FinanceCalcs
Rule of 25 Calculator
The Rule of 25 is the cornerstone of the FIRE (Financial Independence, Retire Early) movement. To retire, you need 25× your annual expenses invested — enough to support a 4% annual withdrawal indefinitely. Enter your numbers to find your retirement target and timeline.
Based on the Trinity Study and William Bengen's research showing a 4% withdrawal rate has historically sustained portfolios for 30+ years across all market conditions since 1926.
Your FIRE Number
4% Withdrawal Rate (Rule of 25)
$0
Portfolio Growth to FIRE
| Year | Age | Portfolio Value | % of FIRE Goal |
|---|
Withdrawal Multiplier Comparison
| Withdrawal Rate | Multiplier | Your FIRE Number |
|---|
“A 4% initial withdrawal rate, adjusted annually for inflation, has historically sustained a 50/50 stock-bond portfolio for 30+ years in 95% of historical market scenarios going back to 1926. For most retirees, it remains the most practical planning benchmark available.”
— William Bengen, 1994 / Trinity Study, 1998
What is the Rule of 25?
The Rule of 25 states that you need 25 times your annual expenses saved to retire safely. It's the inverse of the 4% safe withdrawal rate: if you withdraw 4% of your portfolio each year, your portfolio lasts indefinitely (or at least 30+ years in nearly all historical scenarios). 1/4% = 25, so 25× annual spend is your target.
Origin: Financial planner William Bengen published research in 1994 showing that a 4% annual withdrawal, inflation-adjusted, never depleted a diversified portfolio over any 30-year historical period since 1926. The Trinity Study (1998) confirmed this with broader analysis. The FIRE community later simplified this to "save 25× your expenses."
Adjusting for your situation: If you're retiring very early (40s or earlier), some planners use a 3% or 3.5% rate (33× or 29× multiplier) for extra safety over a potentially 50+ year retirement. If you have significant Social Security, pension, or rental income, subtract that from your annual expenses before applying the multiplier — only the gap needs portfolio coverage.
Inflation matters: The 4% rule assumes you increase withdrawals each year with inflation. In high-inflation environments, this is more demanding. A flexible spending approach — adjusting withdrawals based on market conditions — can meaningfully improve outcomes.
Common Questions
Does the Rule of 25 still work today?
The original research used US historical data from 1926–1994. Critics note that today's lower bond yields and higher valuations may reduce expected forward returns. Some researchers now suggest a 3.3%–3.5% rate is safer in current conditions. The Rule of 25 remains a useful starting point, but planning with a slightly larger buffer (28–30×) is increasingly recommended for early retirees.
What counts as "expenses" in the Rule of 25?
Your realistic annual spending in retirement — housing, food, healthcare, travel, hobbies, and discretionary spending. Don't forget healthcare costs before Medicare eligibility (typically age 65), which can be $5,000–$15,000/year for early retirees. Most people underestimate retirement expenses by 10–20%.
What's the difference between FIRE and the Rule of 25?
FIRE (Financial Independence, Retire Early) is a lifestyle movement; the Rule of 25 is the mathematical framework most FIRE practitioners use to define their retirement number. There are also variations: Lean FIRE (smaller spend, smaller number), Fat FIRE (higher spend), Barista FIRE (partial retirement with part-time income), and Coast FIRE (stop contributing and let compound growth do the rest).
What if I hit my number but the market drops right after I retire?
This is sequence-of-returns risk — the biggest threat to early retirees. Bad returns in the first few years of retirement are far more damaging than the same returns later. Strategies to manage it include maintaining 1–2 years of cash reserves, reducing withdrawals in down markets, keeping a small part-time income, or using a bond tent (higher bond allocation in the years around retirement).
Disclaimer: All calculators on this site are provided for informational and educational purposes only. Results are estimates based on the inputs you provide and mathematical formulas — they do not account for taxes, fees, inflation, risk, or other real-world factors that may affect financial outcomes. Past performance does not guarantee future results. Nothing on this site constitutes financial, investment, legal, or tax advice. Always consult a qualified professional before making financial decisions.
About FinanceCalcs.net — FinanceCalcs.net is a free financial calculator directory built and maintained by Ted Grajeda. The site exists to give everyone access to fast, accurate financial math — no subscriptions, no paywalls, no signup required. Every calculator runs entirely in your browser using standard financial formulas.