Financial independence

FIRE calculator

A FIRE projection asks when an inflation-adjusted portfolio may reach annual spending divided by the chosen withdrawal rate while contributions continue.

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# FIRE target
current_portfolio = 85000 in usd
monthly_investment = 1500 in usd
annual_spending = 36000 in usd
return_rate = 7%
inflation_rate = 2%
withdrawal_rate = 4%
fire_target = annual_spending / withdrawal_rate
annual_contribution = monthly_investment * 12
current_progress = current_portfolio / fire_target

Inputs

What the model needs

Current portfolio: Invested assets included in the financial-independence plan.
Monthly contribution: New money added throughout the projection.
Annual spending: The spending level the portfolio is intended to support.
Return and inflation: Separate nominal growth from purchasing-power erosion.
Withdrawal rate: The modeled annual portfolio draw at the target.

Method

Formulas stay visible

real_fire_target = annual_spending / withdrawal_ratereal_return ≈ (1 + nominal_return) / (1 + inflation) - 1portfolio is projected with current capital plus recurring contributions until it reaches the real target

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Worked example

A $36,000 annual spending target

$85,000 invested
$1,500 monthly contribution
7% nominal return
2% inflation
4% withdrawal rate

ResultThe real spending-based target is $900,000; the current portfolio represents about 9.4% of it.

Projection timing depends heavily on continued contributions and the real return. The target should move when durable spending changes.

Stress-test it

Change annual spending before fine-tuning return assumptions.
Test a lower return and a lower withdrawal rate together.
Model contribution interruptions rather than assuming a perfect straight line.

Use it when

Turning a spending estimate into a portfolio target
Comparing contribution levels
Understanding which assumptions dominate a retirement projection

Know the boundary

Constant returns and inflation are simplifying assumptions.
Taxes, fees, sequence risk, pensions, and other income require explicit treatment.
This model is educational and not retirement or investment advice.

Questions

What is the FIRE number?

In this model it is annual spending divided by the withdrawal rate. At a 4% assumption, that is 25 times annual spending.

Why include inflation?

A nominal future balance does not show what that money can buy. Separating inflation makes the target and growth comparable in real terms.

Is a 4% withdrawal rate guaranteed?

No. It is a planning assumption derived from historical research, and outcomes vary with horizon, allocation, fees, taxes, and market sequence.

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