1. What is FIRE Money?

FIRE Money refers to the amount of capital needed to achieve Financial Independence and Retire Early, based on the 4% safe withdrawal rule from investment portfolios.

2. How Does the Calculator Work?

The calculator uses the FIRE money formula:

Where:

• \( Annual\ Expenses \) — Your total yearly living expenses in dollars
• \( 0.04 \) — The safe withdrawal rate (4%)

Explanation: This calculation determines the investment portfolio size needed to support your annual expenses indefinitely using the 4% withdrawal rule.

3. Importance of FIRE Money Calculation

Details: Calculating your FIRE number is essential for financial planning and retirement goals. It helps determine the target savings needed to achieve financial independence and maintain your desired lifestyle without active employment income.

4. Using the Calculator

Tips: Enter your total annual living expenses in dollars. The value must be greater than zero. The calculator will compute the required investment portfolio size for financial independence.

5. Frequently Asked Questions (FAQ)

Q1: What is the 4% rule?
A: The 4% rule suggests that you can safely withdraw 4% of your investment portfolio annually without running out of money over a 30-year retirement period.

Q2: Is the 4% rule still valid today?
A: While debated, the 4% rule remains a popular benchmark, though some experts recommend a more conservative 3-3.5% withdrawal rate for longer retirement periods.

Q3: What expenses should I include?
A: Include all essential living expenses: housing, food, healthcare, transportation, taxes, and discretionary spending for your desired lifestyle.

Q4: Does this account for inflation?
A: The 4% rule typically includes adjustments for inflation, with withdrawals increasing annually to maintain purchasing power.

Q5: What investment return assumptions are made?
A: The rule assumes a balanced portfolio with average annual returns of 7-8% before inflation, or 4-5% after inflation adjustments.