Inflation-Adjusted FIRE

FIRE stands for Financial Independence, Retire Early - the point at which your investments can cover your living costs without needing a salary. Your FIRE number is the portfolio size that supports this, often estimated as your annual expenses multiplied by about 25, which corresponds to living on roughly 4 percent of the portfolio each year. The larger your annual spending, the larger the number, which is why controlling expenses moves the target as powerfully as earning more.

A FIRE number expressed in today's money will buy less by the time you reach it, because prices rise over the years in between. If you aim at an un-adjusted figure you risk arriving financially independent on paper but short in real purchasing power. By inflating the target over your time horizon, the calculator keeps the goal honest in terms of the lifestyle it will actually fund.

The 4 percent rule is a guideline suggesting you can withdraw 4 percent of your portfolio in the first year of retirement and adjust that amount for inflation thereafter, based on historical market data. It is a useful starting point, not a guarantee: a poor run of returns early in retirement, known as sequence-of-returns risk, can strain a portfolio even if the long-run average is fine. Many people plan for a slightly lower withdrawal rate or keep flexibility in their spending.

No. This is an educational projection using the figures and a constant assumed return that you provide. Real markets are volatile, so your actual path will differ from the smooth estimate shown. For a view that models market ups and downs, try the Monte Carlo and Sequence of Returns calculators, and speak to a licensed adviser about your specific plan.