How the FIRE number works

Your FIRE number is the portfolio that covers your spending without you working. The usual shorthand is 25 times your annual spend, which is the 4 percent rule turned upside down. Spend $48,000 a year and the number is $1.2 million.

Coast FI is the quieter and more useful figure. It is the amount that, left alone, grows into your FIRE number by the age you want it. Once you pass it you can stop investing entirely and still retire on time, which usually arrives years before anyone expects.

Common questions

Is the 4 percent rule still safe?

It came from the Trinity study using US historical returns over 30 year retirements. For a retirement starting at 40 or 45 the horizon is closer to 50 years, and most researchers drop the figure to somewhere between 3.25 and 3.5 percent for that. At 3.5 percent your target is 28.6 times spending rather than 25.

What is the difference between FIRE and Coast FI?

FIRE is the finish line, the amount that funds your life forever. Coast FI is the point where you can stop adding money and compounding does the rest. Coast FI always arrives first, and hitting it is what turns a stressful job into an optional one.

Should I use spending before or after tax?

Use what actually leaves your account in a year, including tax you will still owe in retirement. Retirement income from a traditional 401k or IRA is taxed as ordinary income, so budgeting your gross spend rather than your take home avoids a shortfall of exactly the size of your tax bill.

Does health insurance change the number?

In the US it changes it a lot if you retire before 65. Marketplace premiums count as spending, and the 400 percent federal poverty level subsidy cliff came back in 2026, which for a couple lands at $84,600 of income. Cross it by a dollar and the premium credit goes to zero.

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