What Is the FIRE Number?
Your FIRE number is the total investment portfolio value that generates enough passive income to cover all your living expenses — indefinitely, without ever needing to work again. It is the destination of your financial independence journey, and calculating it correctly is one of the most important exercises in FIRE planning.
The formula is elegantly simple:
FIRE Number = Annual Spending ÷ Safe Withdrawal Rate
At the most commonly used safe withdrawal rate of 4%: FIRE Number = Annual Spending × 25. If you spend £30,000 per year, you need £750,000. If you spend £20,000, you need £500,000. The safe withdrawal rate (SWR) reflects the maximum percentage you can draw from a portfolio each year, adjusted for inflation, with a high probability of the portfolio lasting at least 30 years based on historical market data.
For UK FIRE seekers retiring before age 50, many financial planners recommend using a 3.5% SWR to account for the longer retirement horizon, giving a multiplier of approximately 28.6. The additional portfolio required is the price of confidence over a 50+ year retirement.
Step 1: Calculate Your Retirement Spending
The most important input to your FIRE number is your annual spending in retirement. This is personal — it depends entirely on the lifestyle you want to lead — but understanding realistic UK cost ranges helps anchor your planning.
Here are typical annual cost categories for a retired individual in the UK (2025/26 prices):
- Housing (rent or mortgage-free ownership costs): If your mortgage is paid off, housing costs are primarily maintenance, insurance, and council tax — typically £3,600–£8,400 per year. If renting in retirement, costs vary enormously by location, from around £8,400 per year in rural areas to £18,000+ in major cities.
- Food and groceries: A realistic budget for one person is £4,000–£6,000 per year; for a couple, £6,000–£9,000. This assumes home cooking with occasional restaurants.
- Transport: Without a daily commute, transport costs typically fall. A car with insurance, fuel, and maintenance runs approximately £3,000–£5,000 per year. Those in cities with good public transport may spend as little as £1,500.
- Utilities and bills: Energy, water, broadband, and phone together typically cost £2,400–£4,800 per year for a typical UK household, depending on home size and energy efficiency.
- Healthcare: The NHS covers most healthcare for free, but dental care, prescriptions (unless exempt), glasses, and private health insurance are real costs — typically £500–£2,000 per year for a relatively healthy individual.
- Leisure, holidays, and personal spending: This is highly variable — it is where most of the lifestyle difference between Lean FIRE and Fat FIRE is expressed. A frugal traveller might spend £2,000 per year on holidays; someone taking regular international business class trips might spend £10,000 or more. Hobbies, gym memberships, entertainment, and clothing are additional.
- Miscellaneous and buffer: Car replacement, home repairs, and unexpected costs — budget at least £1,500–£3,000 per year for contingencies.
Totalling these categories, a moderate, comfortable retirement for a single person in the UK typically costs £25,000–£35,000 per year. For a couple, costs are often only 50–70% higher than for a single person, because many fixed costs (housing, utilities) are shared. A couple living well might spend £35,000–£50,000 per year.
Step 2: Account for the State Pension
Many UK FIRE calculations ignore the State Pension, which leads to significantly over-estimating the required portfolio. This is one of the most common and consequential mistakes in UK FIRE planning.
The full new State Pension for 2025/26 is £11,502 per year per person, received from age 67 (currently; it is scheduled to rise to 67 by 2028 and is under review for further increases). Under the triple lock, it increases each year by the highest of CPI inflation, average earnings growth, or 2.5%, making it a genuinely inflation-protected income stream.
For a FIRE planner spending £30,000 per year, the State Pension covers £11,502 of that from age 67 — meaning the portfolio only needs to generate £18,498 per year in State Pension age and beyond. At a 4% withdrawal rate, the portfolio needed to generate £18,498 is just £462,450 — compared to £750,000 without accounting for the State Pension.
A more sophisticated calculation uses a two-phase approach: calculate the portfolio needed for the bridge period (from early retirement to State Pension age) separately from the post-67 phase. The UK FIRE Calculator handles this automatically.
