Retirement guide
FIRE Number at 3.5% vs 4%
Quick answer: Divide annual spending that the portfolio must cover by the initial withdrawal rate. A $40,000 gap produces a $1,000,000 FIRE number at 4%, but about $1,142,857 at 3.5%—roughly 14.3% more.
Reviewed October 8, 2026 · Published by ToolRicherly
The FIRE number formula
Only the gap investments must fund belongs in the numerator. If expected spending is $60,000 and dependable pension or rental income is $15,000, the portfolio gap is $45,000.
3.5% vs 4% examples
| Annual gap | At 4% | At 3.5% |
|---|---|---|
| $40,000 | $1,000,000 | $1,142,857 |
| $60,000 | $1,500,000 | $1,714,286 |
| $80,000 | $2,000,000 | $2,285,714 |
Use the FIRE number calculator to include other income, current investments, monthly contributions, and a simplified time-to-target estimate.
What the 4% rule means
The commonly cited framework begins with a first-year withdrawal equal to 4% of the starting portfolio, then adjusts that dollar amount for inflation. It is not the same as withdrawing 4% of the changing balance every year. Research commonly called the Trinity Study compared historical portfolio success rates across withdrawal rates, asset mixes, and retirement periods.
Why test 3.5%?
A lower starting rate raises the target but reduces the initial claim on the portfolio. Someone may test it for a retirement longer than 30 years, limited spending flexibility, high investment costs, or concern about poor early returns. It remains a scenario, not a guarantee.
Sequence-of-returns risk
Average return alone cannot describe a withdrawal plan. Large losses early in retirement can be especially damaging because withdrawals remove assets that might otherwise participate in a recovery. Flexible spending, cash reserves, other income, and diversification matter alongside the starting rate.
Frequently missed expenses
- Income taxes on withdrawals
- Health insurance and medical costs
- Home, vehicle, and appliance replacement
- Investment expenses and advisory fees
- Family support and irregular travel
Frequently asked questions
Is the FIRE number the same as net worth?
No. It usually refers to investable assets available to fund spending. Home equity is not automatically spendable.
Should Social Security reduce the target?
Expected benefits can reduce the later portfolio gap, but an early retiree must separately fund years before benefits begin.
Is 25 times expenses always enough?
Twenty-five times the portfolio-funded gap is the 4% arithmetic. Suitability depends on horizon, allocation, taxes, fees, flexibility, and future conditions.
Sources and methodology
Primary research: Cooley, Hubbard, and Walz, A Comparative Analysis of Retirement Portfolio Success Rates. See the FPA discussion of updated Trinity research and our methodology. Historical outcomes do not predict future success.