FIRE Calculator

About the FIRE Calculator

This calculator projects how many years until your invested portfolio reaches your financial-independence number (annual spending ÷ withdrawal rate), given a starting balance, annual contributions and a real return rate.

How to use this calculator

1. Enter your current portfolio value, because this is the amount already invested.
2. Enter your annual savings or contributions, plus your expected annual return, using a decimal like \(0.07\) for \(7\%\).
3. Enter your annual spending and your safe withdrawal rate, which the calculator uses to estimate the FIRE number.
4. Review the estimated years to financial independence, then adjust savings or spending to see how the timeline changes.

The formula explained

The formula computes your FIRE number with \(FI = \frac{annual\ spend}{wr}\), then estimates the time \(t\) needed for your savings to grow to that target. It combines current assets, yearly contributions, and compound growth.

• FI = the financial independence target, or the portfolio size needed to support your annual spending
• \(annual\ spend\) = your expected yearly spending in retirement
• wr = the safe withdrawal rate, written as a decimal
• t = the estimated number of years to reach financial independence
• P = your current portfolio value
• S = your annual savings or contributions
• r = your expected annual return, written as a decimal

Step by step method

1. Find the FIRE target using \(FI = \frac{annual\ spend}{wr}\).
2. Compare that target to your current portfolio \(P\) and your yearly contributions \(S\), then use the growth rate \(r\) to estimate how long it takes to reach \(FI\).
3. If the result is negative or not defined, check whether your inputs are realistic, especially that \(r\) and \(wr\) are entered as decimals, not percentages.

Worked example

Problem. You have \(P = 120000\), save \(S = 18000\) per year, expect a return of \(r = 0.06\), and plan to spend \(annual\ spend = 40000\) per year with a safe withdrawal rate of \(wr = 0.04\). Estimate the years to financial independence.

1. First find the FIRE target, \(FI = \frac{40000}{0.04} = 1000000\).
2. Then compare the target to your current path and apply the growth estimate using the calculator's formula.
3. The calculator gives an estimate of about \(22.0\) years.

Tips and common mistakes

• Be careful to enter \(7\%\) as \(0.07\), not \(7\), because the calculator expects decimal form.
• A higher spending target increases \(FI\), while a higher savings rate or return usually lowers the time to reach it.

Frequently asked questions