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Financial Independence Calculator

Financial independence means your investments generate enough to cover your annual expenses without needing to work. The 25x rule gives a simple rule of thumb for how much you need.

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Result

ยฃ750,000.00

FI number (assets needed)

Still to save
ยฃ700,000.00
Progress
6.7%
How this was calculated
  1. 1FI number: annual expenses ร— 25ยฃ30,000.00 ร— 25 = ยฃ750,000.00

Formula

FI number = annual expenses ร— 25

The 25x rule is the inverse of the 4% rule: if you can withdraw 4% of your portfolio annually without depleting it, your required portfolio is 25 times your annual expenses (1 รท 0.04 = 25). This rule of thumb comes from research into historical stock market returns (the Trinity Study) and is widely used in the FIRE movement (Financial Independence, Retire Early), though there is no guarantee future returns will match the past.

Worked examples

โ‚ฌ 30,000 annual expenses

โ†’ FI number = โ‚ฌ 750,000.

Common mistakes

  • Basing the calculation on your current salary instead of your actual annual expenses.

Limitations

  • The 4% rule is based on historical US market data over a 30-year period; other periods, countries or a longer retirement horizon may call for a different percentage.

When to use it

  • Setting a long-term goal for investing and saving.

Frequently asked questions

Is the 4% rule guaranteed to be safe?

No, it is a historical rule of thumb, not a guarantee. Some planners use a more conservative 3 to 3.5% instead.

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