Jannese Torres was earning a six-figure salary as an engineer, but the calculation in her spreadsheet told her something profound: she had enough. Not enough to buy a bigger house or a luxury car, but enough to walk away from corporate America entirely.
In 2021, Torres quit her engineering job after her side hustles generated sufficient income to cover her expenses indefinitely.
Torres is now a Latina money educator, writer, business coach, and host of the personal finance podcast “Yo Quiero Dinero.” Her decision wasn’t impulsive—it was mathematical. She had reached her FIRE number, the precise amount required to achieve financial independence and make work optional.
Torres is part of a growing movement of professionals, particularly women, who are rewriting the script on retirement. Instead of grinding until 65, they’re calculating their way to freedom decades earlier using a surprisingly simple mathematical formula. And while the concept might sound like financial fantasy, the math behind it is more accessible than you might think.
The Origins of a Movement
The FIRE movement—which stands for Financial Independence, Retire Early—traces its intellectual roots to a 1992 book called Your Money or Your Life by Vicki Robin and Joe Dominguez. The authors challenged readers to rethink their relationship with money and time, planting seeds that would eventually blossom into a full-fledged lifestyle movement.
However, the mathematical foundation that makes FIRE practically achievable came from financial planner William Bengen, who in 1994 analyzed decades of market data and concluded that retirees could safely withdraw 4% of their portfolio annually, adjusted for inflation, without running out of money. Four years later, the Trinity Study confirmed these findings, cementing what would become known as the 4% rule into retirement planning canon.
By the 2010s, blogs like Mr. Money Mustache had transformed these academic findings into a practical roadmap, particularly resonating with millennials burdened by student debt and disillusioned with traditional career paths. The movement found real-world practitioners like Nik and Adinah Johnson, who retired in their forties after years of intentional saving. On their first date three decades ago, Nik presented a coupon. Adinah’s response? “How many other coupons do you have? What’s the best deal?” She knew immediately she’d found her financial soulmate.
The Magic Formula: Understanding Your FIRE Number
At the heart of FIRE lies elegantly simple math: your FIRE number equals 25 times your annual expenses. This calculation, known as the 25x rule, is the inverse of the 4% withdrawal rate. If you can live on 4% of your portfolio annually, you need 25 times your yearly spending to achieve financial independence.
Here’s how it works in practice: If you spend $40,000 per year, multiply that by 25. Your FIRE number is $1 million. If your lifestyle requires $60,000 annually, you’ll need $1.5 million. The formula scales to your specific circumstances, which is precisely why it resonates across income levels.
The brilliance of this approach lies in its focus on expenses rather than income. According to NerdWallet, every $100 you cut from monthly spending reduces your FIRE number by $30,000. This mathematical reality transforms everyday financial decisions into tangible milestones toward freedom.
Different Flavors of Financial Freedom
Not everyone pursuing FIRE follows the same path, and the movement has evolved to accommodate diverse lifestyles and goals. Several variations have emerged that reshape how people approach early retirement.
Lean FIRE appeals to minimalists willing to live on $40,000 or less annually. These practitioners typically need to save around $1 million based on the 25x rule, embracing frugality as a permanent lifestyle choice.
Fat FIRE targets those who want to maintain or exceed their current standard of living. With annual spending often reaching $100,000 or more, Fat FIRE followers need portfolios of $2.5 million or higher—a substantial sum that typically requires high earnings and aggressive saving.
Barista FIRE represents a middle path gaining particular traction among women. Rather than completely exiting the workforce, Barista FIRE practitioners save enough to cover most expenses, then supplement with part-time work they find meaningful. This approach typically requires saving 12 to 15 times annual expenses rather than the full 25.
Coast FIRE front-loads retirement savings early in life, then lets compound interest handle the rest. Someone who aggressively saves in their twenties and thirties might reach a point where they can stop contributing to retirement accounts entirely, knowing their existing investments will grow to meet their goals.
