🏖️ Financial Independence Calculator
The "25x rule" says that if you save 25 times your annual spending, you can theoretically live off 4% per year indefinitely without running out of money. This is the basis for FIRE (Financial Independence, Retire Early) planning.
FIRE number (FI goal)
£1,250,000.00
Monthly spending
£4,166.67
Multiply annual spending by FIRE multiplier: £50,000.00 × 25 = £1,250,000.00
Formula
FIRE number = Annual spending × Multiplier (default 25). Based on 4% withdrawal rule (1÷25 = 4%).
The 25x rule stems from research (Trinity Study) showing you can safely withdraw 4% annually from your portfolio for 25+ years with low risk of running out over 30+ years. This works well with moderate annual growth (7%) and diversification.
Steps
- 1Calculate your current annual spending (fixed and variable costs).
- 2Determine your retirement spending (will it be less than now?).
- 3Multiply by 25 (or your adjusted multiplier for 4% withdrawal).
- 4This is your FIRE number — your goal for financial independence.
FIRE multipliers and withdrawal percentages
| Multiplier | Withdrawal % | Risk level |
|---|---|---|
| 20x | 5.0% | High |
| 25x | 4.0% | Moderate |
| 30x | 3.3% | Low |
| 40x | 2.5% | Very low |
Higher multiplier = lower risk of running out of money but longer saving period.
commonMistakes
- Forgetting that this doesn't account for inflation — your need grows over years.
- Underestimating retirement spending — many people spend more than predicted, especially travel and hobbies.
- Ignoring portfolio risk — 25x assumption requires ~70% stocks, which can be volatile.
useCases
- Determine your retirement goal and track progress toward your FIRE number.
- Calculate different retirement scenarios with different spending levels.
- Plan saving behavior and investment strategy based on FIRE number and current wealth.