Retirement Guru: What’s your number?

A Realistic and Flexible Approach to Finding Your Correct FIRE Number

The journey to Financial Independence and Retiring Early (FIRE) is highly personal, and a rigid formula won’t work for everyone. While traditional methods like the 25x rule and the 4% withdrawal rule provide a useful starting point, they often fall short when applied to early retirees, especially those with longer time horizons. A more sustainable approach involves building flexibility into your FIRE plan, diversifying income streams, and adapting to market conditions.

1. Your FIRE Number Is a Baseline, Not a Fixed Target

Many FIRE enthusiasts calculate their "FIRE number" using the 25x rule (annual expenses × 25). While this provides a helpful benchmark, it oversimplifies long-term financial planning. Factors like inflation, healthcare costs, market volatility, and changing lifestyles mean that a static number is unrealistic. Instead, consider a dynamic approach to your FIRE number:

• Start with a baseline FIRE number using conservative assumptions (e.g., lower expected returns, higher future expenses).
• Build in flexibility by reviewing your plan regularly and adjusting spending, investments, or income streams as needed.