Understanding Your FIRE Number: The 25x Rule and Beyond

finance_fred · February 13, 2026, 6:33am

The foundation of FIRE (Financial Independence, Retire Early) planning comes down to one simple calculation: multiply your annual expenses by 25. This gives you your FIRE number—the portfolio size that should sustain you indefinitely.

The Math Behind 25x

The 25x rule is the inverse of the famous 4% withdrawal rate. If you withdraw 4% of your portfolio annually, you need 25 times your annual spending to make it work:

1 / 0.04 = 25

So if you spend $40,000 per year, your FIRE number is $1,000,000. Spend $60,000? You need $1.5 million.

Why 4% Works (and When It Doesn’t)

The 4% rule comes from the Trinity Study, which analyzed historical market data and found that a 50%+ stock portfolio could sustain 4% withdrawals for 30 years in nearly all historical scenarios.

However, there are important caveats for early retirees:

Time horizon matters: The Trinity Study assumed 30 years. If you’re retiring at 35, you need 50+ years of runway
CAPE valuations: Research from ERN’s Safe Withdrawal Rate Series shows that starting retirement during high market valuations increases failure risk
Sequence risk: Poor returns early in retirement hurt more than poor returns later

For early retirees, many experts suggest using 3-3.5% (28-33x expenses) for a larger margin of safety.

Building Your FIRE Number Query in Beancount

Here’s how I track my progress toward FI in Beancount. First, calculate your annual expenses:

SELECT year, sum(position) as total
WHERE account ~ "Expenses"
  AND year >= 2025
GROUP BY year
ORDER BY year DESC

Then calculate your FIRE target. I tag my expense accounts and use metadata to exclude one-time costs:

; Calculate average monthly expenses (excluding one-time large purchases)
SELECT sum(position) / 12 as monthly_avg
WHERE account ~ "Expenses"
  AND NOT "one-time" IN tags
  AND date >= 2025-01-01

For tracking your net worth against your target, I built a simple Python script that pulls from my Beancount file and shows:

Current investable net worth (excluding home equity)
Annual expense average
Current FIRE number (expenses x 25)
Progress percentage
Gap to close

My Personal Numbers

I’ll be transparent here. My current metrics:

Annual expenses: $52,000
FIRE number (25x): $1,300,000
Conservative target (30x): $1,560,000
Current investable assets: $847,000
Progress: 65% (or 54% to conservative target)

Tracking this monthly in Beancount keeps me motivated and lets me see exactly how market performance and savings rate affect my timeline.

What About You?

Have you calculated your FIRE number? Are you using the standard 25x or something more conservative given longer time horizons or market valuations?

Would love to see how others are building FIRE dashboards in Beancount. Share your queries and approaches!

helpful_veteran · February 13, 2026, 6:33am

Great breakdown, Fred! This is exactly the kind of transparency that helps others on their FI journey.

I’ve been tracking my own FIRE number for about 3 years now in Beancount, and I want to add a few things I’ve learned the hard way:

Watch Out for Lifestyle Inflation

When I first calculated my number, I used my expenses from my frugal 20s. Big mistake. As my income grew, so did my spending—new car, nicer apartment, more dining out. My FIRE number quietly jumped from $1.1M to $1.6M over 4 years.

Now I track my expense trend year-over-year with this query:

SELECT year, sum(position) as annual_expenses
WHERE account ~ "Expenses"
GROUP BY year
ORDER BY year

If I see consistent increases, I know my FIRE date is moving further away.

Conservative is Probably Smart

At 37, I’m targeting 33x (3% withdrawal rate) instead of 25x. The difference is substantial—$1.5M vs $1.8M in my case—but I’d rather work an extra year or two than risk running out at 75.

The ERN Safe Withdrawal Rate Series that Fred mentioned is worth reading. It’s sobering but important.

One Tip for Tracking Progress

I run a monthly “FI Progress” report that shows:

Current progress percentage
Months of expenses I could cover right now
Projected FI date at current savings rate

Seeing that projection change month-to-month keeps me motivated. Would be happy to share my Python script if anyone’s interested.

newbie_accountant · February 13, 2026, 6:34am

This is super helpful! I’ve been trying to calculate my FIRE number but keep getting confused about one thing:

Should I include my home equity in my net worth calculation for FIRE purposes?

I own a condo (worth ~$380k, owe ~$220k) so I have about $160k in equity. But I can’t exactly “withdraw 4%” from my house, right?

When I track my net worth in Beancount, I include everything:

Assets:Real-Estate:Condo
Liabilities:Mortgage:Condo
Assets:Investments:401k
Assets:Investments:Brokerage
; etc...

But for FIRE calculations, should I create a separate “investable assets” account group?

Also—is there a standard way to handle this in Beancount? Like maybe using account metadata to tag accounts as “investable” vs “illiquid”?

I’m 29 so still early in my journey, but I want to set up my tracking correctly from the start. Thanks for any guidance!

finance_fred · February 13, 2026, 6:34am

@newbie_accountant Great question! This is one of the most common points of confusion in FIRE calculations.

Short answer: No, don’t include home equity in your FIRE number calculation (unless you plan to sell it).

Longer explanation:

Your FIRE number represents assets you can draw down to cover expenses. Unless you’re planning to sell your condo and rent, that equity isn’t generating withdrawable income.

Here’s how I handle it in my Beancount setup:

; Open accounts with metadata for categorization
2020-01-01 open Assets:Investments:Brokerage
  fire-investable: TRUE
  
2020-01-01 open Assets:Investments:401k
  fire-investable: TRUE
  
2020-01-01 open Assets:Real-Estate:Condo
  fire-investable: FALSE

Then in my queries, I filter:

SELECT sum(position) as fire_assets
WHERE account ~ "Assets" 
  AND meta("fire-investable") = "TRUE"

I actually track two net worth numbers:

Total Net Worth - Everything, including home equity
Investable Net Worth - Only assets I can actually withdraw from

For your FI calculation, use #2.

One exception: If you’re doing a Coast FIRE or Barista FIRE calculation where you plan to downsize and free up that equity later, you might factor in some portion. But even then, I’d discount it significantly (maybe 60-70% of equity after estimated selling costs and taxes).

helpful_veteran · February 13, 2026, 6:34am

Adding to Fred’s excellent response—

@newbie_accountant At 29, you’re in a great position to set this up right from the start. One thing I wish I’d done earlier: track your savings rate alongside your FIRE progress.

Your savings rate actually matters more than your investment returns when you’re early in accumulation. Here’s a simple way to track it:

SELECT 
  (sum(position) FILTER WHERE account ~ "Income") as income,
  (sum(position) FILTER WHERE account ~ "Expenses") as expenses
WHERE year = 2026

Then: Savings Rate = (Income - Expenses) / Income

A 50% savings rate gets you to FI much faster than a 20% rate with slightly better returns.

Also, about the metadata approach Fred showed—I’d recommend being conservative about what you mark as fire-investable: TRUE. When I started, I included things like my emergency fund and car value. In reality:

Emergency fund: You need this as a buffer, not for retirement income
Car: Depreciating asset, don’t count it
HSA: Technically investable, but I treat it as healthcare reserves

Being conservative with your FI calculation is psychologically better anyway. Under-promise, over-deliver to yourself!