Question 1

What is FIRE and how does it work?

Accepted Answer

FIRE stands for Financial Independence, Retire Early. It's a movement focused on extreme saving and investing to build a portfolio large enough to sustain your living expenses indefinitely through investment returns. The core idea is to save 50-70% of your income, invest aggressively, and reach a portfolio size (your FIRE number) where you can live off the returns without working.

Question 2

What is the 4% Safe Withdrawal Rate rule?

Accepted Answer

The 4% rule, derived from the Trinity Study, suggests you can withdraw 4% of your portfolio annually in retirement with a very low probability of running out of money over 30 years. For example, if you need $40,000 per year, your FIRE number is $1,000,000 ($40,000 ÷ 0.04). Some experts recommend 3.5% for extra safety, especially for early retirees with longer retirement periods.

Question 3

What is the difference between Lean, Regular, and Fat FIRE?

Accepted Answer

Lean FIRE means retiring with a more frugal lifestyle (80% of current expenses). Regular FIRE covers your current expenses. Fat FIRE provides a more comfortable lifestyle (125% of expenses). Each requires a different portfolio size - Lean FIRE is fastest to achieve but requires lifestyle adjustments, while Fat FIRE takes longer but provides more financial cushion.

Question 4

What is Coast FIRE?

Accepted Answer

Coast FIRE means you've saved enough that your portfolio will grow to your full FIRE number by traditional retirement age without any additional contributions. Once you reach Coast FIRE, you only need to earn enough to cover current expenses - you can take a lower-paying job, work part-time, or pursue passion projects without worrying about saving for retirement.

Question 5

What is Barista FIRE?

Accepted Answer

Barista FIRE is a semi-retirement approach where your portfolio covers about half your expenses through the safe withdrawal rate, and you earn the other half through part-time or low-stress work. The name comes from the idea of working a part-time barista job for income plus benefits like health insurance.

Question 6

How does inflation affect my FIRE number?

Accepted Answer

Inflation increases the amount you'll need over time. If you plan to retire in 15 years and inflation averages 2.5%, your expenses will be about 45% higher by then. This calculator adjusts your FIRE target for inflation, showing you the real amount needed. Using a real return rate (nominal return minus inflation) gives you a more accurate picture.

Question 7

What savings rate do I need to retire early?

Accepted Answer

The higher your savings rate, the faster you reach FIRE. At a 50% savings rate, you can retire in roughly 17 years. At 70%, in about 8 years. At 30%, it takes around 28 years. The savings rate has a dual effect: you accumulate wealth faster AND you need less money since you're living on less.

Question 8

What investment returns should I expect?

Accepted Answer

Historical U.S. stock market returns average about 10% nominal (7% after inflation). A diversified portfolio of stocks and bonds might return 6-8% after inflation. This calculator lets you adjust the return rate - use 7% as a reasonable default for a stock-heavy portfolio, or 5-6% for a more conservative mix.

Question 9

How accurate is this FIRE calculator?

Accepted Answer

This calculator provides estimates based on constant assumed returns and inflation. In reality, returns vary significantly year to year (sequence of returns risk), and inflation fluctuates. Use the results as a planning guideline rather than a guarantee. Consider running scenarios with different return rates (optimistic, moderate, conservative) to understand your range of outcomes.

Question 10

Can you achieve FIRE with an average income?

Accepted Answer

Yes, FIRE is possible on an average income, though it requires higher savings discipline. The key factor is the gap between income and expenses, not absolute income. Someone earning $60,000 who spends $30,000 (50% savings rate) will reach FIRE faster than someone earning $150,000 who spends $120,000 (20% savings rate). Focus on reducing expenses and investing the difference.