FIRE — Financial Independence, Retire Early — uses a simple rule of thumb: once your invested pot reaches about 25 times your annual spending, you could in theory withdraw 4 percent a year to live on. This tells you that target number and how far along you are. It is a guide, not a guarantee: markets, inflation and your spending all vary.
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Frequently asked questions
What is the 4% rule?
It suggests you can withdraw 4 percent of your portfolio in the first year of retirement, adjusting for inflation after, with a good chance the pot lasts 30+ years. Hence a target of 25× spending.
Is the 4% rule safe?
It is a widely used starting point, not a promise. Long retirements, poor early returns or high inflation can require a more cautious withdrawal rate.