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The Magic Number: Calculate the Exact Amount to Quit Everything

The simple formula that tells you exactly how much you need

Beginner
5 min
Foundations
Last updated Β·
By The Let's Go FIRE team
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Table of contents(5)
  1. 01The Number That Defines Your FIRE
  2. 02Example: $30,000 in expenses β†’ $750,000
  3. 03The formula, in two versions
  4. 04⚠️ The trap: treating it as fixed
  5. 05Key Takeaways

The Number That Defines Your FIRE

Your FIRE Number is the capital that funds your expenses for life. The formula fits on one line: annual expenses Γ— 25. With $40,000 in expenses, you aim for $1 million. With $25,000, you aim for $625,000. Once that capital is reached and invested, you can withdraw 4% per year and last 30 years with 95% probability (Trinity Study, 1998).

Example: $30,000 in expenses β†’ $750,000

$30,000 Γ— 25 = $750,000. Invested in a 60/40 portfolio, this capital sustains 30 years of inflation-adjusted withdrawals in 95% of historical scenarios. For earlier FIRE (40+ years of retirement), switch to Γ—33 (3% withdrawal rate): $990,000.

The formula, in two versions

Mental shortcut: FIRE Number = Annual expenses Γ— 25. General form: FIRE Number = Annual expenses Γ· Safe withdrawal rate. The 25Γ— rule comes straight from a 4% withdrawal rate (1 Γ· 0.04 = 25). If you prefer 3% for extra safety, multiply by 33.

⚠️ The trap: treating it as fixed

Your expenses move. A child, a move, three years of 5% inflation: your target can climb 30% in just a few years. Recalibrate every year from your actual spending, not from an estimate made five years ago.

Key Takeaways

  • 1FIRE Number = Annual expenses Γ— 25 (equivalent to a 4% safe withdrawal rate).
  • 2$40,000 in expenses delivers a $1,000,000 target. The rule is strictly linear.
  • 3Cutting expenses by 25% cuts your FIRE Number by 25%: the most powerful lever, stronger than chasing a higher return.
  • 4Prefer a corridor (Lean, Central, Comfortable) instead of a single frozen number.
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Frequently asked questions

FIRE Number = Annual expenses Γ— 25, equivalent to a 4% safe withdrawal rate. For $40,000 expenses: 40,000 Γ— 25 = $1,000,000 target capital. The Rule of 25 comes directly from the Trinity Study (1998) on 30-year withdrawals at 95% success.

Lean FIRE = living frugally (~$25k/yr, ~$625k capital). Fat FIRE = living comfortably (~$100k/yr, ~$2.5M capital). Coast FIRE = having enough invested that compound growth alone gets you to FIRE without further contributions. Three philosophies, same Rule of 25.

No, by convention. The FIRE Number represents the capital that funds your expenses through annual withdrawals, meaning liquid or productive assets (ETFs, rental real estate, bonds). The primary residence generates no cash flow and does not count, but it reduces your expenses (rent avoided).

Yes: kids, moves, projects, and inflation all change your target expenses. Prefer a corridor (minimum survivable + comfortable FIRE Number) rather than a frozen number. Our simulator recalculates your target in real time as you adjust parameters.

Sources and references