Guide
Your FIRE number and the 4% rule: how to calculate it, and where it breaks
“Financial independence” has a simple arithmetic core: how large a portfolio can pay for your spending without you working? The most quoted answer is the 4% rule, which turns that question into a multiplication. This guide shows how to calculate your number, how long it takes to reach, how long money lasts at different withdrawal rates, and where the rule stops being reliable.
You can follow every step in the FIRE & Retirement Calculator.
How do you calculate your FIRE number?
FIRE number = annual spending ÷ withdrawal rate. At a 4% withdrawal rate the number is 25 × annual spending (1 ÷ 0.04 = 25).
Amounts below are in one currency, in today’s money. Spending 300,000 a year gives:
| Withdrawal rate | Multiple of annual spending | FIRE number |
|---|---|---|
| 3% | 33.3× | 10,000,000 |
| 3.5% | 28.6× | 8,571,428.57 |
| 4% | 25× | 7,500,000 |
| 4.5% | 22.2× | 6,666,666.67 |
| 5% | 20× | 6,000,000 |
A one-point change in the rate moves the target by millions. That is why the withdrawal rate deserves more thought than the headline “25 times”.
Where does the 4% rule come from?
It comes from US retirement research. William Bengen’s 1994 article in the Journal of Financial Planning examined 1926–1992 returns for a portfolio split 50/50 between US large-cap stocks and intermediate-term US Treasuries, rebalanced yearly. The highest first-year withdrawal rate that would not have run out over any 30-year period was about 4%, with each later withdrawal raised for inflation. Bengen later reported higher figures with other assets (4.3% in 1997 and 4.5% in 2006, per the Financial Planning Association). The 1998 Trinity study by Cooley, Hubbard and Walz asked a slightly different question, reporting the share of historical periods in which a portfolio survived for different withdrawal rates, mixes and lengths.
What the rule is not: a law, or a promise about the future. It describes some US portfolios over 30 years, with a particular asset mix, before tax and fees. Our calculator says the same: the 4% rule is a historical rule of thumb, not a guarantee.
How many years until you get there?
The calculator solves a compound-growth formula for the years until your savings reach the target:
Years = ln[(target + C ÷ r) ÷ (savings + C ÷ r)] ÷ ln(1 + r), where C is what you add each period, r is the real return per period, and contributions are added at the end of each period.
For monthly savings the calculator converts the annual real return to a monthly rate, (1 + r)^(1/12) − 1.
Worked example. Spending 300,000 a year, current savings 1,000,000, saving 12,000 a month, a real return of 4% and a 4% withdrawal rate. The target is 7,500,000, and the answer is 22.25 years. If you saved the same total once a year at year-end (144,000) the answer would be 22.46 years, slightly longer because the money arrives later. You can reproduce the first figure in the calculator: annual spending 300,000, withdrawal rate 4, current savings 1,000,000, savings frequency Each month, amount 12,000, expected real return 4.
Changing one input at a time (same savings plan):
| Change | Years to FIRE |
|---|---|
| Withdrawal rate 3% (target 10,000,000) | 27.40 |
| Withdrawal rate 3.5% | 24.59 |
| Withdrawal rate 4% (base case) | 22.25 |
| Withdrawal rate 4.5% | 20.27 |
| Withdrawal rate 5% | 18.57 |
| Real return 2% | 29.30 |
| Real return 3% | 25.23 |
| Real return 5% | 19.96 |
| Real return 6% | 18.13 |
Both a stricter withdrawal rate and a lower return cost you years. The return you assume is a guess; a lower one is the more careful planning choice.
How long does the money last at different withdrawal rates?
