How to Use This FIRE Calculator
Our Financial Independence, Retire Early (FIRE) Calculator is designed to help you determine exactly how much money you need to accumulate to stop working forever. Whether you are planning for a standard retirement or aggressive early retirement, this tool provides precise numbers based on your personal spending habits.
- Enter Current Age & Retirement Age: This sets your accumulation timeline.
- Annual Expenses: Input your yearly spending. This is the most critical number. we default to 25x this amount as your target.
- Current Savings: Include all investments (stocks, bonds, retirement accounts). Do not include your primary home equity unless you plan to sell it.
- Growth Rate & Inflation: Adjust these based on your region. (e.g., US: 7-8% growth, 3% inflation; India: 10-12% growth, 6% inflation).
What is the 4% Rule?
The "4% Rule" is a common rule of thumb in the FIRE community, derived from the Trinity Study. It states that you can withdraw 4% of your portfolio in the first year of retirement, and subsequently adjust that amount for inflation every year, with a very high probability (95%+) that your money will last for at least 30 years.
FIRE Number = Annual Expenses × 25
For example, if you spend $40,000 per year, you need $1,000,000 invested ($40,000 × 25) to be financially independent.
Types of FIRE
Financial independence isn't one-size-fits-all. Choose the strategy that fits your goals:
- Lean FIRE:For minimalists who plan to live on a strict budget (e.g., <$40k/year). Requires a smaller portfolio but offers less flexibility.
- Fat FIRE:For those who want a luxurious retirement with travel and high spending (e.g., >$100k/year). Requires a significantly larger portfolio (30-50x expenses).
- Coast FIRE:You have saved enough that compound interest alone will carry you to traditional retirement age. You only need to work to cover current expenses.
- Barista FIRE:You have saved a significant amount but not enough to fully retire. You work a low-stress, part-time job (like a barista) to cover some expenses or health insurance.
Inflation: The Silent Killer
Ignoring inflation is the biggest mistake in retirement planning. A million dollars today will not have the same purchasing power in 20 years. Our calculator automatically adjusts for this.
US Context: Historic inflation averages 3%.
India Context: Historic inflation is higher, typically 6-7%. This means you need a larger growth rate on your investments to break even.
Frequently Asked Questions
What is the 4% Rule?
The 4% Rule (Trinity Study) suggests you can withdraw 4% of your portfolio in the first year of retirement, and adjust for inflation thereafter, with a high probability of never running out of money for 30 years.
Does this work for India?
In high-inflation economies like India, a withdrawal rate of 2.5% - 3% is considered safer than 4%.
What is Lean FIRE vs Fat FIRE?
Lean FIRE is retiring on a bare-bones budget (e.g. $40k/yr). Fat FIRE is retiring with luxury and abundance (e.g. $100k+/yr).