# What Is Your Fire Number?

Understandably a lot of focus in the FIRE community (Financial Independence Retire Early) is about reaching and determining What Is Your Fire Number. That is the amount of savings you will need to retire and not run out of money. Put another way, it is that point where you can say to the boss something wholly inappropriate or simply resign, retire, or find another job you enjoy more. To find What is Your Fire Number you can put your financial data in a retirement calculator and like many be dismayed just how big that number is. Don’t worry though, time will do its magic and that number will appear smaller each year.
Picture a 24-year-old seeing a \$3 million projection when they have \$3,300 saved. I have known several people who ran a retirement calculator only to become disappointed “I will never be able to save that much”. I know I thought that too, but we hit our number and surpassed it. Also careful with these calculators you could get on a mailing list forever.

You can safely use Firecalc to answer the question What is Your Fire Number and to test retirement scenarios. All you need to do is put in your annual expenses, portfolio value, and the number of years retired. It will then calculate your likelihood of success (not running out of money) for 120 different scenarios. Looking back for 30 year periods analysis has shown results will vary.
You also could simply use the 4% rule to estimate your retirement needs

“The 4% rule is based on research by William Bengen, published in 1994, that found that if you invested at least 50% of your money in stocks and the rest in bonds, you’d have a strong likelihood of being able to withdraw an inflation-adjusted 4% of your nest egg every year for 30 years” Without running out of money.

So, to retire you need 25 times your annual expenses. For example, Let’s say have normal expenses of \$7,000 a month all in. House, car, food, phone, tax, Home and Health insurance, and contingency, So, \$7,000 times 12(months) = \$84,000 My is my current annual expenses. For some that may sound like a great deal of money, but it includes \$2,200 a month of health insurance for my wife and my son. To calculate What Is Your Fire Number Multiply that \$84,000 by 25 and you get the impressive sum of \$2,100,000 (2.1 Million). That first year you withdraw 4% or \$84,000. The good news for me is my Health insurance will drop to around \$1,200 in October. Saving me about a thousand each month so my new number becomes 1.8 Million. So your expense may be a bit of a moving target.

For many people, there is an obsession with hitting that number because it means the ability to quit that job that they hate. I have said in the past I waited to retire until I was 64.5 because I loved my job. I have been retired for two years now. The long road to my retirement taught us a couple of lessons I would like to share (in no particular order):

The number we retired with was far greater than what I would have guessed in my 20s, 30s, 40s, or early 50s. Our initial \$35,000 a year health insurance premium (now \$24,000 as I reached 65) would have been unfathomable to me. This is why I believe it is so hard to develop a realistic retirement budget and the number too many years in advance. All is not lost though, I always focused instead on the percent of earnings saved number. For most people, I believe the magic number is 15% for a comfortable retirement more if you would like to retire early. Yes, more absolutely would be better. We averaged well over 20%. Living below our means, DIY, coupon clipping, and working for a once generous corporation also helped greatly as did a super bull market.
I’ve learned nothing is truer than what I read in the book The first Millionaire Next Door “It doesn’t matter what you earn, what matters is what you manage to hang onto” So, my suggestion is for most people is to focus on your savings rate and let your FIRE number take care of itself. You can not control what health insurance will cost 20 years from now but you can hopefully control how much you save. Now if you are one of those super early retirement people you may need to save 50% of your salary. Not too many of us can or want to do that. Balance in life is very important.

Once you hit that magic number three things can happen:
1. You will move the “number” and that is not a bad thing.

2. You may feel differently about the “annoyances” at the job; you know – the triggers big or small things that make you angry. I have always thought of the “pile” as a stress insulator. For example, my son drops a required class in his junior year. The summer course costs three grand. Pay it, move on, and have a chat with the rising senior about being judicious about professor and course selection. On the job when you are at that millionth meeting about a change in direction, you smile and think this is so very unimportant. For me, it was easier to separate the bureaucracy from the work and dismiss it.

3. You will possibly develop One More Year syndrome: Pulling the plug can be very difficult for some. It certainly was for me. Your number may be in the rear-view mirror and you just can not or won’t do it. Eventually a younger friend’s advice “Retire Ray” and her unexpected passing soon after was enough.
I made the following suggestion in a fire group on social media:
If you are thirty and obsessing about the “number” and about getting out of a job you absolutely hate, it is a tragedy in the making. Another 25 years in a job you do not like. You are kidding, right? I never had a problem getting up and going to work. If you do change your paradigm.
Most people agreed but some pointed to several reasons they could not quit. Kids, divorce, not being able to replace the income. I will admit some were very difficult challenges, particularly when it came to health issues. The choice however remains a simple one, you can give up and choose to be a victim of your circumstances and waste a third of your life or you can methodically plan and execute on that plan and find your way out.

Working in a job you don’t like is chronic pain as it will affect:

Finally and probably most important you are wasting your precious time
.
If you are early in your retirement savings do not be disheartened by a huge number. Save first, save automatically, save more than 10% and most certainly live below your means.
I recently read Sixty-four percent of Americans are now expected to retire with less than \$10,000 in their retirement savings accounts. That scares me. Do not be one of those people You too can enjoy a comfortable retirement.
If you have enjoyed the post may I suggest: The Best Financial Advice I Ever Received

Raymond Mills, M.B.A., M.S. has spent over 30 years of his career as a Controller and Investment Bank and Credit Card Technical Auditor.  He now spends his time writing his blog, short stories and running his boutique Microsoft Office software customization business.

You can contact Ray @ by emailing him Here or by using the contact form in the right border.