What is a FIRE number?

FIRE Number = Annual Expenses ÷ Safe Withdrawal Rate

“FIRE number” is one of those personal-finance terms that sounds technical and turns out to be a single division. This page defines it plainly, shows a worked example, and clears up the two things people most often get wrong about it.

What does “FIRE number” mean?

FIRE stands for Financial Independence, Retire Early. Your FIRE number is the dollar amount that marks that independence: the point where the income thrown off by your investments can replace your salary. Below it, you depend on a paycheck. At or above it, work becomes optional.

You’ll also see it called an FI number (financial-independence number). They mean the same thing — “FI” just drops the retire-early emphasis. The arithmetic is identical.

The intuition: a large enough pot of invested money produces enough return each year to live on, without you having to sell it all off. The FIRE number is simply how big that pot has to be.

How a FIRE number is calculated

One formula:

FIRE Number = Annual Expenses ÷ Safe Withdrawal Rate

The safe withdrawal rate (SWR) is the fraction of the portfolio you take out in the first year, then adjust for inflation. The most-cited default is 4%, which comes from the Bengen and Trinity Study research on 30-year retirements. Dividing by 4% is the same as multiplying by 25 — hence the “25× rule.”

Lower the rate and the target grows: 3.5% needs about 28.6× expenses, 3% needs about 33×. Lower rates buy more safety for very long retirements, at the cost of a bigger number. For the full derivation, see how to calculate your FIRE number and the FIRE formula.

A worked example

Say your household spends $50,000 a year.

FIRE Number = $50,000 ÷ 0.04 = $50,000 × 25 = $1,250,000

At $1.25M invested, a 4% withdrawal is $50,000 — exactly your spending. Want more margin for a 40- or 50-year retirement? Use 3.5%:

$50,000 ÷ 0.035 = $1,428,571

The extra ~$180,000 is the price of a more conservative withdrawal assumption. Every $1 of recurring annual spending needs roughly $25 of invested assets behind it at 4%.

FIRE number vs net worth

This is the most common mix-up. Your net worth is everything you own minus what you owe — including home equity, cars, and other illiquid assets. Your FIRE number counts only investable assets: index funds, stocks, bonds, and retirement accounts.

The reason is simple: you can’t withdraw 4% a year from the house you live in. Count home equity only if you genuinely plan to downsize and convert it to investments. More on this in FIRE number vs net worth.

Your FIRE number is personal

There’s no universal answer, because the only input that matters is your spending. Most US households land somewhere between $1,000,000 and $2,500,000, simply because typical retirement spending is $40,000–$100,000 a year and 25× that range is $1M–$2.5M. Someone living on $30,000 has a Lean FIRE number near $750,000; someone spending $120,000 needs $3,000,000.

Because expenses drive everything, the fastest way to shrink your FIRE number is to lower recurring spending — a $5,000/year cut lowers the target by $125,000 at a 4% rate, and raises your savings rate at the same time.

Go deeper:

• How to Calculate Your FIRE Number — the full framework, the four FIRE variants, and live calculators.
• The FIRE formula — the equation itself and its Coast, Lean, and Barista variants.
• What is the 4% rule? — where the 25× multiplier comes from.

Plug your own expenses into the Standard FIRE Calculator to see your number. It runs entirely in your browser — nothing you type is sent anywhere.

Educational content, not financial advice. The 4% rule is based on US historical data and 30-year horizons; longer retirements may warrant a lower withdrawal rate.