When will I be able to retire, and how many years of saving will it take? Use this FIRE calculator to visualise your financial situation, quickly get an estimated result, and save it as an image or share it with friends.
What is FIRE (Financial Independence, Retire Early)?
FIRE is an acronym for Financial Independence, Retire Early, which literally means a financial status that allows you to retire early and no longer be restricted by your current financial status. This concept believes that work should not be the whole of life, as long as you have saved enough money, through the compound interest of the investment to receive a fixed percentage (commonly 4%) of the amount of money as living expenses, you can achieve the purpose of early retirement.
When can I retire early?
When the “Total Net Worth” exceeds the “FIRE Net Worth”, the conditions for retirement are met. The withdrawal rate is preset at 4%, which means that 4% of your total assets will be withdrawn as living expenses every year, and the rate can be lowered if you are more conservative.
For example, if your total annual expenses are $50,000 and the withdrawal rate is set at 4%, it means you need to have $1.25M in assets (125 * 4% = 5 or 5 / 4% = 125), which is called the “FIRE Net Asset Limit”. Therefore, as long as the total net assets exceeds the FIRE Net Asset Limit, it means that you have reached the condition of Early Retirement.
The formula to calculate your FIRE number using the Safe Withdrawal Rate (SWR) is:
\[ \text{FIRE Number} = \frac{\text{Annual Spending}}{\text{SWR}} \]
For example, if your annual spending is $40,000 and the SWR is 4% (i.e., 0.04), then:
\[ \text{FIRE Number} = \frac{40,000}{0.04} = 1,000,000 \]
FIRE net worth is related to the following:
Withdrawal rate: 4% is commonly used, conservative people can lower it a little bit, and it is generally recommended that the withdrawal rate should be slightly lower than the investment return rate minus the inflation rate Annual expenditure: the larger the annual expenditure, the more FIRE net assets are needed Inflation rate: 2%~3% is generally used.
Total net worth is related to the following:
Current Net Asset Amount Annual Savings Investment Return: Depends on each investor’s situation.
How to use the Early Retirement FIRE Calculator
I’ve pre-set default values for users, so all you need to do is click Calculate and you’ll get the results right away. You also have the option of updating the numbers to see the results as they change.
You will find:
- At the beginning, you need to enter your current age, current annual income, and annual expenses.
- You should also input your current total assets, along with the allocation of these assets across different investment types (the total should add up to 100%). Different investment types will have different rates of return.
- You may enter decimal values if you believe they provide a more accurate estimate.
- The investment return rate is an estimate of how your invested money grows annually. This calculator will provide a default value for your convenience, but you can update it for a more precise estimate. Based on the past 10 years of S&P 500 returns, this rate is typically above 7%.
- The inflation rate reflects how your cash loses value over time. This is usually around 3%, though the number can vary depending on the country.
- The Safe Withdrawal Rate (SWR) estimates the percentage of your assets you can withdraw each year for daily expenses. This is typically set at 4%. The lower this rate, the harder it is to achieve FIRE (Financial Independence, Retire Early), as it means you need a higher total amount of assets.
If you’re an advanced user, I’ve also provided more detailed data settings so you’ll get a more accurate estimate.
You can also download the calculations and share them with your family and friends.
Inflation consideration
Inflation is a crucial factor to consider when planning for retirement. Unlike stocks and mutual funds, cash gradually loses value over time due to inflation. The inflation rate typically ranges from 2% to 3%. This calculator already takes inflation into account—you just need to adjust the specific parameter. If you have a more pessimistic outlook, you can set a higher inflation rate.
Math
Your total assets in the second year will include the growth on your current total, plus the additional principal you contribute.
The formula to calculate your end-of-year savings is:
\[ \text{End of Year Savings} = \text{Previous Savings} \times (1 + \text{Growth Rate}) + \text{Annual Savings} \]
This equation assumes your previous savings grow at a certain rate, and you add new savings at the end of the year.
If you don’t make any withdrawals, this formula will continue to apply year after year.
The standard compound interest formula is:
\[ A = P \times (1 + r)^t \]
Where:
- A = the future value of the investment or loan, including interest
- P = the principal amount (initial investment)
- r = the annual interest rate (as a decimal)
- t = the number of years the money is invested or borrowed for
FAQ
You can export the CSV file or save as image.
Yes, there are several “Advanced Settings” sections at the bottom of the calculator that you can expand to customize the default values.
All amounts are in today’s dollars.
Privacy and Data Usage Statement: Please note that all data you enter into this FIRE calculator is not transmitted to our servers or anywhere else. All of your data is anonymous and exists only within your browser.
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Disclaimers
This calculator is a model, not a prediction. The results are based on the limited information you’ve provided and certain assumptions about the future. All figures are estimates only and are not guaranteed.
It cannot accurately predict your final superannuation balance or retirement income, as these depend on many personal and external factors—such as your individual circumstances, unexpected life events, government Age Pension entitlements, investment returns, tax, and inflation.
The model assumes consistent contributions and stable conditions over time. These assumptions allow you to explore the potential impact of decisions within your control, such as changing your investment strategy.
We recommend reviewing and updating the projections regularly, especially if your situation changes. You can adjust some of the assumptions to better reflect your personal circumstances.
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