What is Your FI Number?

Your FI number is the amount of invested assets you need to cover your living expenses indefinitely without working. It is the target at the center of the Financial Independence, Retire Early (FIRE) movement, and for most people it is calculated by multiplying annual spending by 25.

That multiplier comes from the 4% rule, a guideline drawn from research on historical portfolio survival rates. If you can withdraw 4% of a portfolio in the first year and adjust for inflation thereafter, you need roughly 25 times your annual expenses.

How to Calculate Your FI Number

FI Number = Annual Expenses / Safe Withdrawal Rate

Someone spending $50,000 a year using a 4% withdrawal rate needs $1,250,000. Dividing by 0.04 is the same as multiplying by 25, which is why the “25x” shorthand is so common.

The inputs that matter are your expenses in retirement, not your income today, and the withdrawal rate you consider sustainable.

The rate you pick moves the target substantially. Dropping from 4% to 3% raises the number by a third, which for most people translates to several additional years of work. Early retirement is the usual argument for the lower rate, since a 50-year retirement gives a portfolio far more opportunity to fail than the 30-year period the original research examined.

What Your FI Number Leaves Out

The 25x calculation is a starting point, not a plan. Several things it does not capture can move the real number in either direction.

Taxes. Withdrawals from traditional retirement accounts are taxable income. If your $60,000 of spending has to come out of a traditional IRA, you need to withdraw meaningfully more than $60,000 to net it, which raises your target.

Other income. Social Security, a pension, rental income, or part-time work reduce what the portfolio has to cover. Someone expecting $24,000 a year from Social Security at 67 does not need the portfolio to fund the full $60,000 forever, only the gap and the years before benefits begin.

Healthcare before Medicare. Retiring before 65 usually means buying coverage on the Affordable Care Act (ACA) marketplace, where premiums depend on your modified adjusted gross income (MAGI). Because portfolio withdrawals count toward MAGI, how you fund your spending affects what your insurance costs.

Spending that is not flat. Most retirement spending is not a straight line. Travel and discretionary costs often run higher in the first decade and taper later, while healthcare tends to move the other way.

A single multiplier cannot represent any of this, which is why the number works best as an opening estimate. Layering in your actual income sources, tax treatment, and a spending pattern that changes over time usually produces a different target, sometimes lower than expected once Social Security is included.

FI Number vs. Related FIRE Milestones

Your FI number is the full target. Several common milestones are defined relative to it.

All four are the same arithmetic applied to different spending assumptions or different amounts of outside income.

Frequently Asked Questions

How do I calculate my FI number? Divide your expected annual retirement spending by your chosen withdrawal rate. At 4%, spending $50,000 a year gives an FI number of $1,250,000.

Is 25x expenses enough to retire? It has held up well historically over 30-year retirements, which is what the original research tested. For a retirement that could run 40 or 50 years, many people target 28x to 33x instead, corresponding to withdrawal rates of roughly 3.5% to 3%.

Should I use gross or net expenses for my FI number? Use the amount you actually need to spend, then account for taxes separately based on which accounts the money comes from. Applying 25x to a pre-tax income figure overstates the target; ignoring taxes entirely understates it.

Does Social Security lower my FI number? Usually yes. Benefits reduce what the portfolio must cover from your claiming age onward, though you still need enough to bridge the years before they start.

How often should I recalculate it? Once a year is enough for most people, or after anything that materially changes your spending: a move, a mortgage payoff, a new dependent, or a change in health coverage.