Financial Independence, Retire Early (FIRE) starts with a number: the amount of invested assets that can generate your annual spending indefinitely. Everything else is math between now and that number.
The 4% Rule
The Trinity Study and subsequent research found that a portfolio of 50–75% stocks, 25–50% bonds historically survived a 30-year retirement with a 95% success rate when drawing 4% of the initial portfolio annually (adjusted for inflation). So: annual spending ÷ 0.04 = FIRE number. If you spend $50,000/year, your number is $1,250,000.
What Savings Rate Produces FIRE
The time to FIRE depends primarily on savings rate — what percentage of your income you're saving and investing:
- 10% savings rate → ~51 years to FIRE
- 20% savings rate → ~37 years to FIRE
- 30% savings rate → ~28 years to FIRE
- 50% savings rate → ~17 years to FIRE
- 75% savings rate → ~7 years to FIRE
The math assumes 7% nominal returns (5% after inflation) and a 4% withdrawal rate.
The Side Hustle Factor
Increasing income has a disproportionate effect on FIRE timeline. A person earning $60,000 saving $18,000/year (30%) takes 28 years. Increasing income to $80,000 while saving $24,000 (still 30%) cuts that to 23 years. High-income earners who maintain lifestyle inflation reduction can hit FIRE in 10–15 years instead of 30+. For a practical guide to the FIRE framework, including savings rates, withdrawal strategies, and healthcare considerations, Your Money or Your Life or similar FIRE-focused books cover the full roadmap.
The Realistic Critique
FIRE math assumes consistent returns and static spending. Healthcare before Medicare eligibility (age 65) is expensive. Sequence-of-returns risk (bad returns in the first years of retirement) is real. Most people should build a buffer — plan for 3.5% withdrawal rate or have part-time income in early retirement to reduce sequence risk.