Calculating Your Personal Number
Determining your FIRE number requires honest self-assessment and careful budgeting. Start by tracking your current spending for at least three months. Include everything: housing, utilities, food, transportation, insurance, healthcare, entertainment, and occasional expenses like travel or home repairs.
Be realistic about retirement expenses. While some costs may decrease—no more commuting, professional wardrobes, or work lunches—others will likely increase. Healthcare is particularly significant for early retirees who won’t be eligible for Medicare until 65. According to the Kaiser Family Foundation, a 62-year-old purchasing unsubsidized ACA coverage paid an average of $1,116 per month in 2025.
Vicki Robin, co-author of the book that sparked the movement, frames the calculation differently. Her philosophy centers on asking what is “enough”—a question that differs for everyone. “It’s just, ‘Okay, how can I have enough for a life that’s really happy, but no excess, so that I can liberate my time to do what I find I’m called to do, what I care to do?'” Robin says. “I buy my freedom with my frugality every day.”
Once you have your annual expense figure, multiply by 25. That’s your FIRE number. But the calculation doesn’t stop there. You also need to determine how long it will take to reach that goal based on your current savings and annual contributions.
For example, if you’re 30 years old with $50,000 already saved, aiming for a FIRE number of $1.25 million by age 45, you’d need to invest approximately $2,255 monthly assuming an 8% return. Online FIRE calculators can help model different scenarios, showing how adjustments to savings rate, retirement age, or spending affect your timeline.
The Women’s Perspective on FIRE
Women face unique challenges and opportunities in pursuing financial independence. Pay disparities persist, with women earning approximately 83 cents for every dollar men earn, and the gap widening significantly for women of color. Black women earn 58 cents, Native American women 50 cents, and Latina women 49 cents for every dollar earned by white, non-Hispanic men.
Yet these challenges are precisely why financial independence matters so profoundly for women. Women are redefining FIRE on their own terms, often embracing Fat FIRE strategies that prioritize income growth over extreme frugality. Rita-Soledad Fernandez Paulino, a former public school math teacher who launched her financial education company Wealth Para Todos in 2021, represents this shift. “I like spending money,” she says. “I get a lot of joy out of shopping. So cutting back on everything I enjoy just didn’t feel sustainable.”
Torres echoes this sentiment, noting there’s too much emphasis on frugality in the broader FIRE movement. “I want to still enjoy my life in the present,” she says. This philosophy recognizes that for many women, especially those starting from lower income levels or facing systemic barriers, extreme austerity isn’t a viable long-term strategy.
Women also tend to live longer than men, meaning their retirement savings must stretch further—another reason to plan carefully. However, research shows that when women invest, their portfolios outperform men’s by 0.4%, suggesting that once women engage with investing, they often excel.
Beyond the Numbers
Financial independence is ultimately about options, not obligations. Reaching your FIRE number doesn’t mean you must stop working—it means work becomes optional. Many who achieve FIRE continue pursuing passion projects, consulting part-time, or launching businesses without the pressure of needing income to survive.
Peter Adeney, who blogs as Mr. Money Mustache and retired at age 30, reflects on the experience: “I often think that, because I retired so early, I have lived a lot longer than a normal 50-year-old. Like, I feel like I retired 100 years ago, because I’ve had so many experiences.” Yet he cautions that early retirement isn’t a cure-all: “It doesn’t solve your happiness problems. Taking away your job just exposes them more, ’cause you can no longer distract yourself from them.”
Financial advisors caution against sacrificing present happiness entirely for future freedom. The journey to FIRE often spans a decade or more, and extreme deprivation can lead to burnout or regret. The goal is finding a sustainable savings rate that allows for meaningful experiences today while building toward tomorrow.
