FIRE Number: What It Is and Why It Matters
Your FIRE number is the total amount of invested assets you need to retire or achieve financial independence. It's calculated as 25 times your annual expenses, derived from the 4% safe withdrawal rate.
The formula: FIRE Number = Annual Expenses x 25. If you spend $40,000/year, your FIRE number is $1,000,000. If you spend $60,000/year, it's $1,500,000.
Your FIRE number is deeply personal — far more about your spending than your income. Two people with identical incomes can have very different FIRE numbers based on lifestyle choices.
Reducing expenses has a double impact: it lowers your target number AND frees up more income to invest. Cutting $5,000/year in expenses reduces your FIRE number by $125,000 and accelerates your timeline by years.
The calculation should be personalised. Consider healthcare costs, inflation over a long retirement, potential part-time income, and anticipated major expenses. Those retiring in their 30s or 40s may prefer 28-33x expenses for a larger buffer.
Your FIRE number isn't fixed. Revisit and recalculate annually as your lifestyle, income, and goals evolve.
Richify Tip
Richify's AI agents calculate your personalised FIRE number, break it into achievable milestones, and show how your current savings rate tracks toward the goal.
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