What portfolio could support your expected spending?

What the FIRE signal tells you

FIRE stands for financial independence, retire early. This tool turns planned annual retirement spending into a simple portfolio target using the 4% rule in reverse. It also shows how much of that target is already invested and estimates a timeline using current monthly contributions and a 5% annual return after inflation.

The trajectory color is intentionally separate from the size of the number. Green means the target is already reached or the estimate is no more than 20 years away. Yellow covers more than 20 through 35 years. Red covers longer estimates or a pace that never reaches the target in the model. It is a planning signal, not a forecast or promise.

A worked FIRE number example

Suppose expected retirement spending is $48,000 per year, current invested assets are $300,000, and monthly investing is $2,000.

1. Calculate the target: $48,000 × 25 = $1,200,000.
2. Calculate current progress: $300,000 ÷ $1,200,000 × 100 = 25%.
3. Convert the assumed 5% annual real return to an equivalent monthly rate, then grow the balance and add $2,000 once per month.
4. Repeat monthly until the modeled balance reaches $1,200,000. Under these assumptions, it takes about 15.6 years, producing a green trajectory.

The answer is expressed in today’s purchasing power because the return assumption is real, meaning after inflation. If the $48,000 spending estimate is also in today’s dollars, the two sides are conceptually consistent. The timeline will change substantially if contributions, spending, or returns differ.

What the rule ignores

The 25-times rule is the inverse of a 4% initial withdrawal rate. It does not guarantee a portfolio will last. Actual outcomes depend on the sequence of market returns, retirement length, investment fees, taxes, asset allocation, and whether spending can fall after poor market years. A very early retirement may require the portfolio to last longer than the period behind common withdrawal research.

The timeline assumes a smooth return every month, while real markets move unevenly. It also assumes the monthly contribution never rises or stops. The tool does not add Social Security, pensions, part-time work, or other future income, and it does not distinguish taxable from retirement accounts. Healthcare, taxes, and one-time purchases are easy to omit from spending. Housing equity should not be counted unless the retirement plan actually converts it into spendable assets.

Next steps for each color

Green: stress-test independence

• Run higher spending and lower-return cases.
• Plan for taxes, healthcare, and large irregular purchases.
• Review withdrawal strategy and account access before leaving work.

Yellow: improve one strong lever

• Increase monthly investing automatically with future raises.
• Examine whether expected retirement spending reflects real priorities.
• Reduce investment fees and keep a diversified allocation suited to the timeline.

Red: make the path concrete

• Start with a sustainable contribution rather than an unrealistic short sprint.
• Test a later work-optional date or some ongoing earned income.
• Separate high essential spending from costs that could change in retirement.

The 4% rule and 5% real-return assumption are planning rules of thumb, not financial advice.