Your FI (financial independence) number is the portfolio size that can fund your lifestyle without earned income. It is the central target in FIRE planning, everything else (savings rate, timeline, investment strategy) flows from this number.
The basic formula is simple: annual spending divided by withdrawal rate. The hard part is estimating honest annual spending and choosing a withdrawal rate you trust for your time horizon.
The basic formula
FI number = annual expenses × (1 / withdrawal rate). At a 4% withdrawal rate, multiply annual expenses by 25. At 3.5%, multiply by about 28.6. At 3%, multiply by 33.3.
If you spend $48,000 per year and use a 4% rate, your FI number is $1,200,000. If you want a more conservative 3.5% rate, the target rises to about $1,370,000.
Use post-tax spending, what you actually live on, not gross income. Track expenses for 3–6 months to get a realistic number. Include insurance, healthcare, travel, and irregular costs amortized annually.
What to include in annual expenses
Include housing (rent or mortgage payment, property tax, insurance, maintenance), food, transportation, healthcare, insurance premiums, utilities, and discretionary spending you plan to continue in retirement.
Exclude current retirement contributions (401k, IRA), those are savings, not spending. Include estimated healthcare costs if you will lose employer coverage before Medicare at 65.
Adjust for retirement lifestyle changes. Many people spend less in early retirement (no commute, no work clothes) but more on travel and healthcare. Build a retirement-specific budget rather than copying today's spending blindly.
Choosing a withdrawal rate
The 4% rule is the most common starting point for 30-year retirements. Early retirees with 40–50 year horizons often plan for 3–3.5% to add safety margin.
Higher withdrawal rates (4.5–5%) deplete the portfolio faster and fail more often in bad market sequences. Lower rates (3%) require a larger portfolio but survive more stress scenarios.
Flexible spending improves outcomes. Planning to cut discretionary spending 20% in down markets lets you use a slightly higher initial rate with similar safety.
FI numbers for Lean, Coast, and Barista FIRE
Lean FIRE uses lower annual spending ($25,000–$40,000), producing a smaller FI number. Barista FIRE uses part-time income to cover part of expenses, so the portfolio only needs to fund the gap.
Coast FIRE is a different calculation: how much you need today so compound growth reaches your retirement number without further contributions. It is a milestone, not a full FI number.
Run all variants with the FIRE comparison calculator to see how different spending levels and income assumptions change your target and timeline.
Calculate your personal FI number
Enter your actual expenses, savings, portfolio, and return assumptions in the FIRE calculator to see your FI number and estimated independence date.
Compare Lean, Coast, Barista, and Full FIRE targets with the comparison tool, and stress-test withdrawals with the retirement calculator.