Retirement
Financial independence target
Spending divided by the withdrawal rate. Equivalent to multiplying spending by the reciprocal of the rate — 25x at 4%.
The Formula
FIRE Number = Annual Spending / Safe Withdrawal Rate
Spending divided by the withdrawal rate. Equivalent to multiplying spending by the reciprocal of the rate — 25x at 4%.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| S | Projected annual spending in retirement | currency | Build it line by line. Include taxes, insurance, healthcare and the replacement cycle for cars and appliances. |
| WR | Safe withdrawal rate as a decimal | decimal | 0.04 for four percent. Lower is more conservative and requires a larger multiple. |
| F | Required invested portfolio | currency | Invested assets, not including the home you live in — though imputed rent matters if the mortgage ends. |
What Each Symbol Means
Scurrency
Projected annual spending in retirement
Build it line by line. Include taxes, insurance, healthcare and the replacement cycle for cars and appliances.
WRdecimal
Safe withdrawal rate as a decimal
0.04 for four percent. Lower is more conservative and requires a larger multiple.
Fcurrency
Required invested portfolio
Invested assets, not including the home you live in — though imputed rent matters if the mortgage ends.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate your fire number page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Your FIRE Number, filed under Finance. Every number the guide produces comes from substituting into this one line.