Your Australian FIRE Number: How Much You Need to Retire Early

The base formula: FIRE Number = Annual Expenses x 25. If you spend $60,000 per year, your FIRE number is $1,500,000. If you spend $40,000 per year, it is $1,000,000. But for Australians, this requires splitting across two buckets.

The Australian two-phase approach: if you plan to retire at 45 with $50,000 in annual expenses, you need enough outside super to fund 15 years until preservation age (roughly $750,000 in investments), plus enough in super to fund the rest (which compound growth may achieve from your existing balance). Your total FIRE number is the sum of both buckets.

Reducing expenses has a double impact: it lowers your FIRE number AND frees up more income to invest. Cutting $5,000 per year in expenses reduces your FIRE number by $125,000 and accelerates your timeline by years. In Australian terms, moving from Sydney to a regional area could reduce annual expenses by $15,000-$25,000, slashing your FIRE number by $375,000-$625,000.

Franking credits and super tax advantages mean your effective FIRE number in Australia may be lower than in many other countries. A portfolio generating $60,000 in fully franked dividends provides more after-tax income than $60,000 in unfranked income — potentially reducing the amount you need.

Your FIRE number is not fixed. Revisit and recalculate annually as your lifestyle, income, super balance, and goals evolve. Life changes — a new child, a move to a cheaper area, a partner reaching their own FIRE number — can all shift the target significantly.