Where the 4% rule actually comes from
Your FIRE number is your annual expenses divided by your withdrawal rate — which is the same as multiplying by 25 at a 4% rate. That 4% figure comes from research on historical market returns showing a portfolio withdrawn at that rate has a strong track record of lasting 30 years without running out, even through poor market sequences. It’s a starting assumption, not a law of physics — some people use 3.5% for more of a safety margin, especially over a longer-than-30-year retirement horizon, which raises the target number; others use 4.5% and accept more risk for a lower target.
Key terms
FIRE number
The portfolio size needed to sustain your annual expenses indefinitely via withdrawals — your annual expenses divided by your safe withdrawal rate, commonly expressed as 25 times annual expenses at a 4% rate.
Safe withdrawal rate (SWR)
The percentage of your portfolio you withdraw in the first year of retirement (adjusted for inflation thereafter), chosen so the portfolio has a strong historical track record of lasting the full retirement without running out. 4% is the most commonly cited starting point.
Coast FIRE
The amount you need invested today such that, with zero further contributions, pure compound growth alone carries it to your full FIRE number by your target age.
Savings rate
The share of your income you save and invest rather than spend. It’s the single biggest lever over how many years it takes to reach your FIRE number — more so than income itself, since it determines both how much you’re contributing and how large a portfolio you actually need.
How much your savings rate changes the timeline
| Savings rate | Years to FIRE |
|---|---|
| 10% | 40.4 years |
| 25% | 26.3 years |
| 50% | 14.5 years |
| 70% | 8.1 years |
These figures hold this calculator’s own default assumptions constant — a 7% annual return and a 4% withdrawal rate — and vary only the savings rate, starting from $0 already saved. The relationship isn’t linear: going from a 10% to a 25% savings rate cuts 14 years off the timeline, but going from 50% to 70% only cuts about 6 — the biggest gains come from moving off a low savings rate in the first place.
Coast FIRE: the target that arrives earlier
Coast FIRE is the amount you need invested today such that, with zero additional contributions, pure compound growth carries it to your full FIRE number by your target age. It’s a fundamentally different milestone than full FIRE — reaching it doesn’t mean you can stop working, it means you can stop saving for retirement specifically and still arrive on schedule, while your income covers current expenses instead. For a lot of people, Coast FIRE is a more motivating and more achievable near-term target than the full number.
Why the Coast FIRE threshold moves every year
The table above shows the Coast FIRE threshold shrinking as you age, because there’s less time left for compounding to do the work. A dollar invested at 30 has 25 years to grow before a target age of 55; that same dollar invested at 45 only has 10 years. This is why Coast FIRE gets easier to reach the closer you get to your target age — not because the math changed, but because compounding has less runway left to make up for a lower starting balance.
What this calculator doesn’t account for
This assumes a constant expected return every year, which real markets don’t deliver — actual returns are volatile, and a portfolio that hits its number right before a market downturn faces different risk than one that hits it during a bull run. It also doesn’t model taxes on withdrawals, healthcare costs before Medicare eligibility (a real and often underestimated expense for early retirees), or Social Security, which for most people starts well after a FIRE target age and effectively reduces how much the portfolio alone needs to cover.
Using this calculator
Base your annual expenses figure on what you actually spend, not what you currently earn — overestimating your target number by using income instead of spending is one of the most common FIRE-planning mistakes. Adjust the withdrawal rate down if you’re targeting an especially long retirement horizon, since a 4% rate was originally modeled around a 30-year retirement, not necessarily a 50-year one.
This article is for educational purposes only and isn't legal, financial, or tax advice. See our Disclaimer for details.
