FatFIRE Calculator

How it is calculated

The target portfolio is yearly spending divided by the withdrawal rate: target = annual expenses ÷ (rate ÷ 100), which is the same as multiplying expenses by 100 ÷ rate. Annual expenses is what you want to spend per year in dollars, and rate is the share of the portfolio you plan to withdraw each year, in percent (3.5 means 3.5%). The tool also shows monthly budget = annual expenses ÷ 12. The relationship is inverse: halving the rate doubles the target. There is no inflation, tax, investment-return or time-horizon modelling; the withdrawal rate is the only safety assumption, and it is yours to choose. A rate of zero or below, a rate above 100, or negative expenses returns no result; zero expenses gives a zero target.

Common mistakes

• Typing 0.035 for the rate. The field is in percent, so 3.5% is entered as 3.5; 0.035 would give a target of about $428.6 million.
• Entering a rate above 100, which gives no result. Realistic withdrawal rates are a few percent, so check the decimal point.
• Entering pre-tax income instead of spending. The target is based on what you will actually spend, and any tax on withdrawals has to be added to that figure yourself.
• Leaving out costs that appear after retiring early, such as health insurance, which can be larger than the budget you live on today.
• Entering the monthly budget in the annual field, which produces a target twelve times too small.