FIRE calculator, how much you need to live off your investments
How much would you need saved and invested to stop depending on your salary? This calculator tells you in a moment, using only what you spend each month.
Target capital
Hypothetical simulation for educational purposes. Past performance does not guarantee future results. This is not financial advice.
How it works
The calculator uses the 4% rule. Your target is to build up about 25 times what you spend in a year, because 4% of that amount is exactly your yearly spending. If you spend $2,200 a month, that is $26,400 a year, and $26,400 times 25 is $660,000.
Where the 4% comes from
In 1994, financial adviser William Bengen used data going back to 1926 to show that someone who withdrew 4% of their portfolio in the first year, and then the same amount adjusted for inflation, would not have run out of money in any 30-year period. In 1998, three professors at Trinity University in Texas repeated the analysis and reached a similar conclusion. This is the well-known Trinity Study.
Good to know
- It is a rule of thumb, not a guarantee. It is based on what happened in the past and was designed for retirements of around 30 years. If you want to stop working much earlier, many people use a bigger margin, such as 3.5%.
- To estimate the time to your target we assume a 7% annual return, a historical average for global markets. In reality there are good years and bad years, so the result is only a guide.
- It does not take taxes or fees into account, which in real life reduce what you can withdraw.
Educational content. This is not financial advice.