How much do you really need to retire?
The 4% rule, the 25× rule, and practical retirement math that actually works.
"How much do I need to retire?" is the single most googled financial question. Most answers are either scary ($5 million!) or vague (it depends). The real answer is a simple math formula.
The 4% rule
Three professors at Trinity University ran the math on historical market returns. The maximum safe withdrawal rate from a portfolio that lasts 30+ years is 4% per year, adjusted for inflation. Withdraw 4%, and you almost never run out — even through the Great Depression, 1970s stagflation, and the 2008 crash.
The 25× rule
If 4% is your safe withdrawal rate, your portfolio needs to be 25× your annual expenses. Spend $40,000/year? You need $1,000,000. Spend $80,000? $2,000,000. This is your "FI number" (financial independence). Reach it and work becomes optional.
Calculating your number
Start with current annual spending (not income). Add/subtract expected changes: no more mortgage? Subtract $24,000. More travel? Add $10,000. Multiply by 25. That's your number.
Lean FIRE vs FAT FIRE
Lean FIRE targets minimal expenses ($25K-$40K/year = $625K-$1M portfolio). Regular FIRE targets middle-class retirement. Fat FIRE aims for luxury ($100K+ = $2.5M+).
Why 4% might be too high for early retirement
The 4% rule was calibrated for 30-year retirements. If you retire at 40 and live to 90, that's 50 years. Some researchers suggest 3.25-3.5% for very early retirees (28-30× expenses).
Plug in your own amounts with our free calculators.