FIRE MATH
The 25× Rule: The Fastest Way to Estimate Your FIRE Number
If your annual spending is $50,000, you need $1.25 million invested to retire. That's the 25× rule — the simplest way to estimate your FIRE number. It's also the 4% rule in disguise.
Formula
Spending × 25
Equivalent to
4% withdrawal
Best for
Quick mental math
Origin
Trinity Study (1998)
How It Works
The 25× Rule states: your FIRE number equals your annual spending multiplied by 25. If you spend $40,000/year, you need $1,000,000 invested. If you spend $80,000, you need $2,000,000. The rule is the mathematical inverse of the 4% Rule: 1 ÷ 0.04 = 25. It's the same equation, rewritten for people who think in goal-based terms ('how much do I need?') rather than withdrawal terms ('what can I take out?'). The beauty of the 25× formulation is that it forces you to focus on reducing annual spending, because every dollar of recurring spending multiplies 25× into your required portfolio. Cutting $200/month from your budget ($2,400/year) reduces your FIRE target by $60,000.
Where It Came From
The 25× framing became popular through the early-2010s FIRE blogosphere, particularly Mr. Money Mustache's 2012 post 'The Shockingly Simple Math Behind Early Retirement' and JL Collins' Stock Series. Both writers noticed that most people find '25× your spending' more intuitive than '4% withdrawal rate' when planning toward a number. The rule has no separate academic origin — it's a presentation of Bengen's (1994) and Trinity (1998) research reformulated for FIRE audiences.
Where It Breaks
The 25× rule inherits every limitation of the 4% rule, because they're the same math. It assumes a 30-year retirement horizon, US equity/bond data, and constant inflation-adjusted spending. For 40-50 year early-retirement horizons, you'd need closer to 30× or 33× (3.3–3.5% withdrawal rate). The rule also assumes your 'annual spending' accurately reflects reality — most people systematically underestimate healthcare costs before Medicare eligibility (age 65) and one-time expenses like home repairs and vehicle replacement. Third, the rule doesn't handle spending that varies with market performance (dynamic strategies). A retiree willing to cut spending by 10–15% during prolonged downturns can safely start at closer to 30× (5% initial rate) instead of 25×. Fourth, it ignores where you live — retiring in Portugal at $2,500/month requires ~$750,000, while retiring in Brooklyn at $7,000/month requires ~$2,100,000, same 25× multiplier but wildly different absolute numbers.
Worked Examples
Lean FIRE in low-cost city
Setup: $30,000/year spending in Chiang Mai or Medellín
FIRE number: $30,000 × 25 = $750,000
Fat FIRE in US
Setup: $120,000/year spending in a US metro
FIRE number: $120,000 × 25 = $3,000,000
40-year horizon, adjusted multiplier
Setup: $60,000/year spending, retiring at 45 with 45-year horizon
Using 30× (3.3% SWR): $60,000 × 30 = $1,800,000. Using 25×: $1,500,000 but higher failure risk.
Run Your Own Numbers
Put the math behind The 25× Rule to work with your own portfolio, spending, and time horizon.
Research Citations
- “25× = reciprocal of 4% withdrawal rate” — Bengen (1994); popularized for FIRE by Mr. Money Mustache, 2012
- “'Shockingly Simple Math' framing” — Mr. Money Mustache, 2012
- “30× recommended for longer horizons” — Pfau, Finke, Blanchett (2013)
Related Strategies
Sources
- Bengen (1994), 'Determining Withdrawal Rates Using Historical Data', Journal of Financial Planning (accessed 2026-04-17)
- Mr. Money Mustache, 'The Shockingly Simple Math Behind Early Retirement' (2012) (accessed 2026-04-17)
- Cooley, Hubbard, Walz (1998), 'Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable', AAII Journal (accessed 2026-04-17)
Last verified: 2026-04-17
Educational content only — not individual investment advice. Retirement planning involves significant uncertainty. Consult a qualified fiduciary advisor before acting on any strategy.