FIRE Retirement Calculator
Work Out Your FIRE Number & Early Retirement Date
Updated: 23rd August 2022
This tool is a great motivator for Financial Freedom! Watch your retirement age decrease as you increase your savings or play around with different FIRE strategies.
We recommend you come back to this tool often to check your progress and refine your FIRE goals.
Your Net Worth
Do NOT include the value of your house, only the value of your investments and cash. Be sure to include the equity for any investment properties you own (i.e. after deducting the mortgage from the current house value). Deduct debts including credit cards, loans and overdrafts.
Rate Of Return
This is after subtracting inflation. For example, an 8% stock market nominal return becomes a 5% real return, if inflation is assumed to be 3%.
Your income and expenses are assumed to rise over the years with inflation. Your FIRE number (the Required FIRE Pot Size) is at today’s vale of money, having factored in inflation.
Withdrawal Rate (The 4% Rule)
A 4% rate is widely assumed to be sensible. A higher rate increases the risk of you running out of money in retirement, while a lower rate gives you additional safety.
Now you know the route to freedom, you need the means. The only realistic way to accomplish FIRE is to invest. That’s because cash sat in the bank yields negative real returns – hardly helpful to your objective!
Getting started is easy. If you’re a total beginner and would like experts to manage your investments on your behalf, it can be as easy as opening an account with Nutmeg or InvestEngine. These investment platforms and ones like it are known as robo-advisors. They do everything for you and will build you a diversified portfolio of global stocks, bonds & commodities factoring in their suitability to you.
Both Nutmeg and InvestEngine, amongst others, have welcome bonuses for new customers. Offers available on the MU Offers Page.
Alternatively check out our curated list of the Best Do-It-Yourself Investment Platforms for those who want to pick their own investments. Managing your own portfolio is a great way to cut costs, control your own finances and even have a little fun, but make sure you do your research and know what you’re doing.
What Is FIRE?
FIRE stands for Financial Independence, Retire Early. More and more people are choosing to shun the culture of working into your 60s, instead adopting the principles of FIRE and retiring decades earlier than their peers.
“Money is the carrot, the illusion. If the donkey could see the whole picture, it might rethink its choice to chase the carrot.”
– Robert Kiyosaki
Instead of committing their lives to the pursuit of career, work is a means to an end: financial freedom.
Most often FIRE manifests itself as a combination of high savings rates (50%+ of income), frugal living (a tight control of outgoings), and investing, with the intention to retire within a decade or two.
When the money you earn from your investments will pay for your living expenses, you have reached FIRE. This is when you can begin to withdraw money from your investment pot each year without burning up your invested capital. FIRE enthusiasts tend to drawdown from their investment pot using the 4% safe withdrawal rate.
The calculator above tells you when you reach that magical tipping point, the moment when you can take full control of what you do with your life.
Types Of FIRE
The method of FIRE you apply will require sacrifices – whether that be in time, effort or luxuries. So, it’s good to know that a number of options are available for you to choose from which all arrive at some variation of the same end destination of financial freedom.
You retire early, with an investment pot large enough to continue to fund a comfortable middle-class lifestyle. Your Required FIRE Pot Size might range between £500k-£1.5m, returning £20k-£60k per year.
Popular amongst the minimalists, who just want freedom and don’t need luxuries. You retire when your pot reaches a size to live on, but without any home comforts. Maybe you are happy to live in a campervan rather than a 3-bed semi. Your Required FIRE Pot Size might range between £200k-£500m, returning £8k-£20k per year.
Maybe retirement for you is nothing less than total comfort and travelling the world in style – the celebrity lifestyle. If you are happy to keep working for longer to allow your pot time to grow, Fat FIRE might be the route for you. Your Required FIRE Pot Size will probably need to be at least £1.5m, and likely higher.
This route is FIRE at its most basic – it doesn’t even necessarily end in you leaving the rat race. All it buys you is semi-retirement, but it is much more achievable because of that. You accumulate your freedom fund to cover some of your expenses, but not all. As a result, you commit to working part-time to make up the shortfall in income, until you can draw your state pension.
Coast FIRE is best described as investing enough money at a young enough age so that you can stop contributions mid-career, live affluently for the second half of your working life, and still achieve financial independence sometime in the future just by “coasting” along. This relies on compounding returns to do the work for you in the background, while you concentrate on enjoying life while still in your career.
Earn An Extra £500+ A Month Additional Income
Using a side hustle to boost your income is a great way to shave years off your FIRE date.
Check out our Guide To Matched Betting, for information on how to add this simple side hustle to your income streams, and discounts for the matched betting tools you’ll need.
Every income stream helps towards your FIRE goal.
Investing Offers and Cash-Bonuses
Keep checking back in on the Offers Page for great discounts and bonuses on investing platforms, home energy and insurance bills, and investing analytics tools.
This a great resource for both increasing your income and driving down your expenses.
So you know…
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