The most widely used benchmark is the 4% rule: you can withdraw 4% of your portfolio each year indefinitely without running out of money (based on a 60/40 portfolio over 30+ years). This means you need 25× your annual spending saved to retire.
Calculating your FIRE number
Annual spending × 25 = retirement target. If you spend $50,000/year, you need $1.25 million. If you spend $80,000/year, you need $2 million. That's it — no complex formula needed for the baseline.
How long it takes depends on your savings rate
This is where most retirement calculators miss the point. Your savings rate — the percentage of income you save — determines your timeline far more than investment returns:
Save 10% → ~43 years to retire
Save 25% → ~32 years
Save 50% → ~17 years
Save 75% → ~7 years
This is because a high savings rate simultaneously speeds up wealth accumulation AND reduces the target (you need less saved if you spend less).
Adjustments to the 4% rule
- Retire before 65: use a 3.5% withdrawal rate to extend portfolio longevity
- Include Social Security: your required portfolio shrinks by 25× your annual SS benefit
- Include rental income: reduces how much portfolio you need for expenses
- Flexible spending: being able to cut 10–20% in down years dramatically improves portfolio survival
The inflation problem
$50,000 today will have the purchasing power of roughly $27,000 in 30 years at 2% average inflation. Your retirement target should be in real (inflation-adjusted) dollars — or your investments need to beat inflation over time.
Frequently Asked Questions
Does the 4% withdrawal rule still hold up today?
It remains the widely used benchmark, but some planners now recommend 3.5% for more conservative planning, particularly for retirements expected to last 40+ years or in environments of lower projected future returns. The original research (Trinity Study) found a 4% withdrawal rate had roughly a 95% historical success rate over 30-year retirement periods — a solid but not guaranteed foundation.
How does Social Security reduce how much I need to save?
Each dollar of annual Social Security income reduces your required portfolio by 25× under the 4% rule. If you expect $24,000/year from Social Security, you need $600,000 less in portfolio savings. Check your personalised projected benefit at ssa.gov and subtract your annual SS income from your total spending target before calculating your FIRE number.
What if markets crash right before I plan to retire?
This is sequence-of-returns risk — one of the most significant threats to retirement security. Practical mitigation strategies include: keeping 1–2 years of expenses in cash or short-term bonds, using a flexible withdrawal approach (reducing spending 10–20% in down market years), and considering working 1–2 additional years to build a buffer. Preparing for a bad market is planning; assuming a good one is wishful thinking.
Calculate your FIRE number and timeline
Use our FIRE Retirement Calculator to enter your income, expenses, savings rate, and current savings — and see your projected retirement date and FIRE number.