The Freedom Number
Financial Independence (FIRE) is not a feeling. It is a specific number. Once your net worth crosses this threshold, working becomes optional.
Most people rely on hope. They say, "I will retire at 65." But retirement is not an age; it is a financial state. If you save correctly, that state can be achieved at 45, 35, or even 30.
The Physics of "Enough"
The calculation above relies on the 4% Rule (derived from the Trinity Study). The rule states that if you invest in a diversified portfolio (stocks/bonds), you can safely withdraw 4% of your total balance every year without running out of money.
Therefore, your "Freedom Number" is simply your Annual Expenses × 25.
For example, if you spend $40,000 a year, you need $1,000,000 invested. Once you hit that million, the market gains (average 7-10%) cover your spending. You become "Job Optional."
The Variable of Speed
There are only two levers you can pull to accelerate this date:
- Income Velocity: Earning more increases the shovel size.
- Expense Compression: Spending less lowers the target number.
Most people focus on Income. But Expense Compression is more powerful because it hits the equation twice: it increases your savings rate AND lowers the amount you need to retire.
System Documentation (FAQ)
Is the 4% Rule safe for early retirement?
The 4% rule was designed for a 30-year retirement. If you are retiring at 35 (planning for 50+ years), many economists recommend a safer withdrawal rate of 3.25% or 3.5% to account for market volatility.
Does this calculator account for inflation?
This calculator uses "Real Return" logic. We assume a 7% return, which is actually a 10% market return minus 3% inflation. This keeps the math in today's dollars for clarity.
What is LeanFIRE vs FatFIRE?
LeanFIRE is retiring on expenses less than $40k/year (Minimalist). FatFIRE is retiring on expenses >$100k/year (Luxury). The math is the same; only the target number changes.
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