How the FIRE Calculator Works
FIRE — Financial Independence, Retire Early — is the idea that with disciplined saving and smart investing, you can build a portfolio large enough to cover your living expenses for the rest of your life. The maths behind it is surprisingly simple, and our calculator above puts it directly in your hands.
The 4% Rule
The 4% rule, first published by financial planner Bill Bengen in 1994, says that if you withdraw 4% of your portfolio in your first year of retirement and adjust that amount for inflation each year afterwards, your money should last at least 30 years across almost any historical 30-year window. That's why our calculator multiplies your annual expenses by 25 (which is 100 ÷ 4) to find your FIRE Number — the portfolio size you need before you can stop working.
Why Compound Interest Matters
Your contributions are only half the story. The other half — and often the larger half over long time horizons — is investment returns compounding on themselves. A 7% real return roughly matches the long-run after-inflation return of the US stock market, which is why we set it as the default. Increase the slider and you'll see how dramatically a higher return shortens your timeline, but remember: nobody is guaranteed market-average returns, especially over short periods.
Tweak Your Withdrawal Rate
A more conservative 3.5% withdrawal rate is popular among early retirees who expect a 50+ year retirement, while some "Lean FIRE" practitioners are comfortable with 4.5% if they're flexible on spending. Move the slider to see exactly how each rate changes both your FIRE Number and your monthly passive income.
What This Calculator Doesn't Do
It doesn't model taxes, healthcare costs in early retirement, sequence-of-returns risk, or variable income. Treat the result as your starting point, not your finish line. Pair it with the other TrayWealth tools — Net Worth Tracker and Investment Return Calculator — to build a full picture of your finances.