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5 Minutes to FI: Find and Calculate Your FI Number


How much do you need to retire? Well, the answer may be a lot simpler than everyone’s been telling you. All you’ll need are a few basic numbers and a few minutes before you can map your way to financial independence.

To calculate your financial independence number, simply take your annual expenses and divide them by your estimated withdrawal rate (the percentage you plan to withdraw from your retirement savings each year). The number you calculate is your financial independence (FI) number.

While easy to calculate, it’s important to know what considerations impact your FI number. We handle a few calculated examples below, and we’ll guide you on how to adjust your number over time.

Find Your Financial Independence Number

The math to understanding the amount of money you’ll need to retire is simple. Understanding the meaning behind that number is a completely different mountain to climb.  Remember that financial independence is different for everyone. Maybe it means ditching your day job to work passion projects. Or making time to attend your children’s dance recitals or baseball games. Or having enough money to live off of your investments forever. Whatever the reason, financial independence is what it means to you

But you need to see the peak before you begin the climb, right? Here’s how to capture that vision.

First, you need to know your annual expenses. It’s important to know your costs, as it’ll affect your FI number. Prioritize this knowledge, because it will benefit you in the long-run. Even if it requires a little legwork up front. Once you have your annual expenses, you’re about ready to go! For our example, we’ll use $50,000 annual expenses.

Second, we’ll need your retirement withdrawal rate. That’s the percentage you withdraw from your retirement savings annually. The idea here is to target a rate that keeps you from outliving your savings. As a rule of thumb, we’ll use 4% (thanks Trinity study). Now, there’s a lot of advice around the 4% rule out there. But it’s a generally safe and successful method to account for at least 30 years worth of savings in retirement.

The last step is the easy part: calculate your FI number by dividing your expenses by your withdrawal rate. 

Annual Expenses: $50,000

Withdrawal Rate: 4% (which is 4 / 100, or 0.04)

$50,000 / 0.04 = $1,250,000

And there you have it! Your financial independence number: $1,250,000. 

Put another way, you’d be able to successfully retire and live off your investments by saving and investing your FI number amount. Now, who doesn’t want that? 

Knowing your FI number is liberating. You are now armed with the power and peace of mind to know where you’re headed. Better yet, you know the decisions you make can positively or negatively impact your number. You’re in control, and you’re ready to begin climbing your financial mountain. 


When it comes to your FI number, remember to account for the overall quality of your life. It’s better to approach your goals holistically. You might be able to pinch and save for the next 5-10 years to hit your FI number faster for example. But what happens if your lifestyle inflates after reaching financial independence?  You’ll risk depleting those hard-earned savings quicker than you hoped. 

Only you know what it costs to fill your life with what’s actually meaningful to you. There’s a diminishing return when it comes to materials or possessions. But experiences can become memories that last a lifetime for you and your loved ones. What does that cost to you? Accounting for family retreats or once-in-a-lifetime vacations are important considerations.


Below are examples of more FI number calculations. Included is the average annual U.S. household expenses as of 2019 (data released September 2020). The U.S. average can help you identify a baseline in your expenses. Would you consider yourself more frugal? Or do you enjoy a more lavish lifestyle? Spending levels aside, you can note the impact your annual expenses have on your FI number. 

Annual ExpensesWithdrawal RateFinancial Independence Number

As a note, the 4% rule adjusts for inflation every year after the first year of retirement. It also contains a general rule for stock to bond asset allocation. If your investment strategy differs, you may want to re-adjust your calculations.

Conservative Approaches

What if you plan on living for a while? About 14% of average retirees live to 95 (the 30 year mark after the age of retirement).  Adjust your savings, allocations, or withdrawals if a more conservative approach better suits you. 

Speaking of conservative approaches, you can always take a 30x multiplier into account. The 4% rule used above is actually the same as your expenses multiplied by 25, so multiplying them instead by 30 will give you a bigger cushion.

$50,000 x 25 = $1,250,000

If instead you wanted to provide an extra $10,000 buffer (or any other amount) to your retirement withdrawals, you can. You have the power to adjust your FI number as you see fit, to help account for uncertainty in your life or in the market. 

Why Annual Expenses?

Simply put, it’s hard to know exactly what your future is going to cost. There’s a lot of value in your personal finance data. Your historical trends can provide insight to your financial patterns. They can also point out irregularities for you to recognize. Maybe there was a family injury one year, adding to your health expenses. Maybe there was a fender-bender two years prior. Your financial data can help you understand how life’s uncertainties average out over time. And your costs can give you an idea of what that will look like in the future – especially as you near retirement. 

Adjusting Your FI number

Should you adjust your financial independence number? Absolutely! Your life evolves over time. Your desires and dreams change. Your family may also grow over time, bearing expenses for each new headcount. Planning for retirement isn’t as precise as general financial advice makes it out to be. Only you know what you want out of life. You can adjust for those things as you gain experience and grow as an individual. 

One approach to dialing in on your FI number is to test your spending level. We look at this on a spending-to-happiness ratio. If you like buying the newest tech or gadgets, great! But do they lie around your house all day (or take up too much of your time)? If so, they may actually have a negative benefit to your quality of life (and your savings). The key is to hone in on what makes you happy. Does a professional camera make you happier than taking photos with your phone? If the memory is more important than the tool you use to remember it with, then you have your answer.

What about adjusting your FI number to account for buying a house? Or what if you’re considering a new subscription? Does moving affect your financial independence number? All of these are fantastic questions, and deserve your attention individually.

Remember to adjust your FI number regularly and keep yourself on target toward your goal. As you live, you learn, so use that knowledge to help track your way to financial independence. You now know your final destination, and it’s time to begin your journey.


1. Find Your FI Number

Take your annual expenses and divide by your withdrawal rate (4% as a rule of thumb) to find your financial independence number. This is the number you’d need to reach to successfully live off of your investments.

2. Take Quality of Life Into Account

Approach your goals in life holistically. Fill your life with what’s meaningful to you and adjust accordingly, without inflating your lifestyle. Materials and possessions have a diminishing return over time.

3. Adjust Your FI Number Over Time

Go as you grow. As your life changes (family headcount, big move or purchase, etc.) it’s okay to readjust your FI number. It isn’t a moving target, but your circumstances are sure to change over time. If you know what your goals are, you’ll be able to reach them.

Climb on, FinBase. ???? 


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John is a personal finance writer, editor, and a fellow FinBase climber. Tech worker by day, design owl by night, he is the co-founder and creator behind The Financial Basecamp.
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