FIRE Calculator - Financial Independence Retire Early
Calculate your path to financial independence and early retirement using the FIRE methodology. Determine how much you need to save and how long it will take to achieve financial freedom.
FIRE Results
Progress Analysis
FIRE Milestones
Lean FIRE: 3x annual expenses
Fat FIRE: 4x annual expenses
Barista FIRE: 25x annual expenses
Tip: Start with emergency fund, then max retirement accounts
Understanding FIRE - Financial Independence Retire Early
FIRE (Financial Independence Retire Early) is a movement focused on achieving financial independence and retiring much earlier than traditional retirement age. The core principle is saving aggressively, investing wisely, and living below your means to accumulate enough wealth to cover your expenses indefinitely.
The 4% Rule
The foundation of FIRE is the 4% rule, which suggests you can withdraw 4% of your portfolio annually without running out of money over 30 years. This means your FIRE number is 25 times your annual expenses.
FIRE Number = Annual Expenses × 25
Example: $50,000 annual expenses = $1,250,000 FIRE number
FIRE Variations
| FIRE Type | Annual Expenses | Lifestyle | Savings Rate |
|---|---|---|---|
| Lean FIRE | $30,000-40,000 | Minimalist lifestyle | 70-80% |
| Fat FIRE | $60,000-100,000 | Comfortable lifestyle | 50-60% |
| Barista FIRE | $40,000-60,000 | Part-time work | 60-70% |
| Coast FIRE | Varies | Continue working | Varies |
Key FIRE Principles
- High Savings Rate: Save 50-80% of income for rapid wealth accumulation
- Investment Growth: Invest in low-cost, diversified portfolios
- Frugal Living: Minimize expenses to maximize savings
- Side Income: Generate additional income through side hustles
- Tax Optimization: Maximize contributions to tax-advantaged accounts
- Emergency Fund: Maintain 3-6 months of expenses in cash
Savings Rate Calculation
Your savings rate is the percentage of your income that goes toward investments and savings. Higher savings rates dramatically reduce the time needed to reach financial independence.
Savings Rate = (Income - Expenses) ÷ Income × 100
Example: $75,000 income, $30,000 expenses = 60% savings rate
Investment Strategy
- Index Funds/ETFs: Low-cost, diversified investments
- Tax-Advantaged Accounts: 401(k), IRA, Roth IRA
- Asset Allocation: 60-80% stocks, 20-40% bonds
- Rebalancing: Annual portfolio rebalancing
- Dollar-Cost Averaging: Regular, systematic investing
- Keep Costs Low: Minimize fees and expenses
Common FIRE Challenges
- Lifestyle Inflation: Expenses growing with income
- Market Volatility: Sequence of returns risk
- Healthcare Costs: Rising medical expenses
- Longevity Risk: Outliving your savings
- Inflation: Purchasing power erosion
- Taxes: Impact on withdrawals and required minimum distributions
FIRE Success Factors
- Start Early: Time is your greatest ally in compounding
- Consistency: Regular saving and investing habits
- Education: Continuous learning about personal finance
- Community: Connect with other FIRE enthusiasts
- Patience: Focus on the journey, not just the destination
- Flexibility: Adjust plan as life circumstances change
FIRE vs Traditional Retirement
- Retirement Age: FIRE: 30-50 years, Traditional: 65+ years
- Savings Rate: FIRE: 50-80%, Traditional: 10-15%
- Investment Horizon: FIRE: 30-60 years, Traditional: 20-30 years
- Lifestyle: FIRE: Frugal now for freedom later, Traditional: Gradual saving
- Risk Tolerance: FIRE: High for early retirement, Traditional: Moderate
FIRE Wisdom: Financial independence is about having options and freedom. The journey to FIRE teaches valuable lessons about money management, delayed gratification, and intentional living that benefit you regardless of when you achieve financial independence.