What is your FI number? (formula, examples, calculator)

What is an FI number?

Your FI number (financial independence number) is the size of the invested portfolio that could cover your annual spending indefinitely, so paid work becomes a choice instead of a requirement.

The idea rests on one relationship: a diversified portfolio can historically sustain withdrawals of a small percentage of its starting value each year, adjusted for inflation, for decades. Flip that percentage around and you get a savings target. Once your investments reach it, your portfolio — not your paycheck — can pay for your life.

Two things your FI number is not:

• It's not a net-worth target. It counts invested assets you could actually draw on — index funds, brokerage accounts, retirement accounts. Your home equity doesn't pay the grocery bill, so it stays out (more on that below).
• It's not a guarantee. It's an estimate built on assumptions — your spending, your withdrawal rate, market history. Good planning means seeing those assumptions and stress-testing them, not treating one number as destiny.

The FI number formula

FI number = annual spending ÷ safe withdrawal rate (SWR)

That's the whole formula. At the common 4% withdrawal rate:

FI number = annual spending ÷ 0.04 = annual spending × 25

This is why you'll hear it called the 25x rule — same math, different packaging. A more cautious withdrawal rate raises the multiple:

Notice what drives the number: spending, not income. Someone earning $200,000 and spending $50,000 has a smaller FI number than someone earning $90,000 and spending $60,000. Every dollar of permanent annual spending you trim cuts your FI number by $25 at a 4% withdrawal rate.

Where the 4% rule comes from (Bengen and the Trinity study)

The 4% rule isn't folklore — it comes from two pieces of published research on US market history.

Bengen (1994). Financial planner William Bengen tested historical US stock and bond returns to see what initial withdrawal rate, adjusted for inflation each year, would have survived every historical retirement start date. His answer: at a 4% initial withdrawal rate with a 50–75% stock allocation, no historical portfolio he examined was exhausted in less than about 33 years — including for people who retired into the Great Depression or the 1970s stagflation. He recommended holding "a stock allocation as close to 75 percent as possible, and in no cases less than 50 percent." (Bengen, "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning, October 1994. Bengen himself has since revised his own headline number several times — up to roughly 4.5–4.7% under updated assumptions — which tells you it's a research finding under ongoing debate, not physics.)

The Trinity study (1998, updated 2011). Three Trinity University professors — Cooley, Hubbard, and Walz — asked a related question across withdrawal rates, portfolio mixes, and horizons using data from 1926 onward: what fraction of historical retirement periods succeeded (didn't run out of money)? The often-cited result from the 2011 update: a 4% inflation-adjusted withdrawal over 30 years from a 50/50 stock/bond portfolio succeeded in 96% of rolling historical periods.

Read both findings carefully and you'll see the fine print that most FI content skips: the research is about roughly 30-year retirements, based on US historical data. Which brings us to the part that matters most if you're aiming to retire early.

Retiring early? The 30-year fine print (and why many planners use 3.25–3.5%)

If your money needs to last 40–60 years instead of 30, the 4% rule gets noticeably less safe, and a withdrawal rate around 3.25–3.5% is the commonly used conservative adjustment.

The clearest public work here is the Safe Withdrawal Rate series at Early Retirement Now (Karsten Jeske), which re-ran the historical simulations for early-retirement horizons. Two findings worth knowing:

• In his simulations, a 4% withdrawal rate that succeeded in about 95% of 30-year historical periods (50/50 portfolio) succeeded in only about 65% of 60-year periods.
• Withdrawal rates in the 3.25–3.5% range survived even the most catastrophic historical start dates in his analysis.

That's why FIManager's calculator ships with a one-tap 3.5% long-horizon preset alongside the 4% default. Neither is "the right answer" — they're different assumptions, and your FI number moves meaningfully between them (see example 2 below). The honest approach is to compute both and know which one you're planning against.

How to calculate your FI number (step by step)

1. Estimate annual spending in retirement, in today's dollars. Use real spending data, not income. Include health insurance, taxes you'll still pay, and lumpy costs (cars, roofs) averaged per year.
2. Pick a withdrawal rate. 4% for a ~30-year horizon; 3.25–3.5% if you're retiring decades early or want more margin.
3. Divide spending by the rate. That's your FI number.
4. Compare it to what you have invested (exclude home equity), and project when contributions + growth get you there.

Step 4 is where a calculator earns its keep. Here's the exact math ours uses — no hidden assumptions.

The exact math our calculator runs

The FIManager FI calculator works entirely in today's (real) dollars: growth is a real (after-inflation) return, so results don't need a separate inflation adjustment. Given your current invested amount P, annual contribution C, real return r, and FI target T:

• FI number: T = annual spending ÷ SWR
• Years to FI (closed form, the standard future-value-of-an-annuity equation solved for n):
  n = ln[(T·r + C) ÷ (P·r + C)] ÷ ln(1 + r)
• Coast number (the amount that grows to T by your target retirement age with zero further contributions):
  Coast = T ÷ (1 + r)^(years until target age)

Default assumptions, all visible and editable on the page: 4% withdrawal rate (3.5% long-horizon preset), 5% real return (a ~7% nominal return minus ~2% inflation basis — shown on screen; note 2% is on the optimistic end for inflation, and a ~3% assumption would put the real return near 4%).

