FIRE Calculator

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FAQ

What is FIRE?

FIRE (Financial Independence, Retire Early) represents a lifestyle movement where individuals aggressively save and invest to break free from traditional employment. Unlike conventional retirement planning, FIRE enthusiasts aim to accumulate enough wealth earlier in life, giving them the freedom to pursue passions, work optionally, or retire decades before the standard retirement age.

What is a safe withdrawal rate?

While the famous 4% withdrawal rate guideline emerged from the Trinity Study’s analysis of market performance between 1925-1995, modern FIRE practitioners understand it’s just one piece of the puzzle. Your optimal withdrawal rate depends on various factors: investment mix, retirement duration, market conditions, and risk tolerance. Some opt for more conservative rates around 3.5% for longer retirements, while others comfortable with higher stock allocations might safely withdraw more.

What annual growth of my portfolio can I expect?

Portfolio returns vary significantly based on your investment strategy and risk tolerance. Traditional stock market indices like the S&P 500 have historically averaged around 10% annually, while tech-heavy portfolios can see higher volatility with potentially greater returns. Conservative investors often blend stocks with bonds for stability, typically yielding 5-7%. Emerging assets like Bitcoin have shown remarkable growth potential, though with substantial risk. The key is aligning your portfolio’s growth expectations with your risk comfort level and time horizon.

Do you take into account that my spending will increase over time due to inflation?

Our calculator incorporates inflation’s impact on your future purchasing power, ensuring your retirement planning remains realistic. This is vital because what costs $50,000 today might require $67,000 in a decade. By factoring in inflation, you can better prepare for maintaining your desired lifestyle throughout retirement, avoiding the common pitfall of underestimating future expenses.