What Is Your FIRE Number? The 25× Rule Explained

The 25× rule and the 4% withdrawal rate

The 25× rule is the mirror image of the 4% rule. If you can safely withdraw 4% of your portfolio in the first year and adjust for inflation after that, then the portfolio must be 100 ÷ 4 = 25 times your annual spending. Spend $50,000 a year and you need about $1,250,000 invested.

The 4% figure comes from the Trinity Study, which tested historical stock-and-bond portfolios and found that a 4% starting withdrawal rarely ran out of money over 30 years. It is a planning benchmark, not a guarantee — sequence-of-returns risk, longer retirements and low bond yields all argue for treating it as a ceiling rather than a promise.

How to work out your own number

Start from what you actually spend, not what you earn. Add up a full year of expenses — housing, food, transport, insurance, healthcare and discretionary spending — then multiply by 25. Someone with $36,000 of annual costs needs $900,000; someone at $60,000 needs $1,500,000. The exercise doubles as a budgeting reality check.

Two adjustments matter. If part of your retirement will be covered by a state or workplace pension, subtract that annual income before applying the 25× multiple, because you only need your portfolio to fund the gap. And because early retirement can span 40 or 50 years rather than 30, cautious planners use a lower rate — say 3.5% (about 29×) — which raises the target but adds a safety margin.

Coast, Lean and Fat FIRE

The FIRE label covers a spectrum. Lean FIRE targets a bare-bones budget — often under $30,000 a year — so the number is smaller but the lifestyle is tight. Fat FIRE aims for a generous budget with travel and slack, pushing the number well past $2,000,000. Most people land somewhere in between, at what the community calls regular or Barista FIRE, where part-time work bridges the gap.

Coast FIRE is different in kind. It means you have invested enough early that compounding alone will grow the pot to your full FIRE number by traditional retirement age, without any new contributions. A 30-year-old who has invested $200,000 may reach roughly $1,000,000 by 60 at 7% growth — so from then on they only need to cover current expenses and can ease off saving entirely.

Frequently asked questions

Why 25 times and not another multiple?

Twenty-five is the inverse of the 4% withdrawal rate (1 ÷ 0.04 = 25). Choose a 3% rate and the multiple becomes about 33; a 5% rate makes it 20. The multiple and the withdrawal rate are two ways of saying the same thing.

Does the FIRE number include my home?

Usually no. The number counts invested assets that generate income you can withdraw. A home you live in produces no cash flow, so it is excluded — though owning it outright lowers your annual expenses and therefore lowers the number you need.

How does inflation affect the target?

The 4% rule already builds in inflation-adjusted withdrawals, so you plan in today's money and let the portfolio's growth outpace rising prices. Recompute your number whenever your real spending changes materially.

Is FIRE realistic on an average income?

It is slower but possible; the driver is your savings rate, not your salary. Saving 25% of income points to roughly 32 working years, while 50% cuts that to about 17. Coast or Barista FIRE offer softer, more accessible targets.