Your FIRE number is the portfolio size that can support your spending indefinitely, and calculating it is simpler than most guides make it sound. It comes down to five steps: measure your spending, choose a withdrawal rate, do the division, adjust for reality, and build a savings plan to close the gap.

Start with your actual spending over the past twelve months, not a budget you wish you followed. Include everything, including irregular costs people forget, such as car repairs, gifts, and annual subscriptions, then adjust for retirement by removing costs that will disappear and adding costs that will appear.

A withdrawal rate is the percentage of your portfolio you plan to spend each year. Four percent is the classic starting point, but longer retirements, higher inflation, and lower expected returns all argue for a more conservative rate, such as three to three and a half percent.

Divide your annual spending by your withdrawal rate. Thirty thousand dollars of spending divided by four percent gives a target of seven hundred and fifty thousand dollars. That is your FIRE number in its simplest form, but do not stop there, because the simple version ignores several real-world factors.

Taxes, healthcare, and one-off costs all sit outside the simple calculation. Add a buffer for healthcare, consider whether your home is paid off, and build in a margin for surprises: most plans benefit from a ten to twenty percent buffer above the simple number.

Once you have the target, work backwards. Subtract your current portfolio, estimate a reasonable growth rate, and calculate the monthly savings needed to close the gap by your target date. If the monthly number is impossible, adjust spending, income, or timing, and revisit the number once a year.

The most common FIRE number mistake is using current spending without adjusting for retirement. People forget costs that disappear, such as commuting and payroll taxes, and costs that appear, such as health insurance and more leisure spending. Both errors distort the target, sometimes by tens of thousands of dollars a year, which translates into hundreds of thousands in portfolio terms.

Another mistake is treating the withdrawal rate as a guarantee. Historical research supports a range of rates, but no rate is safe in all futures, and longer retirements argue for conservatism. A third mistake is ignoring taxes: portfolio withdrawals may be taxed, and the spending your portfolio must support is after-tax spending. Build these adjustments into the calculation from the start, and revisit the number annually, because a FIRE number based on stale spending is a plan built on old data.