What is the FI Number? The FI Number is the total invested-asset value required to sustainably cover your annual expenses indefinitely, the headline goal of any FIRE plan. It is calculated by multiplying annual expenses by the inverse of your chosen safe withdrawal rate (typically 25x for 4%, 28x for 3.5%, 33x for 3%).
Worked examples:
| Annual expenses | SWR | FI Number |
|---|---|---|
| $40,000 | 4% | $1,000,000 |
| $40,000 | 3.5% | $1,142,857 |
| $60,000 | 4% | $1,500,000 |
| $100,000 | 3.25% | $3,076,923 |
The FI Number is deeply personal because expenses are deeply personal. Two people with identical $150,000 salaries can have FI Numbers ranging from $500,000 to $3,000,000 depending on lifestyle choices. Recalculating your FI Number every year, as expenses, inflation, and life circumstances change, is one of the highest-leverage exercises in personal finance.
Your FI Number is not static. Paying off a mortgage removes $18,000/year in expenses and reduces the target by $450,000 overnight. A new child may add $25,000/year and push the target up by $625,000.