000 annually for these expenses.
What are considered safe withdrawal rates for different retirement lengths?
The traditional 4% rule was designed for 30-year retirements. For longer time horizons common in early retirement, many experts recommend adjusting downward. A 3.5% rate provides additional safety for 40-year retirements while a 3% rate offers maximum protection for 50-plus year time horizons. Conversely, if you have flexibility to reduce spending during downturns or earn supplemental income, you might safely use 4.5% or higher. The key is matching your withdrawal rate to your specific circumstances and risk tolerance.
Can I pursue FIRE with children?
Absolutely, though it requires more careful planning. Families pursuing FIRE typically budget for childcare, activities, education savings, and larger housing needs. Many families target Barista FIRE or Coast FIRE rather than full early retirement, maintaining some income while children are young. College funding strategies vary widely with some FIRE families prioritizing 529 plans while others plan for children to attend affordable state schools or pursue scholarships. The key is incorporating realistic child-related expenses into your FIRE number rather than treating children as an obstacle to financial independence.
How does real estate factor into FIRE planning?
Real estate plays different roles in various FIRE strategies. Your primary residence is typically not counted toward your FIRE number since it does not produce income, though owning outright eliminates housing costs from your expense calculations. Rental properties can accelerate FIRE by generating passive income but require more active management than index fund investing. Some FIRE practitioners use house hacking, living in one unit of a multi-family property while renting others to dramatically reduce housing costs during the accumulation phase.
How long does it realistically take to reach FIRE?
Timeline depends almost entirely on savings rate. At a 10% savings rate, FIRE takes approximately 51 years. Increase to 25% and timeline drops to 32 years. A 50% savings rate achieves FIRE in about 17 years while a 75% rate requires only 7 years. Most dedicated FIRE practitioners target 50% or higher savings rates, making 10 to 15 year timelines realistic. Starting earlier helps tremendously due to compound growth, but FIRE is achievable at any age with sufficient commitment.
What causes FIRE plans to fail?
The most common failure modes include underestimating expenses, particularly healthcare and housing maintenance costs, experiencing sequence of returns risk by retiring into a major market downturn, lifestyle inflation that increases spending beyond planned levels, divorce or major relationship changes, and inadequate emergency reserves forcing portfolio withdrawals during market lows. Successful FIRE practitioners mitigate these risks by building conservative buffers into their numbers, maintaining spending flexibility, keeping adequate emergency funds outside their investment portfolio, and often pursuing some form of income in early retirement years.
FIRE Planning Tips
Successfully reaching financial independence requires more than just saving aggressively. These evidence-based strategies from the Trinity Study research and practitioners like Mr. Money Mustache can help ensure your FIRE plan succeeds.
Calculate Your True Expenses
Track every dollar for at least three months before setting your FIRE target. Many people underestimate spending by 20% to 30% when relying on memory or rough estimates. Include irregular expenses like car repairs, home maintenance, travel, gifts, and medical costs that do not occur monthly but significantly impact annual spending.
Build a Buffer Into Your Number
Consider targeting 28 to 30 times expenses rather than exactly 25 times. This provides margin for unexpected costs, market volatility, and the reality that early retirement often spans 40 to 50 years rather than the 30 years the Trinity Study examined. A larger buffer also provides psychological comfort that makes it easier to actually pull the trigger on retirement.
Plan for Healthcare Explicitly
Do not treat healthcare as an afterthought. In the US, research marketplace plans, get actual quotes, and budget $500 to $2,000 per month for coverage depending on your age and location. In Canada, while basic care is covered, budget for dental, vision, and prescription drugs which can run $200-$500 per month without employer coverage. Healthcare costs typically increase faster than general inflation in both countries.
Test With a Trial Retirement
Before fully committing to early retirement, test your planned budget for six months to a year while still employed. This reveals hidden expenses and confirms whether your projected lifestyle is actually sustainable and enjoyable. Many discover their spending estimates were optimistic or that certain anticipated expenses can be eliminated without sacrificing happiness.
Did you know?
- Increasing your savings rate from 10% to 50% reduces years to retirement from 51 to 17 years.
- The FIRE movement was popularized by the 1992 book "Your Money or Your Life" by Vicki Robin.
- Coast FIRE means saving enough early so compound growth covers retirement without more contributions.
- The average American saves only about 5% of their income, making traditional retirement at 65 difficult.
- Many FIRE practitioners continue working on passion projects after reaching financial independence.