What is a FIRE Number?

Your FIRE number is the total amount of income-producing assets you need to cover all of your living expenses and be able to retire from a traditional 9 to 5 job effectively.

So, what is your FIRE number? How do you know how much you will need to retire early? At the crux of this question lies a formula. It is not a complex formula but rather quite simple. There are several rules or guides related to investing, and FIRE that will help you determine your specific number.

We won’t get into too many details here, but the general rule is that to get to FIRE as quickly as possible, you need to be saving/investing between 50-75% of your income, which is far more than the typical 10-15% recommended by most financial planners and gurus. While 10-15% is good, saving 50-75% is much better and is a surefire way to reach financial independence within 7 to 17 years.

The traditional FIRE goal for most people is 25 times your annual living expenses. If you abide by the conventional 4% withdrawal rule, you could potentially not run out of assets for the rest of your life. Knowing your FIRE number, or the amount of income-producing assets to cover at least 25 years of living expenses, is mandatory as you cannot get to where you’re going without knowing where you’re going.

How do I calculate my FIRE Number?

The Rule of 25 is simple. Take your total annual living expenses, multiply that by 25, and that is your FIRE number or the number of assets needed to produce income to cover your living expenses. For example, if you have a mortgage that you’re still paying, and the monthly payment is $1000, the annual amount is $12,000. $1K x 12mo. = $12,000. If you need to cover that amount, you would need 25X that amount in assets or $300K. $12K x 25 = $300K.

So how would that $300K produce income to cover the $12K in annual expenses? Well, that is where the 4% rule comes into play. If you invest $300K in some good growth stock mutual funds or low-cost index funds that generate an average of 7% growth per year, which is conservative, it will generate $21K in potential returns. $300K x 7% = $21,000. So if you withdraw 4% of that, it would be $12K, ensuring you leave some in the investment so that it can continue to grow with compounding interest.

If you had to pay taxes on the money you withdraw, you might need to draw a little more to cover the taxes and ensure you net the total $12K required to cover the mortgage payment.

For example, if you wanted to retire early and need to cover $100K of expenses a year, you would need about 25X that amount in assets, about $2.5 million. 4% of 2.5Million is $100K. Assuming these assets produce about 7% return per year, that’s about $175K in total returns that you could withdraw without touching the principal. If all this is taxable income, you might need to pay about 1/3 of that or up to 33% in taxes. That would leave you a little over $117,250K in income. So you could withdraw the $100K, pay all the taxes and still leave yourself about $17K to continue to grow your investments or have extra cash.

There are standard terms that coincide with the FIRE movement. These terms are general guidelines that classify the number of assets needed to achieve FIRE and are associated with the lifestyle people choose to live.

Let’s say you needed to cover between $40K-$100K in annual expenses. You would need about $1M – $2.5M+ in assets, a Traditional FIRE number goal.

If you wanted to retire as early as possible and only live off $10K-40K in income, you might only need about $250K to $1M in assets, which we call Lean FIRE.

If you wanted to live a much more abundant lifestyle and have over $100K+ in living expenses, you would need $2.5M+ in assets to generate enough passive income to cover your expenses. Large FIRE numbers like these, we call Fat FIRE.


As you begin to research and learn about FIRE, you will hear the following terms more often. Fat FIRE, Lean FIRE, Barista FIRE, Coast FIRE, 4% Rule, Rule of 25, and Rule of 72. We’ve only scratched the surface here, and encourage you to do your research. We teach our financial coaching clients about all of these and go further in-depth in our FIRELife Freedom & FIRELife Pinnacle Programs.
Check out this website to calculate your number: engaging-data.com/fire-calculator/

Knowing your FIRE number will help set the benchmark of where you want to go and how far you have to go to get there. Once you know your ultimate FIRE number or the amount of income-producing assets needed to retire, you will have a clear goal to work towards. One crucial factor to remember is that your path to FIRE will take time. Your FIRE number may seem insurmountable now; however, we know that small, consistent steps taken over some time will result in conquering your financial mountain. How do you eat an elephant? One bite at a time. Take small steps at first, get your plan set up, and keep working toward it. You can do this. Albert Einstein said compound interest is the eighth wonder of the world. As you embark on your journey to FIRE, time and compound interest are your best friends.

Cash Flow Is King

Part 2 of knowing your numbers is knowing your Cash Flow. You will need to understand precisely how much money is coming in and how much is going out every month so you can plan your financial strategy and reach your FIRE goals. Knowing exactly where your money is going is essential if you want to make the surgical changes needed to reduce your spending and increase your saving and investing. Cash Flow is king in finance. Your net disposable income is what you will use to determine the % of how much money is going towards investments.

Calculate your monthly Cash Flow with this formula. Total after-tax take-home pay (before retirement contributions). Then take your total monthly expenses (including all bills and living expenses such as gas, food, etc.) and subtract that from your after-tax take-home pay. That is your Monthly Cash Flow. Your total monthly Cash Flow is the amount of money that you can save and invest to help you reach your FIRE goals.

There are a ton of resources out there that can help you learn more about FIRE. We listed a few here:

Information Is Power


  • Your Money Your Life – Vicki Robin & Joe Dominguez
  • Early Retirement Extreme – Jacob Lund Fisker
  • Total Money Makeover – Dave Ramsey
  • 4-Hour Workweek – Timothy Ferris
  • The Simple Plan to Wealth – JL Collins
  • The Millionaire Next Door – Thomas J Stanley
  • The Minimalists – Joshua Fields Millburn and Ryan Nicodemus
  • Playing with FIRE – Scott Riekens


These are just a few, and we encourage you to search out more information and other opinions and perspectives.