Two Numbers Drive the Whole Plan

In Lesson 1 we sketched the framework: early retirement is an arithmetic problem with three inputs. Now we pin down the two outputs those inputs produce. Your FI number is the portfolio size that, when paired with a safe withdrawal rate, funds your retirement spending indefinitely. Your years to FI is how long it takes to get there, given what you save and what your investments return. Both numbers come from the same model. The rest of this course is how to actually achieve them.

The math is simpler than the marketing around it. We'll walk through the FI number first, then run your specific situation through a calculator you can return to whenever your inputs change.

The FI Number Formula

The math, in one line:

FI number = annual spending ÷ withdrawal rate

At a 4% withdrawal rate, that's annual spending × 25. At a more conservative 3.3%, it's spending × 30. The withdrawal rate matters more than people often think — we cover why in Lesson 8 on withdrawal strategy, and the full 4% rule deep dive walks through the historical evidence. For now: 4% is the classic FIRE baseline, but 3.3–3.5% is what many modern planners use for 40+ year horizons.

What this formula doesn't tell you:

• It doesn't tell you what your retirement spending will actually be. Most people overshoot or undershoot here by 20% or more.
• It doesn't account for taxes on portfolio withdrawals. Roth dollars come out tax-free; traditional dollars are ordinary income; long-term capital gains have their own preferential rates. We address that sequencing in Lesson 6.
• It doesn't tell you whether you can reach the FI number with your current savings rate. That's the second number.

The Years-to-FI Formula

Given your current savings (PV), your annual contributions (PMT), and your expected real return (r), the number of years to hit the target (FV) comes from a closed-form solution to the future-value annuity equation:

n = ln((FV × r + PMT) ÷ (PV × r + PMT)) ÷ ln(1 + r)

You don't need to evaluate this by hand. The calculator below does it. But the structure of the formula tells you something useful: savings rate and starting balance both appear, but spending shows up in the FV term. Cutting expenses both lowers FV and raises PMT (because the money you didn't spend becomes savings). That's why expenses are the dominant lever — they push from two sides at once. We do the explicit math in Lesson 3.

Try It Now

Real Return, Not Nominal Return

The calculator uses a real return assumption — return after inflation. This matters because all your other inputs are in today's dollars: today's expenses, today's savings, today's portfolio balance. Mixing nominal returns with real-dollar inputs produces nonsense.

A 7% real return is the rough historical average for a stock-heavy diversified portfolio. If you want to be conservative, drop it to 5% and watch the years extend. Most calculators that show 10% returns are quietly using nominal numbers and ignoring inflation. They produce optimistic timelines.

Sanity Checks Before You Trust the Number

1. Are your expenses realistic for the post-work version of you? Mortgage may be paid off. Commute may be gone. Healthcare may be higher. Many early retirees end up at 70–80% of pre-retirement spending, but yours could go either way.
2. Is your portfolio actually invested for the implied horizon? A 60/40 allocation may underperform what an early retiree needs. We cover this in Lesson 5.
3. Have you stress-tested for sequence-of-returns risk? The withdrawal rate assumes "average" market conditions — real markets deliver years of bad sequences. Lesson 8 walks through what to do about that.

The number from the calculator is a target. The rest of this course is how you actually get there safely.