Fire target . How do you calculate fire target . .
Oct 10, 2021
14 Comments
2 kids in elementary school , bay area.
Tc 450k yoe 13 . Family tc 750k
Nw 2.3 m excluding primary home
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comments
25* yearly expenses of family.
The assumption is you
- calculate your current Annual expenses for family and
- how much you will withdraw - typically 4%
- also determine when you want to retire.
Assuming most people will with draw 4%, (Trinity Study) hence 25* Annual expenses.
There are variations of Fire depending on choices and interests
Fat Fire
Lean Fire
Coastal Fire etc
The typical FIRE numbers for Bay Area range from 1.25 million to 6.25 million or more, depends on your current lifestyle which impacts Annual expenses and assuming your lifestyle will relatively be similar after retirement. If you want to upgrade your lifestyle for retirement then go with higher withdrawal % (FAT FIRE)
FIRE number = annual expenses / safe withdrawal rate
The FIRE community assumes you are investing (usually in index funds) and getting decent returns of at least 4 to 8% or more with your Networth which takes care of the inflation.