Working out your FIRE number (and actually tracking the climb)

We’ve spent this series taking FIRE apart — the theory, the history, the 4% rule, and the dialects of coast, barista, lean and fat, all shadowed by sequence risk. This final post puts it back together into something you can act on tonight: how to work out your number, and — the part almost everyone skips — how to track the climb toward it without lying to yourself. Because a FIRE number you calculated once and never checked against reality is just a nice daydream with a decimal point.

Step one: your real annual spending

Everything starts here, and this is the number people get most wrong. Not your salary, not your budget, not what you think you spend — what actually leaves your accounts in a year to fund the life you intend to keep living.

The trap is the lumpy stuff. Your monthly costs are easy to eyeball; it’s the annual and irregular ones that ambush you — insurance premiums, the holiday, Christmas, the car that dies every decade, the boiler that floods, the dental bill. Add them up and “£2,000 a month” quietly becomes £32,000 a year. Miss them and you’ll aim at a number that’s too low, reach it, retire, and get mugged by your own forgotten expenses. Go back over a full year of actual outgoings across every account. Then decide, honestly, whether early-retirement you spends more (all that free time) or less (no commute, no work wardrobe). The output is one figure: your true annual cost of living.

Step two: pick a withdrawal rate you can defend

Now turn spending into a target. The mechanism is the one we’ve used all series: divide by your withdrawal rate, or equivalently multiply by its inverse. Withdraw 4% and you multiply by 25; withdraw 3.5% and you multiply by roughly 29.

Which rate? That’s a judgement, and the 4% post is the long answer. The short one: 4% was calibrated for a 30-year retirement, so if you’re retiring genuinely early — forty years old, fifty-year horizon — lean toward 3.25–3.5% and accept the larger number, because you’re asking the money to last far longer than Bengen’s retiree ever did. If you have real flexibility to cut spending in bad years, you’ve earned room back toward 4% or a touch above. Pick the rate deliberately, know why you picked it, and write it down.

The arithmetic, then: annual spending ÷ withdrawal rate = your FIRE number. Spend £40,000, choose 3.5%, and your target is about £1,140,000. That’s the finish line. Everything else is running toward it.

Step three: adjust for the dialect you’re actually running

That headline number is your full FIRE figure. But this series has shown it isn’t the only milestone worth tracking — and fixating only on the distant full number is how people miss the nearer wins that would change their life today.

Run the intermediate numbers too. Your coast number — the pot that, left alone, compounds to the full figure by traditional retirement age — is often startlingly close, and crossing it means you can stop saving and downshift now. Your barista threshold — the point where a modest part-time income plus a small draw covers your spending — might be nearer still. And be honest about whether your real spending puts you in lean, chubby or fat territory, because that decides how much slack your plan carries when markets misbehave. One honest spending figure generates all of these targets at once. Track the whole ladder, not just the top rung.

Step four: track the climb honestly

Here’s where good intentions go to die. People calculate a beautiful FIRE number, feel briefly motivated, and then never measure their actual distance from it — which is like training for a marathon you never time yourself running. The number is worthless without the tracking, because FIRE is fundamentally a two-line race: what you have versus what you need, closing over years.

Tracking well means three things. First, a reconciled net-worth figure across every account — pensions, ISAs, taxable brokerage, cash, crypto, the lot — because your progress is measured against the whole pot, and a number scattered across six logins and half-remembered balances is a number you can’t trust. (We wrote a whole piece on tracking net worth across accounts for exactly this reason.) Second, the trend, not the snapshot — one balance tells you nothing; the slope of your net worth over time tells you whether you’re actually gaining on the target or standing still. Third, the discipline to look without flinching, which is easier said than done, and is why we’ve argued you should stop checking your portfolio every day — the FIRE climb is measured in quarters and years, not in this morning’s ticker.

Step five: stress-test, don’t just point-estimate

A single projection line gliding up to your number is comforting and slightly dishonest, because — as sequence risk taught us — the average path is not the one you’ll actually walk. The market will hand you a specific, lumpy, ill-timed sequence, and your plan has to survive that, not the smooth average.

So the last step is to test the plan against many futures, not one. Run it through thousands of return sequences and ask what fraction leave you solvent; test the withdrawal phase specifically, since that’s where sequence risk bites; and re-run it as your real numbers change. A plan that survives 95% of simulated histories is a different animal from one that survives 70%, and you want to know which you’re holding before you hand in your notice.

Where Strata fits

This is the whole reason Strata’s planning tools exist, and it’s a tidy summary of everything this series has argued. You keep a reconciled ledger of what you own — built by you, owned by you, not guessed at by an aggregator — and the tools turn it into the numbers that matter: a FIRE number derived from your spending and your chosen withdrawal rate; a coast-FIRE check that tells you whether you can already ease off; Monte Carlo simulations that report your real probability of success instead of a flattering single figure; and a withdrawal-phase survival test that puts your drawdown through the sequence-risk wringer. Not one confident number pretending the future is certain — a range of outcomes you can actually see and plan against.

That’s the series. FIRE was never about the beach photo or the smugness; it’s about one honest calculation — what you own versus what your life costs — and the discipline to track the gap closing over years. The theory is simple. The measurement is where it’s won or lost. If you’d like to stop estimating and start seeing your own crossover point, coast line and success probability against your real portfolio, you can build your portfolio and put a real number on how far you’ve already come.