Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A FIRE target is only as reliable as its withdrawal-rate assumption, and small changes to that one number move the required portfolio by a large amount. A target built on a 4% withdrawal rate requires a portfolio 33% larger than the identical spending plan built on a 3% rate, all from a one-percentage-point difference in assumption.
Before you rely on it
What to check
Test the target portfolio at more than one withdrawal-rate assumption rather than anchoring on a single commonly cited percentage.
The common error
Where people go wrong with FIRE calculator
Treating one specific withdrawal rate as a fixed, universally correct number rather than an assumption worth stress-testing. A modest change in that single input moves the required portfolio size substantially.
Sensitivity evidence
How withdrawal rate changes the FIRE portfolio target
| Withdrawal rate | FIRE portfolio target | Estimated years to target |
|---|---|---|
| 2.0% | $3,000,000 | 26.0 years |
| 3.0% | $2,000,000 | 20.0 years |
| 4.0%worked example | $1,500,000 | 16.0 years |
| 5.0% | $1,200,000 | 13.0 years |
| 6.0% | $1,000,000 | 11.0 years |
Every input, tested
Which input moves the FIRE portfolio target most
| Input | Tested from | To | FIRE portfolio target at each end | Swing |
|---|---|---|---|---|
| Withdrawal rate | 3.0% | 5.0% | $2,000,000 to $1,200,000 | $800,000 (53%) |
| Annual spending | $54,000 | $66,000 | $1,350,000 to $1,650,000 | $300,000 (20%) |
| Current invested assets | $270,000 | $330,000 | $1,500,000 to $1,500,000 | none |
| Annual investments | $27,000 | $33,000 | $1,500,000 to $1,500,000 | none |
| Expected annual return | 5.0% | 7.0% | $1,500,000 to $1,500,000 | none |
Two variables at once
FIRE portfolio target by withdrawal rate and annual spending
| Withdrawal rate \ Annual spending | $48,000 | $60,000 | $72,000 |
|---|---|---|---|
| 2.0% | $2,400,000 | $3,000,000 | $3,600,000 |
| 3.0% | $1,600,000 | $2,000,000 | $2,400,000 |
| 4.0% | $1,200,000 | $1,500,000 | $1,800,000 |
| 5.0% | $960,000 | $1,200,000 | $1,440,000 |
| 6.0% | $800,000 | $1,000,000 | $1,200,000 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Annual spending | $60,000 |
| Withdrawal rate | 4.0% |
| Current invested assets | $300,000 |
| Annual investments | $30,000 |
| Expected annual return | 6.0% |
| FIRE portfolio target | $1,500,000 |
| Estimated years to target | 16.0 years |
Complete evidence
Full projection schedule
Show all 10 rows
| Period | Opening balance | Contribution | Growth | Ending balance |
|---|---|---|---|---|
| Year 1 | $300,000 | $30,000 | $18,000 | $348,000 |
| Year 2 | $348,000 | $30,000 | $20,880 | $398,880 |
| Year 3 | $398,880 | $30,000 | $23,933 | $452,813 |
| Year 4 | $452,813 | $30,000 | $27,169 | $509,982 |
| Year 5 | $509,982 | $30,000 | $30,599 | $570,580 |
| Year 6 | $570,580 | $30,000 | $34,235 | $634,815 |
| Year 7 | $634,815 | $30,000 | $38,089 | $702,904 |
| Year 8 | $702,904 | $30,000 | $42,174 | $775,078 |
| Year 9 | $775,078 | $30,000 | $46,505 | $851,583 |
| Year 10 | $851,583 | $30,000 | $51,095 | $932,678 |
Where the inputs come from
Annual spending is what you actually spend, taken from twelve months of bank and card statements, not a target. The withdrawal rate sets the portfolio multiple: 4% means 25 times spending. Current invested assets are the balances you could draw on, excluding your home. Annual investments are what you add each year, and expected return is a planning assumption after fees and, ideally, after inflation. Use real, inflation-adjusted returns to keep everything in today's dollars.
Using the FIRE portfolio target in a real decision
Check how the result changes at a 4% return.
When the result stops applying
The model assumes a constant return and a steady savings rate, ignoring sequence risk, taxes on withdrawals and healthcare before Medicare. A 4% withdrawal rate was tested on 30-year periods, and an early retirement is longer. Job loss, market drops and life changes interrupt the path. It also treats your savings rate as fixed, though income usually changes over a long horizon.
What to compare it with
Adjust the target with the lean, fat and barista FIRE calculators, and see the coast FIRE page for the point where you can stop saving. The sequence of returns and Monte Carlo pages test whether the target is safe. The early retirement health insurance calculator covers the biggest bridge cost before Medicare.
People also ask
Frequently asked questions
How long does it take to reach financial independence?
It depends mostly on your savings rate. Saving half your income typically reaches independence in about 17 years, while saving 15% can take over 40 years.
Should I use nominal or real returns?
Real returns, meaning after inflation, keep your spending target in today's dollars. If you use nominal returns, inflate the spending target as well.
Does FIRE mean never working again?
Not necessarily. Many people keep part-time or meaningful work after reaching the number. FIRE means work becomes optional, not that it stops.