Moreover, FIRE planning requires flexibility. Market downturns, unexpected health issues, or life changes may require recalibration. The 4% rule itself has critics who suggest more conservative withdrawal rates of 3 to 3.5% for retirements lasting 40 or 50 years. Regular check-ins to reassess your FIRE number and timeline help ensure your plan stays aligned with reality.
Your Path Forward
Calculating your FIRE number is the first step in a transformative journey. It’s the moment abstract dreams of financial freedom crystallize into concrete, achievable goals. Whether you’re 25 or 55, earning six figures or working multiple jobs, understanding the math behind financial independence puts the possibility within view.
The path isn’t always easy. It requires discipline, intentionality, and often difficult trade-offs. But for those who commit to it, the FIRE number represents something profound: the exact price of freedom, calculated to the dollar.
As Jannese Torres explains her decision to leave her engineering career, “You’re not beholden to company layoffs, downsizing or a pandemic. Financial independence makes work optional.” That shift from necessity to choice—from calculating what you need to survive to understanding what it takes to thrive—is the true power of knowing your FIRE number.
Frequently Asked Questions
What is a FIRE number?
Your FIRE number is the total amount of money you need invested to achieve financial independence and potentially retire early. It’s calculated by multiplying your annual living expenses by 25, based on the principle that you can safely withdraw 4% of your portfolio each year without depleting it over a 30-year retirement.
How do I calculate my FIRE number?
First, determine your annual expenses by tracking your spending for several months and projecting yearly costs. Then multiply that number by 25. For example, if you spend $50,000 per year, your FIRE number would be $1,250,000. Remember to account for healthcare costs and adjust for inflation.
What is the 4% rule?
The 4% rule, established by financial planner William Bengen in 1994 and confirmed by the Trinity Study in 1998, states that you can withdraw 4% of your retirement portfolio in the first year, then adjust that amount for inflation each subsequent year, with a high probability your money will last at least 30 years.
Is FIRE realistic for average earners?
Yes, though it may take longer or require choosing Lean FIRE or Barista FIRE approaches. The key is maximizing your savings rate—the gap between what you earn and what you spend. Even saving 15-20% of income can lead to financial independence, though it may take 30-40 years rather than 10-15. The principles of living below your means and investing consistently benefit everyone regardless of income level.
Should I adjust the 4% rule for early retirement?
Many financial experts recommend a more conservative withdrawal rate of 3-3.5% for retirements lasting 40-50 years, as opposed to the traditional 30-year timeframe the 4% rule was designed for. This means you might need to save 30-33 times your annual expenses rather than 25 times for extra safety.
What are the different types of FIRE?
Lean FIRE involves living on $40,000 or less annually with minimal lifestyle. Fat FIRE maintains a higher standard of living, typically $100,000+ annually. Barista FIRE means saving enough to cover most expenses while working part-time. Coast FIRE involves saving aggressively early, then letting compound interest do the work while you stop making retirement contributions.
Sources
- Bankrate: How To Calculate Your FIRE Number
- Bankrate: Females On FIRE – 3 Diverse Women Share Their Journey
- Bankrate: The 25x Rule for Retirement
- CBS News: How the FIRE Movement is Inspiring Early Retirees
- Empower: FIRE Movement Financial Independence Retire Early
- Jenius Bank: The FIRE Movement – Financial Independence, Retire Early
- Lafayette Federal Credit Union: The Financial Independence, Retire Early Movement
- MoneyGeek: The Women’s Guide to Financial Independence
- U.S. News: What Is the 25x Retirement Rule?
- NerdWallet: FIRE Movement – What It Is, How It Works
- Protective: What is the FIRE movement?
- Snowball Wealth: What the FIRE Movement Means for Women of Color
- SoFi: Pros & Cons of the FIRE Movement
- Unbiased: Financial Independence Retire Early
- Wikipedia: FIRE Movement
- Wikipedia: Trinity Study
- Wikipedia: William Bengen
- Yahoo Finance: What the FIRE Movement Got Right — and Wrong
