What’s My FIRE Number?

What’s My FIRE Number?

Your FIRE number is equal to your annual spending multiplied by 25.  For example, if your annual spending is $40,000 a year then your FIRE number would be $1 million dollars.  This is assuming you will be using a 4% withdrawal strategy.


FIRE Number = (Annual Spending) x 25


Knowing your FIRE number is one of the first steps on the journey to financial independence (FI). 

Most people who achieve FI do so by carefully planning their finances years in advance.  This is why they are successful and are even more prepared for surprises along the way.  


What Is Your FIRE Number?

You can find out your FIRE number by multiplying your annual spending by 25.  Once you have your FIRE number you can calculate how long it will take you to reach financial independence based on your savings rate.  


If you are having trouble getting your annual spending number you can use budgeting resources.  I recommend Mint or You Need A Budget (YNAB) to help you track your expenses throughout the year.  


Here is a quick review of both apps so you can decide which is best for you:



I first started my FIRE Journey by using Mint to calculate my annual expenses.  This made it easy for me to see that I spend about $35,000 a year.  


Then I calculated my FIRE number:

(Annual Expenses) x 25 = FIRE Number

$35,000 x 25 = $875,000


Once I knew my FIRE number, I created a Financial Independence Retire Early (FIRE) Spreadsheet that calculated the potential growth of all of my investments.  It helped me predict exactly when I would reach financial independence and how much money would be in each account.  


It was so useful I wanted to make it available to others in the FIRE community.  So I worked on embedding the formulas into the spreadsheet so all you have to do is plug in your own numbers.


My FIRE Spreadsheet is now available for free in Excel and Google doc format.


I believe it can be an amazing tool for those pursuing financial independence.  What makes this spreadsheet different is how you can add money from different accounts. 


This allows you to better estimate how and when you can access your money once you reach financial independence.


Why Is It Important To Know The Breakdown Of Your Accounts?

Each account likely has a different set of rules dictating how and when you are allowed to withdraw funds.


You might be contributing to both your 401k and 457 plans but they have very different rules when it comes to withdrawals.


Knowing how much is in each account can help with the tax planning portion of early retirement, which is just as important as the accumulation phase of the journey.  


So How Do I Use The FIRE Spreadsheet?

You can use the FIRE Spreadsheet to identify where to begin withdrawing from first, while letting your other accounts continue to grow. 

Do You Know Your FI Number?


As an example:

If you are planning to reach FIRE at the age of 45 and you know that your yearly expenses are $35,000 per year.  You can then calculate your FIRE number which would be $875,000


Using my FIRE spreadsheet, you then can project how long it would take for your portfolio to grow to this amount.  


Your withdrawal rate would be 4%, which equals $35,000 per year.


However, let’s say $410,000 will be locked up in either in a 401k, HSA or Roth IRA gains, which can’t be immediately accessed.  


Eventually, you will have access to those funds, once you are age 59 ½, or earlier using the Roth Conversion Ladder


This leaves you with $465,000 available today that ideally will last at least until age 59 ½. 


This example gives you a much more accurate and responsible picture of your FIRE journey.  Allowing you to be confident in your early retirement and avoid penalties from the IRS.


I also recommend using a net worth tracking tool like Personal Capital to keep track of each account in real-time.


So, now you know your FIRE number and projected date.  



How Can I Test It So I Know I Won’t Run Out Of Money?

I had the same thoughts and luckily I found the Post-Retirement Calculator


It’s a simple simulator that projects how safe your withdrawal strategy is based on the stock market’s past performance.  


This is the final tool for projecting your FIRE journey from start to finish.  With the Post-Retirement Calculator, you can determine the chances of your $465,000 lasting until at least age 60.  


At that point, you can “technically” start using your other, more traditional retirement accounts.  As I mentioned, I plan on using a Roth Conversion Ladder but this scenario assumes we do not.  


This is sort of like a worst-case scenario.  


Simply input your savings of $465,000 and your annual spending of $35,000, which is 4% of $875,000 (total nest egg).  You start taking withdrawals at age 45 and need them to last for 15 years. 


A few more assumptions: 

You are flexible enough to cut back spending by about 25% if necessary during a bear market and your average tax rate is 10% since you won’t be working.  


This is what it looks like:

Post Retirement Calculator


This scenario accounts for all 15 year periods in the stock market from 1871 through 2016.  The results from the simulation say you have an 82% chance of still having some of your initial $465,000 nest egg after 15 years. 


I would be comfortable with that success rate!  This is because I know I can always use a Roth Conversion Ladder, pick up part-time work, or start a side hustle if I get bored.


For some, an 82% success rate won’t be enough and that is ok.  You can save up until you see the success rate that makes you comfortable. 


Knowing the stats allows your mind to be at ease and focus on enjoying early retirement to the fullest.


Once you reach age 60 the remaining $410,000 will finally be available! 


However, since you’ve left it in the market for the last 15 years it is actually $1.1 million without any further contributions! 


Now it makes sense why Einstein called compound interest the 8th wonder of the world!


To conclude, this is an exercise that helped me visualize my early retirement plan and thoroughly evaluate my withdrawal strategy.  I recommend everyone use my FIRE Spreadsheet and then the Post Retirement Calculator to do the same and crush it! 


You can also reach out to me at [email protected]  I am not a financial advisor but I am passionate about financial topics and helping others reach their financial goals.