How much do you need to retire early? Your FIRE number by monthly spending

Financial independence (FIRE) means having enough invested to cover what you spend, so that work becomes optional. How much that is depends mostly on one number: how much you spend a month. Your income, your age and what you have saved so far do not change the target. They only decide how long it takes to get there.

The basic sum: 25 times your yearly spending

The best-known answer comes from the 4% rule: in the first year you take out 4% of your portfolio, and after that the same amount raised with inflation. So the portfolio has to be 25 times your yearly spending. A more careful 3.5% means 28.6 times, and 3% means 33.3 times.

Monthly spending	A year	4% rule	3.5% rule	3% rule	History, 50 years
$2,000	$24,000	$600,000	$686,000	$800,000	$669,000
$3,000	$36,000	$900,000	$1,030,000	$1,200,000	$1,000,000
$4,000	$48,000	$1,200,000	$1,370,000	$1,600,000	$1,340,000
$6,000	$72,000	$1,800,000	$2,060,000	$2,400,000	$2,010,000
$8,000	$96,000	$2,400,000	$2,740,000	$3,200,000	$2,670,000

When 25 times is not enough

The 4% rule was worked out for a 30-year retirement. If you want to stop working at 40 or 45, the money has to last longer. So we ran every historical period in the US data since 1928 through the same calculation the FIRE calculator uses, and looked for the portfolio that would have lasted.

Years of retirement	Lasts in 90% of periods	Lasts in every period
30	23.4	26.8
40	25.8	28.7
50	27.9	30.1

For 30 years, 23.4 times your spending would have been enough, a little less than the 25 of the 4% rule. For 50 years it is 27.9 times. If you plan to stop working really early, treat 25 times as the floor, not the target.

Social Security lowers the sum

Once Social Security starts, the portfolio has to pay for less. Say you stop working at 45, plan to 95, and from 65 Social Security covers a third of your spending. Then 25.3 times your yearly spending would do instead of 27.9 times, or $1,220,000 instead of $1,340,000 in the example.

A third is only an example. Your Social Security statement at ssa.gov shows an estimate based on your own earnings record, and the calculator takes your amount and the age you start claiming.

How fast you get there

Take the calculator's example: you are 30, you have $50,000 saved, and out of $5,500 a month you save $1,500, which is 27%. Your investments earn 7% a year and inflation runs at the Fed's 2% target. You would reach 25 times your spending at 58.

Spending less works twice: it lowers the target and raises what you can save. Spending a fifth less ($3,200), you would save $2,300 and reach financial independence at 50, 8 years sooner.

Spending	Saving	Savings rate	Sum needed	FIRE age
$3,200	$2,300	42%	$960,000	50
$3,600	$1,900	35%	$1,080,000	54
$4,000	$1,500	27%	$1,200,000	58
$4,400	$1,100	20%	$1,320,000	65

Mind inflation

Every amount here is in today's money. In 20 years prices will be higher: if inflation stayed at the Fed's 2% target, today's $1,200,000 would be about $1,780,000. That is why the calculator works in today's prices and takes inflation off the return.

What not to forget

• Spending changes over time. A paid-off mortgage lowers it, health care later in life can raise it. Plan with what you will spend once you are independent, not with what you spend today.
• Health insurance. Retiring before 65 means paying for coverage yourself until Medicare starts. Put it in your spending.
• Fees and taxes. Every percent of fees raises the sum you need, and withdrawals from tax-deferred accounts are taxed as income.
• A cash cushion. Cash for the unexpected means you do not have to sell investments in a downturn.
• History is not a promise. The data are one market's past. The future can turn out worse or better.

See also: Start investing at 25 or 35 · A 0.2% or a 1.5% fund fee

Work out your own number and the age you can reach it with the FIRE calculator. It also covers Coast and Barista FIRE, Social Security and part-time work.