Methodology

1. FIRE number

Your FIRE number is the portfolio size that, at a chosen safe withdrawal rate (SWR), is expected to support a given annual spend:

FIRE number = Annual spending ÷ Withdrawal rate
Multiplier  = 1 ÷ Withdrawal rate

Example (4% rule): $60,000 ÷ 0.04 = $1,500,000 (25×)

Lean / Regular / Fat are only spending presets for convenience. They are not standards of living defined by academic research — edit them to your actual budget.

2. Safe withdrawal rates & the “4% rule”

The popular 4% starting withdrawal rate is associated with work on historical retirement portfolio survival in the United States — commonly traced to William Bengen (1994) and the “Trinity Study” (Cooley, Hubbard & Walz, 1998 and updates). These studies ask, in substance: for a given stock/bond mix and initial withdrawal rate adjusted for inflation, how often would a portfolio have lasted 30 years in past U.S. market history?

• 4% is a widely cited starting point for ~30-year horizons — not a guarantee.
• Early retirement (40–50+ year horizons) often motivates more conservative rates (e.g. 3–3.5%) or flexible spending rules.
• Outcomes depend on asset allocation, fees, taxes, sequence of returns, and spending flexibility — none of which our simple calculator fully models.

3. Years to FIRE

We project a constant real return with end-of-year contributions:

T = P(1+r)^n + C × ((1+r)^n − 1) / r

Solved for n (years):
n = ln((T·r + C) / (P·r + C)) / ln(1+r)

If r ≈ 0: n = (T − P) / C

Where P is current portfolio, C annual contribution, r real return, and T the FIRE target. This is a smooth compound-growth illustration — not a Monte Carlo simulation.

4. Coast FIRE

Coast FIRE asks: how much do you need today so that, with no further contributions, compound growth reaches full FIRE by a chosen traditional retirement age?

years = retirement age − current age
coast number = FIRE number ÷ (1+r)^years

Projected at retirement (stop saving now):
FV = current × (1+r)^years

Hitting Coast FIRE means you could stop saving for retirement — not that you must stop working or that early retirement is funded yet. Lifestyle, healthcare, and Social Security are out of scope of this simple model.

5. Barista FIRE (semi-retirement)

When part-time or flexible work covers some spending, the portfolio only needs to fund the remainder:

gap = max(0, annual expenses − work income)
barista number = gap ÷ withdrawal rate

Years to Barista uses the same compound-growth solver as Years to FIRE, with the barista number as the target. Job stability, benefits, and taxes are not modeled.

6. Savings-rate table

Holding lifestyle spending fixed, each savings rate s implies income = spending ÷ (1−s) and annual savings = s × income. We then solve years to the full FIRE target from your current portfolio. Rows near your current implied savings rate are highlighted in the UI.

7. Real vs nominal returns

By default, expected return is real (after inflation), matching targets expressed in today’s dollars. In nominal mode we convert:

real ≈ (1 + nominal) / (1 + inflation) − 1

Projections always compound at the effective real rate so FIRE targets stay in today’s purchasing power.

8. Default assumptions

9. What we deliberately omit (for now)

• Comprehensive tax planning, including capital gains, RMDs, NIIT, state taxes, and multiyear Roth optimization
• Investment fees and advisory costs
• Personalized Social Security, pension, annuity, and ACA subsidy analysis
• Taxes on withdrawals, account types, and rebalancing rules inside stress tests
• Historical cycle backtesting (cFIREsim-style overlapping periods)
• Inflation shocks, currency risk, and home equity strategies

Product philosophy and free-core commitments live on the Approach, Limitations & Roadmap page.

10. Monte Carlo stress test (illustrative)

Coast FIRE and Years to FIRE include an optional sequence-of-returns stress test. It does not replace the deterministic formulas above. It samples many random return paths so you can see a range of terminal outcomes under a transparent toy model.

Each year:
  Z ~ Normal(0, 1)
  r = max(−0.95, mean_return + σ · Z)
  wealth = wealth × (1 + r) + contribution

Success = terminal wealth ≥ target
Free tier: 1,000 paths · fixed σ presets · seed 42

• Mean return comes from shared assumptions (same real return as the main calculators).
• Volatility σ is an illustrative annual standard deviation (12% / 15% / 18% presets) — not a fitted estimate of your portfolio.
• Independence: year shocks are i.i.d. There is no autocorrelation, regime switching, or crash clustering in the free model.
• Not historical backtesting: this is not overlapping historical market sequences. Those tools answer a related but different question.
• Reported statistics (success rate, p10 / p50 / p90, sample paths) are educational ranges — not probabilities of your life outcomes.

