Delaware fire number calculator

The arithmetic behind the number

Two calculations sit inside this tool, and they are independent of each other.

The first is the target. Annual spending divided by the withdrawal rate. At 4%, $60,000 of spending needs $1,500,000, which is the same thing as 25 times annual spending. Change the withdrawal rate and the multiple changes with it.

The second is the timeline. Your current investments plus a monthly contribution are compounded forward at the return you entered, month by month, until the balance crosses the target. The tool reports the first month it does.

Nothing here knows anything about your job, your health, your family or your country's tax code. It is a division and a compounding loop, and every judgement is in the inputs.

A worked example on the defaults

The defaults are $60,000 of annual spending, $120,000 invested, $2,500 a month, a 5% real return and a 4% withdrawal rate.

The withdrawal rate is the most powerful input on the page, and people treat it as a detail:

Moving from 4% to 3.5% adds $214,286 to the target. It is a half-point change in a field most people skip.

What a lower withdrawal rate costs in years

The target is only half the answer. A bigger target takes longer to reach, and on the defaults, $120,000 invested plus $2,500 a month at a 5% real return, the timeline moves like this:

Going from 4% to 3% costs a little over four years of working life on these inputs. That is the actual trade, and it is a defensible one to make in either direction: four more years of earning in exchange for a materially larger margin of safety across a retirement that might run fifty years. What is not defensible is picking 4% because it is the number in the field and then never looking at what 3% would have required.

Does the 4% rule apply to a retirement that starts at 40?

No, and this is the single most important caveat on the page.

The 4% rule came from a study of 30-year US retirements: a portfolio, a fixed inflation-adjusted withdrawal, and a question about whether it survived three decades of historical American market returns. That is the claim it supports. It was never tested for a retirement that starts at 40 and might run for fifty years, and a fifty-year horizon is not a longer version of the same problem. It gives a bad sequence of early returns far more time to compound against you.

It is worth being clear about what the original test measured, because the rule is quoted far beyond it. The question was whether a portfolio, drawn down by a fixed amount adjusted each year for inflation, still had anything left after 30 years across historical US market outcomes. Success meant not running out. It did not mean the money lasted comfortably, and it did not mean the retiree finished with a balance worth anything. The evidence base is one country's market history over a limited number of overlapping 30-year windows, which is fewer independent tests than the confidence around the number implies.

The withdrawal behaviour it assumed is also nothing like real behaviour. Very few people withdraw a fixed inflation-adjusted sum through a deep market fall without flinching, and the flinching is often the thing that saves the plan. A retiree who spends less in bad years is running a materially safer strategy than the one the rule was tested on, which is why flexible spending rules dominate the discussion among people who have actually stopped working early.

People who plan for a very early retirement typically respond in one of three ways: a lower withdrawal rate, a plan to earn something in the first decade, or a rule that cuts spending after a bad year rather than withdrawing a fixed sum regardless. The tool supports the first of those directly. Set the withdrawal rate to 3% or 3.25% and watch the target move.

What happens to health insurance before 65?

This is the largest hole in most early retirement plans, and the tool does not price it.

Medicare eligibility begins at 65. A retirement that starts at 40 leaves 25 years to cover privately, and the premium for a household is one of the biggest line items in an early retiree's budget. It is also unusually hard to forecast, because premiums, subsidies and the rules behind them all change.

The practical consequence is that the spending figure you type in has to include a realistic health insurance cost, not the payroll-deducted amount you pay through an employer today. If it does not, the target is wrong by a multiple of 25 times the difference.

The multiple is what makes this line item different from the others. Understate the grocery budget by $50 a month and the target is $15,000 light. Understate health cover by $500 a month and it is $150,000 light at a 4% withdrawal rate, which on the defaults is another two years of work. Premiums also rise with age across the exact stretch an early retiree has to cover, and the subsidies available depend on the income you report, which for someone living off a portfolio is a figure partly within their control and worth understanding before it is relied on.

The honest approach is to price it rather than estimate it. Look up what cover for your household actually costs today, use that as the floor, and re-check it every year rather than assuming the number you found once still holds.

What the number leaves out on purpose

Social Security. The tool excludes it, which is conservative. Benefits arrive later and reduce what the portfolio has to cover from that point on, and claiming age changes the amount materially. The SSA publishes the reduction schedule by year of birth.

Tax. A withdrawal from a traditional account is taxable income; a withdrawal from a Roth generally is not. Spending of $60,000 needs a bigger portfolio if it has to come out through the tax system, which is one reason the Roth vs traditional question matters more for an early retiree than for anyone else.

Early access. Money in a 401(k) or traditional IRA generally cannot be touched before 59 and a half without a penalty, though the IRS publishes a list of exceptions including substantially equal periodic payments and separation from service at 55. A plan that reaches the number entirely inside retirement accounts has solved the arithmetic and not the access.

The mistakes people make with a FIRE number

• Entering a nominal return. Type 7% instead of the 5% real return on the defaults and the tool reports 18 years and 1 month rather than 21 years and 6 months. Three years and five months of early retirement appear out of nothing, funded entirely by inflation you have declined to subtract. The field asks for a real return for a reason.
• Using current spending. Retirement spending is not today's spending. Health insurance goes up, commuting goes down, and time is the thing you now have more of.
• Treating the date as fixed. It moves with every market year and every change in the contribution.
• Ignoring the sequence of returns. The order of good and bad years barely matters while you are contributing and matters enormously once you start withdrawing.
• Forgetting that spending is the lever on both sides. Cutting annual spending by $5,000 lowers the target by $125,000 at 4% and raises the monthly contribution at the same time.

Where this projection stops being true

From the tool's own caveats:

• The 4% rule came from a study of 30-year US retirements. A retirement that starts at 40 is not 30 years, and the rule was never tested for one.
• Use a real return here, not a nominal one, or the target is met in money that buys less than you assumed. The compounding maths is the same as the compound interest calculator, which works in nominal terms by default.
• It excludes Social Security, which arrives later and reduces what the portfolio has to cover.
• It ignores the cost of health insurance before Medicare, which is the single largest hole in most early retirement plans.

This is arithmetic on your assumptions, not financial advice. See the disclaimer and the rest of the tools in the calculator index.

A checklist

• Build a retirement spending figure from scratch, including private health cover.
• Enter a real return after inflation, and write down what you assumed.
• Run the target at 4%, 3.5% and 3% and look at the spread.
• Check how much of the target sits in accounts you cannot access before 59 and a half.
• Estimate Social Security separately rather than folding it into the return.
• Re-run it annually. This is a moving target, not a one-off calculation.