The calculator stops at the target. The next question is how long the portfolio lasts once you start withdrawing. For a fixed real withdrawal (the first year’s amount, kept constant in today’s money) taken at the end of each year, with a constant real return, the number of years until the balance reaches zero is:
Years = ln[w ÷ (w − r)] ÷ ln(1 + r) when w > r, where w is the withdrawal as a share of the starting portfolio and r is the real return. When r = 0, years = 1 ÷ w. When w ≤ r the balance never runs out.
| Withdrawal rate | Real return 0% | 2% | 3% | 4% |
|---|---|---|---|---|
| 3% | 33.3 years | 55.5 years | does not run out | does not run out |
| 4% | 25.0 years | 35.0 years | 46.9 years | does not run out |
| 5% | 20.0 years | 25.8 years | 31.0 years | 41.0 years |
| 6% | 16.7 years | 20.5 years | 23.4 years | 28.0 years |
Read a column to see how the rate changes the answer, and a row to see how much the return assumption matters. At a 4% rate the money lasts 35.0 years if the real return is 2%, but 25 years if it is zero. Real returns that stay constant are an assumption, and the next section shows why it is a big one.
Why does the order of returns matter?
Averages hide sequence risk: poor returns early in retirement hurt more than the same returns late, because withdrawals shrink a smaller balance. Here is a hypothetical example, not a forecast. Start with 100, withdraw 4 a year (in today’s money), and take real returns of −25%, −15% and −10% over three years plus 6% in each of the other 27 years. Both orders below have exactly the same returns and the same compound average return of 3.45% a year.
| Order | Balance after year 3 | Outcome |
|---|---|---|
| Three bad years first | 46.72 | Money runs out during year 24 |
| Three bad years last | 106.37 | 227.41 after year 27, then 119.82 left after year 30 |
The historical worst cases for the 4% rule were retirements that started shortly before a long bad stretch. A calculator with one constant return cannot show that, which is why the result is a planning figure and not a plan.
What does the FIRE number leave out?
- Tax and fees. Spending should include the tax you will pay on withdrawals, and the return should be net of fund fees.
- Other income. A pension or state benefit later in life lowers the spending your portfolio must cover.
- Spending changes. Costs are rarely constant. Health care often rises with age; some people spend less after the first years of retirement.
- Flexibility. Cutting withdrawals after a bad year helps far more than the constant-withdrawal model assumes.
- Retirement length. The original research covers 30 years. A longer retirement needs a lower rate.
To see how a lump sum grows on its way to the target, use the compound interest calculator and read how compound interest works. For a quick estimate of the time to double, see the Rule of 72.
FAQ
Is the 4% rule safe for a retirement longer than 30 years?
The original research tested 30-year retirements. A longer retirement, such as stopping work in your 40s, usually calls for a lower starting withdrawal rate, which raises the target. The table in this guide shows how much longer money lasts at lower rates.
Should I use my current spending or my expected spending in retirement?
Use the spending you expect after you stop working, in today’s money. Some costs fall (commuting, pension contributions) and others rise (health care, free time spent on hobbies). Start from your current budget and adjust line by line.
Does the FIRE number include tax and fees?
Not unless you add them. Withdrawals from some accounts are taxed, and fund fees reduce the return. Include tax in the spending figure you divide, and use a return that is already after fees.
Why does the calculator use a real return?
Spending is entered in today’s money, so the return must also be after inflation. If you expect 7% nominal growth and 3% inflation, enter about 3.9% (1.07 ÷ 1.03 − 1), not 7%.
Sources
Checked on 2026-10-10. The worked example matches the FIRE & Retirement Calculator formula; the lasting-years table and the sequence example were computed in Python.
- William P. Bengen, “Determining Withdrawal Rates Using Historical Data”, Journal of Financial Planning, October 1994 (FPA reprint, March 2004)
- Financial Planning Association, “Revisiting William Bengen’s ‘SAFEMAX’ Portfolio Withdrawal Rate”, Journal of Financial Planning, November 2023 (1926–92 data, 50/50 allocation, 30-year period, later 4.3% and 4.5% figures)
- Cooley, Hubbard and Walz, “Retirement Spending: Choosing a Sustainable Withdrawal Rate”, AAII Journal, February 1998, as cited by the Financial Planning Association, “Portfolio Success Rates: Where to Draw the Line”
Related: FIRE & Retirement Calculator, Rule of 72, how compound interest works.
This article explains the maths for general education. It is not financial, investment or tax advice. See the disclaimer.