How We Calculate
UpdatedFIREPath's projections are computed entirely in your browser using transparent, deterministic formulas — no data leaves your device for the calculation. This page documents exactly how each number is produced so you can verify and trust the math.
1. The FIRE number (4% rule / Safe Withdrawal Rate)
Each FIRE target is your annual expenses divided by your Safe Withdrawal Rate (SWR). The default SWR is 4%, first established by financial planner William Bengen in 1994 and later popularized by the Trinity Study (1998), both of which found that withdrawing 4% of a portfolio annually (adjusted for inflation) has historically lasted at least 30 years. You can adjust the SWR slider (2%–6%) to match your own risk tolerance. For example, at a 4% SWR, $40,000 of annual expenses implies a $1,000,000 target.
Note on current research: Recent Morningstar analysis (2024–2026) puts the safe starting withdrawal rate at approximately 3.7%–3.9% for a 30-year, 90%-success horizon — slightly below the traditional 4%. Conservative users may prefer the lower end of the SWR slider. The 4% default is retained as a widely-recognized benchmark; no default has been changed.
2. FIRE-type multipliers
The five FIRE types apply a different multiplier to your current annual expenses before dividing by the SWR:
- Lean FIRE — 60% of expenses (minimalist retirement)
- Regular FIRE — 100% of expenses (current lifestyle)
- Fat FIRE — 150% of expenses (more comfortable lifestyle)
- Barista FIRE — 50% of expenses (part-time work covers the rest)
- Coast FIRE — the amount that, left untouched, compounds to your Regular FIRE target by your chosen retirement age (no further contributions required)
3. Inflation-adjusted real return
Projections use a real(inflation-adjusted) return so all figures are in today's dollars. Given your expected nominal return and inflation rate, the real return is:
Real return = (1 + expected return) ÷ (1 + inflation) − 1
4. Year-by-year compounding
Starting from your current net worth, each year we add your annual savings (annual income × savings rate) and grow the balance by the real return. We project from your current age through age 80 and find the first age at which your net worth reaches each FIRE target. If a target isn't reached by age 80, the result shows "80+" instead of a date.
Next year's net worth = this year's net worth × (1 + real return) + annual savings
5. Monthly passive income
For each target we also show the monthly passive income it would generate at your SWR: (target × SWR) / 12.
6. Default assumptions
The calculator starts from these values, and every one can be changed with the sliders. The last column says whether the default has a source check on record.
| Assumption | Default | Basis | Source check |
|---|---|---|---|
| Safe withdrawal rate | 4% | Bengen (1994) and the Trinity Study (1998). | Checked against Morningstar on : its latest base case is 3.9% for a 30-year horizon, below the 4% default. |
| Expected return (nominal) | 7% | A FIREPath assumption, set below the long-run U.S. stock returns reported by NYU Stern. | Checked against NYU Stern on : long-run U.S. stock returns are higher than 7%. |
| Inflation | 3% | Historical U.S. consumer price data. | No source check on record. |
| Default values in force as of . | |||
Limitations: projections assume constant returns, inflation, and savings, and do not model market volatility, taxes, or sequence-of-returns risk. They are estimates, not guarantees. (See the calculator and its FAQ for plain-language explanations.)
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Sources & References
- [1]William Bengen — Wikipedia— Confirms Bengen published the 4% rule in the October 1994 issue of the Journal of Financial Planning and that it was later popularized by the Trinity Study (1998).
- [2]Bankrate — The Revised 4% Rule— Overview of the 4% safe withdrawal rate, its Bengen origin, and current research.
- [3]Retirement Researcher — Safe Withdrawal Rates and the Trinity Study— Detailed analysis of Bengen (1994) and the Trinity Study (1998) origins.
- [4]NAPA Net — Morningstar Revises Safe Starting Withdrawal Rate— Trade-press report on Morningstar's 2024 revision of its safe starting withdrawal rate.
- [5]Morningstar — Finding Your Safe Withdrawal Rate— Morningstar's State of Retirement Income research: 4.0% (2023), 3.7% (2024), 3.9% (2025/2026).
- [6]NYU Stern — Historical Returns on Stocks, Bonds and Bills— Long-run U.S. stock returns. The 7% nominal return default is a FIREPath assumption set below these returns; you can change it.
- [7]J.P. Morgan Asset Management — Long-Term Capital Market Assumptions— Institutional long-term return assumptions, listed for context.
- [8]U.S. Inflation Calculator — Historical Inflation Rates— Historical U.S. CPI data (basis for the 3% inflation rate default).
- [9]Federal Reserve — Inflation FAQ— Fed inflation target context (2% long-run target; 3% default reflects longer-run averages).
- [10]Wikipedia — Fisher Equation— Mathematical basis for the real-return formula: (1 + nominal) / (1 + inflation) − 1.
- [11]Corporate Finance Institute — Fisher Equation— Applied explanation of the Fisher equation for real return calculations.
- [12]Wikipedia — Trinity Study— The canonical 25× multiple (target = expenses / 0.04) and 30-year success data.
- [13]White Coat Investor — The 4% Rule— Practical explanation of the FIRE target formula (expenses ÷ SWR).
- [14]Bankrate — Different Types of FIRE— Describes Lean, Regular, Fat, Coast, and Barista FIRE definitions.
- [15]ProjectionLab — Coast FIRE— Coast FIRE definition: amount that compounds to your FIRE target by retirement age.
- [16]Motley Fool — Fat FIRE vs. Coast FIRE vs. Barista FIRE— Definitions and examples for Fat, Coast, and Barista FIRE variants.
Disclaimer: This calculator is for educational and informational purposes only. It is not financial advice. Results are based on simplified assumptions and do not guarantee future outcomes. Consult a qualified financial advisor before making investment decisions.