How to Calculate Your Retirement Savings Need
This calculator uses the FIRE (Financial Independence, Retire Early) methodology to determine how much you need to retire. It projects your savings growth based on current savings, monthly contributions, and expected returns, then compares it to your FIRE number.
The FIRE Number Formula
FIRE Number = Annual Expenses / Safe Withdrawal Rate
For example, if you need $50,000 per year in retirement and use a 4% withdrawal rate, your FIRE number is $1,250,000.
How to Use This Calculator
- Enter your current age and desired retirement age
- Enter your current retirement savings
- Enter how much you save each month
- Enter your expected annual expenses in retirement
- Set your expected rate of return and safe withdrawal rate
Understanding the Results
The calculator shows your FIRE number, projected savings at retirement, and whether you are on track. If there is a shortfall, consider increasing monthly savings, pushing back your retirement age, or reducing expected expenses.
Types of FIRE
- Lean FIRE: Retiring on a minimal budget ($25-40K/year)
- Regular FIRE: Retiring on a comfortable budget ($40-60K/year)
- Fat FIRE: Retiring on a generous budget ($100K+/year)
- Coast FIRE: Having enough saved that compound growth alone will fund retirement
- Barista FIRE: Working part-time to cover expenses while investments grow
Retirement Savings Calculator FAQ
What is a FIRE number?
Your FIRE (Financial Independence, Retire Early) number is the amount of savings needed so that annual withdrawals cover your living expenses. It is calculated as Annual Expenses / Safe Withdrawal Rate. For example, if you spend $40,000 per year and use a 4% withdrawal rate, your FIRE number is $1,000,000.
What is the 4% rule?
The 4% rule states that you can withdraw 4% of your portfolio in the first year of retirement, then adjust for inflation each year, and your money should last at least 30 years. It is based on the Trinity Study of historical market returns. Some planners now recommend 3.5% for added safety.
How much should I save for retirement?
A common guideline is to save 15-20% of your gross income for retirement. However, if you want to retire early (FIRE), you may need to save 50% or more. The exact amount depends on your desired retirement age, lifestyle, and expected returns.
What is a realistic rate of return?
Historically, a diversified stock portfolio has returned about 10% annually (7% after inflation). A balanced stock/bond portfolio returns about 7% (4% real). Be conservative in your estimates; using 6-7% nominal or 4% real is prudent for planning.
When should I start saving for retirement?
As early as possible. Thanks to compound interest, someone who starts saving $500/month at age 25 will have significantly more at retirement than someone who starts saving $1,000/month at age 35, despite contributing less total money.