Couples have an even more powerful position: two full State Pensions total £23,004 per year — tax-free income that many couples would find covers a significant proportion of their retirement expenses, dramatically reducing the portfolio they need.
Step 3: Choose Your Safe Withdrawal Rate
Your SWR should reflect the length of your retirement horizon:
- 4.0% — appropriate for a 30-year retirement (retiring at around 37 if you live to 67, for example)
- 3.5% — recommended for retirements longer than 40 years (retiring before 50)
- 3.0% — very conservative, used by those who want near-certainty across extreme scenarios
Remember that the State Pension effectively reduces your SWR requirement in the later phase of retirement. If your portfolio needs to provide £30,000/year for 15 years (bridge period), then only £18,498/year thereafter, the blended withdrawal dynamics are much safer than drawing £30,000 per year indefinitely.
Step 4: Factor In Other Guaranteed Income
Beyond the State Pension, some UK FIRE seekers have additional guaranteed income that reduces their required portfolio:
- Defined Benefit (DB) pension: If you have a final salary or career average pension from a previous employer or the public sector, model its annual income and deduct it from your spending requirement before calculating your FIRE number.
- Rental income: If you own property that generates reliable rental income, net rental income reduces the portfolio withdrawal needed. Note that rental income is taxable, so factor in your marginal tax rate.
- Part-time income (Barista FIRE): Some people plan to earn a small amount part-time after reaching FIRE, which can dramatically reduce the required portfolio and extend portfolio longevity.
FIRE Number Examples: Lean, Moderate, and Fat
To make this concrete, here are three worked examples for a single UK person retiring at 50 with a 3.5% SWR (multiplier 28.6), accounting for the State Pension from age 67.
Lean FIRE: £20,000/year spending.
Bridge period (age 50–67, 17 years): needs full £20,000/year from portfolio. Post-67: State Pension covers £11,502, portfolio only needs to generate £8,498/year. At 3.5% SWR, post-67 portfolio requirement: £242,800. Portfolio at 50 needs to cover 17 years of £20,000 plus reach £242,800 by 67. A simplified calculation: approximately £370,000–£420,000 in today’s money, depending on assumed returns during the bridge period. Achievable on a moderate UK income with a high savings rate.
Moderate FIRE: £30,000/year spending.
Post-67 portfolio requirement (generating £18,498/year): £528,500 at 3.5% SWR. Total portfolio at age 50 to cover bridge and post-67 phase: approximately £580,000–£700,000 in today’s money. This is the most common UK FIRE target range for single people with comfortable but not lavish lifestyles.
Fat FIRE: £50,000/year spending.
Post-67 portfolio requirement (generating £38,498/year): £1,099,900 at 3.5% SWR. Bridge period needs are larger too. Total portfolio requirement at 50: approximately £1.1M–£1.3M in today’s money. This requires either a high income, a long accumulation period, or both — but delivers a genuinely luxurious retirement with extensive travel and flexibility.
Inflation and Real vs Nominal Numbers
All the figures above are in today’s money — real terms, adjusted for inflation. Your FIRE number, as calculated, assumes that your investment returns are measured in real (inflation-adjusted) terms. Historically, global equities have delivered approximately 5–7% per year in real terms over long periods. If you project nominal returns (before subtracting inflation), you need to inflate your future spending target accordingly.
The UK FIRE Calculator allows you to toggle between “today’s money” and future nominal values, making it easy to understand both how your portfolio grows in real purchasing power and what the nominal figures will look like. Most financial planners recommend thinking in real terms — it keeps the numbers intuitive and eliminates the mental overhead of adjusting for inflation manually.
Calculate Your Own FIRE Number
The best way to understand your FIRE number is to model your own specific situation. Use the UK FIRE Calculator at the top of this page to input your current age, savings, contributions, and target spending. The calculator will project your path to financial independence, accounting for ISA and pension wrappers, the State Pension, and UK tax rules — giving you a personalised answer to “how much do I need to retire early in the UK?”