Three worked examples

All three use the calculator's exact formulas above. Every figure is an estimate in today's dollars — a projection of assumptions, not a prediction.

Run your own numbers: fimanager.app/fi-calculator — same math, your inputs, assumptions on screen.

What the simple formula leaves out

The closed-form math above assumes a smooth, constant return every single year. Markets don't do that — and when bad years land matters as much as the average (sequence-of-returns risk: two retirees with identical average returns can end up in wildly different places depending on whether the crash comes early or late).

That's why a single FI date is the start of planning, not the end. The next level is a Monte Carlo simulation: run your plan through thousands of randomized market sequences and report a chance of success instead of one deterministic answer. That's what the full FIManager plan does — along with taxes, milestones, and scenario comparisons — with every assumption exposed and editable. No hidden assumptions is the whole point: if you can't see what a projection assumes, you can't trust what it tells you.

Common mistakes when calculating your FI number

1. Using income instead of spending. Your FI number funds your life, not your salary. Basing it on income (or a "70% of income" rule of thumb) can miss badly in either direction. Track actual spending.
2. Mixing nominal returns with today's-dollar spending. If your spending is in today's dollars, your growth assumption must be a real (after-inflation) return. Compounding at 10% nominal against today's spending will make you look years closer to FI than you are.
3. Applying 30-year research to a 50-year retirement. Bengen and Trinity studied ~30-year horizons. Retiring at 40 on the 4% rule means betting a 50-year outcome on 30-year evidence — consider 3.25–3.5% and look at a chance-of-success simulation.
4. Counting home equity. You can't withdraw 4% of your kitchen. Unless you'll sell and rent (in which case model that explicitly), keep your primary residence out of the invested total.
5. Forgetting taxes and healthcare. Withdrawals from pre-tax accounts are taxable income, and pre-Medicare health insurance is a major early-retiree line item. Both belong inside your annual spending estimate.
6. Treating the number as fixed forever. Spending changes, markets move, life happens. An FI number is a living estimate — recompute it when your inputs change, and track progress against it rather than setting and forgetting.
7. Treating any of this as a guarantee. Historical success rates describe the past. They're the best evidence we have, but they're evidence, not a promise.

FAQ

What is an FI number?

Your FI number is the amount of invested assets that could sustainably cover your annual spending, making work optional. The standard estimate is annual spending divided by a safe withdrawal rate — 25x spending at the common 4% rate.

How do I calculate my FI number?

Divide your expected annual spending (in today's dollars) by your chosen withdrawal rate. Spending $40,000 with a 4% rate: $40,000 ÷ 0.04 = $1,000,000. Use 3.25–3.5% instead of 4% if your retirement could last much longer than 30 years.

Is the 4% rule still valid?

It remains a reasonable ~30-year planning baseline grounded in Bengen (1994) and the Trinity study, and Bengen himself has since argued for somewhat higher rates under updated assumptions. But for early retirements of 40+ years, historical simulations (Early Retirement Now) show 4% failing far more often, which is why many early retirees plan at 3.25–3.5%. It's a starting assumption to stress-test, not a law.

Do I include my house in my FI number?

Generally no. The FI number represents assets you can withdraw from; home equity isn't withdrawable while you live there. If you plan to downsize or sell, model that as an explicit future event instead.

What investment return should I assume?

If your spending is in today's dollars, use a real (after-inflation) return. FIManager's calculator defaults to 5% real (~7% nominal minus ~2% inflation, shown on screen) and lets you set anything from 0–8% — because the honest answer is that this assumption is yours to make, and small changes move the result a lot.

What's the difference between an FI number and a Coast FIRE number?

Your FI number is the full portfolio needed to live on now. Your Coast FIRE number (short for Financial Independence, Retire Early) is the smaller amount that — left untouched — would grow to your FI number by a target retirement age. Reach it, and you only need to cover living costs until then; compounding does the rest.

What's a 4% rule calculator?

A calculator that applies the formula above: spending ÷ 4% (or another rate you choose) for the FI number, plus growth math for when you'd reach it. FIManager's free FI calculator does exactly this with every assumption visible.

Calculate yours: FI and FIRE calculators

Your FI number is the anchor. Each FIRE variant is the same math aimed at a different target — jump straight to the calculator that fits your plan.

• FI calculator →Your core FI number and a rough date to financial independence.
• Coast FIRE calculator →The smaller amount that grows to full FI on its own — stop saving, keep coasting.
• Barista FIRE calculator →How steady part-time income shrinks the portfolio you need to semi-retire.
• Lean FIRE calculator →Reach financial independence sooner on a deliberately frugal budget.
• Fat FIRE calculator →Fund a no-compromises, higher-spending early retirement.
• Chubby FIRE calculator →The comfortable middle band between lean and fat FIRE.