What is a FIRE number?

A FIRE number is the portfolio that could cover your spending at a chosen withdrawal rate. At a 4% starting rate, $100,000 of annual spending implies $2.5 million. It is a target, not a guarantee.

Arc · Published September 18, 2026 · Updated September 18, 2026

The formula

Divide the spending you want the portfolio to cover by the withdrawal rate. Spending should be in today's dollars if the return you use elsewhere is a real return.

FIRE number = annual spending ÷ withdrawal rate

What to count as spending

Use the spending you expect in the years the portfolio has to carry, not a temporary year. Housing, healthcare, taxes, and support for other people belong in the number if they will still be there.

A mortgage that ends before you stop working can make today's spending a poor stand-in. So can a plan to move, or a healthcare bill that starts when an employer plan ends.

A worked example

A household spends $80,000 a year and wants a 4% starting withdrawal. The FIRE number is $80,000 ÷ 0.04 = $2,000,000. At 3.5%, the same spending needs about $2.29 million. The rate is an assumption. Changing it changes the target more than most people expect.

Where the shortcut fails

The rule ignores Social Security, a pension, a paid-off house, and a spouse who keeps working. It also ignores a bad sequence of returns in the first years of withdrawals. Use it to set a target, then test the target against your actual income and spending.

Common questions

Does the FIRE number include home equity?

Only if you plan to spend that equity. A house you live in reduces housing cost. It does not pay the grocery bill unless you sell, borrow, or rent part of it out.

Should I use gross income or spending?

Spending. Income is how you fill the portfolio. The FIRE number is about what the portfolio has to replace.

Sources

Bengen, William P. “Determining Withdrawal Rates Using Historical Data.” Journal of Financial Planning, 1994.