F.I.R.E Calculator
This calculator is one of the most important tools in your FIRE journey. After determining your Net Worth, the next critical step is to use this calculator to estimate when you can retire and explore potential strategies to achieve FIRE sooner. The math doesn’t lie—this calculator gives you a realistic view of what’s possible based on your current financial situation.
How to Use the FIRE Calculator:
Enter Your Current Numbers:
Portfolio Balance:
Input your current Net Worth, specifically the portion of it that is invested or can be invested.
Monthly Investment:
Enter the amount you plan to invest on a monthly basis going forward. This could include contributions to retirement accounts, brokerage accounts, or other investment vehicles.
Age:
Input your current age to help the calculator project your retirement timeline.
Adjust the Assumptions:
Monthly Expenses at Retirement:
Estimate your monthly living expenses during retirement. This should include housing, food, healthcare, entertainment, and any other recurring costs.
Portfolio Growth Rate:
The default assumption is a 7% annual growth rate, which reflects historical averages for a diversified stock portfolio.
Inflation Rate:
Adjust this rate based on your expectations for future inflation. The default is often around 2-3%, but this can vary.
Understanding the 4% Rule:
We assume a 4.00% Safe Withdrawal Rate, a guideline derived from the Trinity Study. This rule suggests that withdrawing 4% of your portfolio annually should allow your funds to last through most historical market cycles, making it a reliable benchmark for planning your retirement.
FIRE Calculator
* The 4% rule comes from the Trinity Study. It states that a 4% withdrawal rate (e.g. $40,000 annual spending on a $1,000,000 retirement portfolio) will survive the vast majority of historical cycles (~87%). Click here for more information.
Why the FIRE Calculator Matters:
The FIRE calculator helps you translate your financial data into actionable insights, showing you the potential timeline for achieving financial independence. By adjusting inputs like your monthly investments or expected expenses, you can see how different scenarios impact your FIRE date. This empowers you to make informed decisions, whether that means increasing your savings rate, adjusting your investment strategy, or reevaluating your retirement goals.
