FIRE Calculator

FIRE stands for Financial Independence, Retire Early. It's a movement focused on extreme savings and investment to achieve financial independence earlier than traditional retirement age. The core principle is accumulating enough invested assets that the returns (typically 4% annually) can cover your living expenses indefinitely. Once you reach your 'FIRE number' (usually 25x your annual expenses), you can stop working for money.

The FIRE number is calculated using the 25x rule, which is based on the 4% safe withdrawal rate from the Trinity Study. To find your FIRE number, multiply your annual expenses by 25. For example, if you spend $40,000 per year, your FIRE number is $1,000,000. This amount, invested in a diversified portfolio, should theoretically last 30+ years with a 4% annual withdrawal rate, adjusting for inflation.

Lean FIRE means retiring on a minimal budget (70% or less of current expenses), often around $20-40K/year in the US. Regular FIRE means maintaining your current lifestyle in retirement. Fat FIRE means retiring with a comfortable/luxurious lifestyle (150%+ of current expenses), often $100K+/year. Each requires different savings targets: Lean FIRE might need $500K-$1M, while Fat FIRE could require $2.5M+.

Coast FIRE is when you've saved enough that, even with no additional contributions, compound growth will get you to your FIRE number by traditional retirement age (65). Once you reach Coast FIRE, you only need to cover current expenses - you can work less, take lower-paying but more fulfilling jobs, or pursue passion projects without worrying about retirement savings. It's often called 'financial freedom light.'

The 4% rule was based on historical US market data and 30-year retirement periods. For early retirees (40+ year retirements), many experts recommend a more conservative 3-3.5% withdrawal rate. Additionally, the rule assumes a diversified US stock/bond portfolio. Some FIRE practitioners use dynamic withdrawal strategies - spending less in down markets and more in up markets - to improve success rates. Consider running your numbers with both 4% and 3.5% to see the difference.

Most FIRE practitioners invest in low-cost index funds that track the broad market (like total US stock market, total international, and total bond market funds). A common allocation is 80-100% stocks for the accumulation phase, shifting toward more bonds as you approach FIRE. Key principles: minimize fees (expense ratios under 0.2%), diversify broadly, and avoid market timing. Tax-advantaged accounts (401k, IRA, Roth) should generally be maximized first.

Savings rate = (Income - Expenses) / Income. You can increase it by: 1) Reducing expenses - housing (house hack, relocate to LCOL area), transportation (used cars, biking), and food are the big three. 2) Increasing income - negotiate raises, switch jobs, start side hustles, develop high-income skills. 3) Avoiding lifestyle inflation - when income rises, save the difference. The FIRE community targets 50%+ savings rates; every 10% increase in savings rate significantly accelerates your FIRE date.

Healthcare is one of the biggest challenges for early retirees in the US. Options include: ACA marketplace plans (often affordable with low income), health sharing ministries, COBRA (temporary, expensive), spouse's employer plan, part-time work with benefits, or relocating abroad (many countries have excellent, affordable healthcare). Budget $500-1500/month per person for US healthcare until Medicare at 65. Some FIRE planners work part-time specifically for health benefits.

Sequence of returns risk is the danger of market downturns early in retirement depleting your portfolio. Mitigation strategies include: 1) A cash buffer of 1-3 years of expenses to avoid selling during downturns. 2) A flexible withdrawal strategy - spend less in down years. 3) Some part-time income in early FIRE years. 4) A larger portfolio (use 3% instead of 4% rule). 5) A bond tent - temporarily higher bond allocation at retirement, gradually shifting back to stocks. The 4% rule accounts for this historically, but extra safety margin is wise.

It depends on your interest rate and personal preference. Mathematically, if your mortgage rate is below expected market returns (around 7% historically), investing wins. However, having no housing payment reduces your FIRE number and sequence of returns risk. Many FIRE practitioners compromise: pay off the mortgage when they FIRE (using taxable investments) or within a few years of FIREing. The psychological benefit of no debt often outweighs the mathematical optimization.