Retirement is not only an age milestone. It is a financial equation: when portfolio income can cover your expenses, you become financially independent.
The 4% rule explained
Based on historical market data, withdrawing around 4% of a diversified portfolio per year can be sustainable in many long-horizon scenarios.
A common shortcut is to multiply annual expenses by 25 to estimate a FIRE target.
The FIRE Calculation
If you spend $40,000/year, your target is about $1,000,000.
If you spend $80,000/year, your target is about $2,000,000.
If you spend $20,000/year (Lean FIRE), your target is about $500,000.
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