Understanding your FIRE number is a crucial step in your journey toward financial independence and early retirement. The FIRE number represents the amount of savings and investments you need to accumulate in order to comfortably sustain your desired lifestyle without relying on traditional employment. To calculate your FIRE number, start by determining your annual expenses and multiplying that figure by 25. This multiplier is based on the 4% rule, which suggests that withdrawing 4% of your invested assets each year should allow you to live off your savings for 30 years or more. Knowing your FIRE number provides a clear target and motivation for your financial journey.
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