What Is Your FIRE Number? How to Calculate Finan

Your FIRE number is the single most important number on your journey to financial independence. It’s the amount of money you need invested so that you never have to work for money again. Once you hit it, work becomes optional. Everything you do from that point forward is a choice, not a requirement.

When I first calculated mine, it felt impossibly large. A number so far away that I almost talked myself out of the whole thing. But breaking it down into a formula, understanding the logic behind it, and tracking my progress towards it turned an abstract dream into a concrete plan.

Here’s how to calculate yours.

The basic formula

Your FIRE number comes down to one simple calculation:

Annual expenses x 25 = your FIRE number

That’s it. If you spend £30,000 a year, you need £750,000 invested. If you spend £40,000, you need £1,000,000. If you spend £50,000, you need £1,250,000.

The formula works because of a concept called the safe withdrawal rate, and the multiplier of 25 is directly tied to it.

Why 25? The 4% rule explained

The number 25 comes from the 4% safe withdrawal rate. The idea is that if you withdraw 4% of your investment portfolio each year, your money should last at least 30 years (and in most historical scenarios, indefinitely).

This originates from the Trinity Study, which analysed US stock and bond returns going back to 1926. The researchers found that a 4% withdrawal rate, adjusted for inflation, survived the vast majority of 30-year periods, including those that contained wars, recessions, and market crashes.

If 4% is your annual withdrawal, then you need 100 / 4 = 25 times your annual spending invested. That’s where the multiplier comes from.

Quick reference table

Annual expenses	FIRE number (x25)
£20,000	£500,000
£25,000	£625,000
£30,000	£750,000
£35,000	£875,000
£40,000	£1,000,000
£45,000	£1,125,000
£50,000	£1,250,000

The UK advantage

If you’re pursuing FIRE in the UK, you have two significant advantages over Americans chasing the same goal.

The State Pension. The full new State Pension is currently £11,502 per year (2025/26). If you’re planning to spend £30,000 a year in retirement, the State Pension covers over a third of that from age 67. This means your investments only need to cover the gap between now and State Pension age, and then a reduced amount after that.

For a couple, that’s potentially £23,000 a year from the State Pension alone. That dramatically reduces how much your portfolio needs to generate.

The NHS. In the US, healthcare costs are one of the biggest concerns for early retirees. Many Americans need to budget £10,000 to £20,000 per year for health insurance alone. In the UK, the NHS means healthcare costs are negligible in your FIRE calculations. This is a genuine and often underappreciated advantage.

Lean FIRE vs Fat FIRE vs Barista FIRE

Not all FIRE numbers are created equal. The community has developed a few variations depending on your lifestyle goals:

Lean FIRE is reaching financial independence on a stripped-back budget, typically under £20,000 to £25,000 per year for a single person. It requires minimal spending and a smaller portfolio, but leaves little room for lifestyle inflation or unexpected costs.

Fat FIRE is the opposite: financial independence with a comfortable or even luxurious lifestyle. Think £50,000 to £80,000+ per year in spending. You need a significantly larger portfolio, but you retire without compromising on anything.

Barista FIRE (sometimes called Coast FIRE) is a middle ground. You’ve saved enough that your investments will grow to cover a traditional retirement, but you still work part-time or in a lower-stress job to cover current living expenses. You’ve removed the pressure of needing a high-paying career, even if you haven’t fully stopped working.

Most people I’ve coached end up somewhere between lean and fat. The sweet spot tends to be a realistic assessment of what you actually spend today, with a small buffer for the unexpected.

Does your FIRE number include your house?

No. Unless you plan to sell your home and downsize (or rent) in retirement, your primary residence should not be counted towards your FIRE number. Your FIRE number represents investable assets, money that generates returns and income you can withdraw from.

Your house is an asset on paper, but it doesn’t produce income while you’re living in it. If you own your home outright by the time you FIRE, that’s brilliant because it means your annual expenses are lower (no mortgage or rent). But the equity in your house isn’t part of the 25x calculation.

How to calculate YOUR number: step by step

Track your spending for 3 months. Use a spreadsheet, an app, or your bank statements. You need an honest picture of what you actually spend, not what you think you spend.
Annualise it. Take your average monthly spend and multiply by 12. Don’t forget annual costs like car insurance, holidays, and Christmas spending.
Adjust for retirement. Some costs will drop (commuting, work clothes, lunches out). Others might rise (hobbies, travel, heating if you’re home more). Be honest with yourself here.
Decide if your mortgage will be paid off. If yes, remove the mortgage payment from your annual expenses. If no, include it.
Multiply by 25. That’s your FIRE number.
Factor in the State Pension (optional). If you’re confident you’ll qualify for the full State Pension, you can reduce your FIRE number. Calculate the gap: (annual expenses minus State Pension) x 25 gives you a lower target. But remember, you still need enough to bridge the years between early retirement and age 67.

How long does it take?

Your savings rate is the single biggest factor in how quickly you reach your FIRE number. Here’s a rough guide assuming 7% real (inflation-adjusted) investment returns:

Savings rate	Years to FIRE
10%	51 years
20%	37 years
30%	28 years
40%	22 years
50%	17 years
60%	12.5 years
70%	8.5 years
80%	5.5 years

The relationship is not linear. Going from a 10% to a 20% savings rate cuts 14 years off your timeline. Going from 50% to 60% only cuts 4.5 years. The early improvements in your savings rate have the most dramatic impact.

The truth about the 4% rule

I want to be upfront about something. The 4% rule is based primarily on US market data, which has historically delivered stronger returns than most other global markets. For UK investors, particularly those with a heavy UK equity allocation, a 3.5% withdrawal rate (which means multiplying your expenses by 28.6 instead of 25) might be more prudent.

The difference isn’t enormous, but it matters. A £30,000 annual spend at 4% needs £750,000. At 3.5%, you’d need £857,000. That’s an extra £107,000 to accumulate, but it buys you a significant safety margin.

Personally, I’ve always planned conservatively. My FIRE number was based on a withdrawal rate closer to 3.5%, and I also built in a buffer for unexpected costs. The peace of mind that comes from knowing your numbers have slack in them is worth the extra time it takes to get there.

What my FIRE number was

My annual expenses when I left employment were around £30,000 to £35,000. Using a 3.5% withdrawal rate, my target was roughly £850,000 to £1,000,000 in investable assets. I hit the upper end of that range before I pulled the trigger, partly because I wanted the buffer and partly because the final years of accumulation, when compound growth really kicks in, added more than I expected.

The journey took the best part of 15 years. It wasn’t always comfortable, and there were years where progress felt painfully slow. But having a concrete number to aim for, rather than a vague idea of “enough”, made all the difference. Every pound I invested moved the needle. Every spending decision had context.

Start with your number

If you take one thing from this article, let it be this: calculate your FIRE number today. Even if retirement feels decades away, knowing your target transforms how you think about money. It gives every financial decision a framework.

Your number might feel huge. That’s normal. Mine did too. But the formula doesn’t lie, and compound growth is remarkably powerful when you give it time.

Work out what you spend. Multiply by 25 (or 28.6 if you want to be conservative). Write it down. That’s your finish line.

Now start running towards it.

What Is Your FIRE Number? How to Calculate Financial Independence