Coast stress tests use zero contributions over the coast horizon and compare terminal wealth to full FIRE. Years stress tests keep your annual contributions and compare to the FIRE number over the modeled years-to-FIRE horizon (or a fallback horizon if unreachable).

11. Historical retirement scenarios

Historical scenario results use overlapping, contiguous periods from a verified annual return series. Each cycle applies withdrawals at the beginning of the year, then applies the year's portfolio return and reports the ending balance in real dollars. The cycle denominator is the number of full-horizon periods available in that verified series.

Historical scenarios are not future probabilities. RetireFire keeps this tool unavailable until its source, transformation method, coverage, and checksum can be independently reproduced.

12. Current-year Roth conversion tax estimate

The Roth calculator estimates regular federal income tax for tax year 2026 only. It treats the entered current taxable income as income after the standard or itemized deduction, caps the conversion at the traditional account balance, adds the applied conversion to taxable income, and traverses the selected filing status's ordinary income brackets progressively.

Applied conversion = min(desired conversion, traditional balance)
Tax after = progressive tax(current taxable income + applied conversion)
Incremental tax = tax after − tax before
Effective rate = incremental tax ÷ applied conversion (if conversion > 0)
If applied conversion = $0: effective rate = N/A

The model assumes the entire applied conversion is taxable. It does not calculate nondeductible IRA or plan basis or applicable pro-rata treatment. IRS guidance explains that a traditional-IRA conversion may be partly nontaxable when it returns basis; see IRS Publication 590-A. The model also does not subtract the standard deduction a second time. Its 2026 standard-deduction amounts and bracket thresholds come from Revenue Procedure 2025-32, effective for taxable years beginning in 2026. This is methodology version 1.0.1 and a current-year illustration, not a multiyear or lifetime tax-savings forecast.

Explicit exclusions include state and local tax, AMT, NIIT, credits, deduction changes, capital-gain and qualified-dividend interactions, nondeductible IRA or plan basis and pro-rata treatment, ACA premium tax credits, Medicare IRMAA, future law, multiyear optimization, withholding and estimated-tax penalties, and the opportunity cost of paying conversion tax.

13. Social Security claim and federal taxable-benefit estimates

The claim-age estimate starts with the retired worker's own SSA monthly estimate at full retirement age. Full retirement age follows SSA's birth-year schedule. For a January 1 birthday, SSA says to use the prior birth year. Claim ages are whole months from age 62 through exactly age 70.

First 36 early months: reduce 5/9 of 1% per month
Additional early months: reduce 5/12 of 1% per month
After FRA: apply the birth-year delayed-credit rate monthly
Delayed credits stop at age 70
Estimated monthly benefit: next lower whole dollar

The monthly early-retirement rules and FRA schedule come from SSA's Benefit Reduction for Early Retirement. Delayed-credit rates and the age-70 stop come from SSA's Delayed Retirement Credits. Dollar rounding and golden cases were checked against the Annual Statistical Supplement, 2025, Appendix C. This is method v1.0.3.

The separate taxable-benefit estimate implements Worksheet 1 from IRS Publication 915 (2025), applicable to 2025 federal income tax returns and the latest completed publication reviewed on August 15, 2026. It supports all five individual filing statuses. Married-filing-separately users must say whether they lived with a spouse at any time during 2025.

Provisional income = other income + tax-exempt interest
                     + 50% of gross Social Security
Lower: $25,000 single/HOH/QSS/MFS apart · $32,000 joint
Upper: $34,000 single/HOH/QSS/MFS apart · $44,000 joint
MFS lived with spouse: direct 85% worksheet branch
Maximum included in federal taxable income: 85% of benefits

Gross benefits are cash received and reduce the later portfolio gap; the federally taxable portion is only the amount included in federal taxable income. It is not the tax owed and is never substituted for gross income. This is method v1.1.2. Manual benefit mode remains available for a user who already has an SSA estimate.

The models do not provide individualized claiming advice and exclude earnings-record calculations, COLAs, the retirement earnings test, spousal and survivor benefits, state tax, total federal tax, lump-sum elections, ordinary repayment and Form SSA-1099/RRB-1099 net box 5 handling, special Publication 915 adjustments, and future law. The taxable model uses the entered gross annual benefit. Exact inputs and results remain client-side.

14. Calculation governance

Every calculation tracked here has a stable methodology version and review record. Status is intentionally visible: development and beta entries are not validated planning advice, and SEPP remains blocked until external review is complete.

15. Further reading

• Bengen (1994) and Trinity Study papers (library / journal access)
• Peer-reviewed and practitioner work on variable withdrawal strategies (e.g. guardrails frameworks)
• Long-run asset return summaries from reputable research shops (always check methodology and period bias)