FIRE Explained: Financial Independence, Retire Early
What FIRE means in practice, where the 4% rule helps and where it breaks, and how to test your target with your own spending.
FIRE (financial independence, retire early) is saving and investing until portfolio withdrawals can cover living costs. There is no single magic number. You need spending, savings rate, and a plan you can keep.
Starting point Annual spending times 25 is a rough target (4% withdrawal). It is a first estimate, not a promise. Taxes, healthcare, and bad markets in early retirement change the number.
Your FIRE number
If you spend $40,000 per year, about $1 million invested is a common starting point. If you spend $60,000, the ballpark moves to $1.5 million before tax and sequence-of-returns risk.
Savings rate matters
Raising how much you save each month often moves the date more than chasing an extra 0.5% return in the first decade. Run a few spending levels: lean, current, and comfortable.
Before you quit
Model weak markets in the first five years of withdrawals.
Include healthcare and one-off costs.
Consider partial work or side income if the portfolio is close but not there.