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A FIRE number can set you free. What’s yours?
In Financial Independence, Retire Early (FIRE) culture, you’re working toward what is known as your FIRE number — the amount of money at which you can embrace a work-optional lifestyle. A napkin-math calculation for this number is to multiply your annual expenses by 25, sometimes known as the 4% rule.
Use the slider below to see what your FIRE number would be based on various monthly expense numbers, according to the 4% rule.
Approximate Your FIRE Number
The FIRE Number: What to Keep in Mind
The numbers above might feel intimidating at first. Let’s all get on the same page about what they mean.
First, it’s important to remember that a FIRE number is different from how much money you need to retire. We’re playing big here.
Your FIRE number is how much money you’ll need to have in investments — whether in your 401(k), Roth IRA, brokerage, or other accounts — to live off the income those investments generate and never touch the principal. In theory, you could be retired for 100 years, and it wouldn’t matter: your principal, untouched, would remain the same.
Even if you don’t want to retire early, your FIRE number can still help you plan your financial future. Many people only want to partially retire, or dip in and out of the workforce throughout their career. The FIRE number is a way to estimate how much passive income will be produced from your investments, so you know exactly how much you need to earn to close the gap.
For most, the FIRE number is… a lot of money. It can feel intimidating at first.
Remember that, at its core, a FIRE number calculation helps you determine approximately how much passive income will be generated from your retirement savings and investments at any given time.
The FIRE number isn’t just a destination. Think of it as a planning tool to project how your wealth will grow as you enter your 30s, 40s, 50s, and beyond, based on current saving and spending habits.
Whatever your reason for finding it, the FIRE number is one of the most thrilling calculations you’ll ever make in your personal finance journey. But to get an exact …….