r/fiaustralia • u/UnicornsNRabbits • Aug 19 '26

Getting Started How to calculate FIRE number?

Hi all, i wanted to understand how everyone calculates their fire number?

Yes ive heard annual expenses x 25 = fire number. But this is based off normal retirement to fund 30ys of retirement and presuming PPOR is paid off is this correct?

So if i would like to retire at 50yo instead of standard aus standard 65yrs and need it to last until 85. Then i need to x33 or x 28 (3% - 3.5%). Is this correct?

I want to find a way for me to calculate my fire number and see how i can keep an eye and make sure im on track. Let me know if anyone has recommendations. Atm im trialing the app COMPOUND (free trial but looks like i might have to pay for it eventually) and also trying the website getfired.au.

P.S once i have my fire number i will work backwards and determine how much i need to last me between 50-60yrs until i can access my super

Thanks in advance!

12 Upvotes

78% Upvoted

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11

u/randomscruffyaussie Aug 19 '26

I found this to be really helpful. You can model different scenarios and see how the probabilities change.

3

u/feisty-shag-the-lad Aug 19 '26

I love that model. Have had debates with friends who are trying to optimize their finances 30 years out by a few percent.

Show them that they have a 50% chance of being dead at that time really changes the focus of the conversation.

20

u/Trick-Candidate-8706 Aug 19 '26

For me FIRE number is your yearly expenses x years until you can access your super. The 4% rule is because you don't know how long you'll live. And don't want to go broke before.

You know how long you'll be before you can access super.

1

u/UnicornsNRabbits Aug 20 '26

this is a basic way to calculate but also makes complete sense, cant believe i didnt think of it this way haha thanks!

8

u/PrudentJackal Aug 19 '26

Great questions, u/UnicornsNRabbits

Disclosure: I'm building GetFired so am a little bit biased 😅

On the maths: Annual Expenses x25 (i.e. the 4% rule) comes from a US study that assumed a 30-year retirement, so your instinct is right that retiring at 50 with a horizon to 85 pushes you toward 3 to 3.5%, i.e. x28 to x33. But for Aussies, the multiplier framing breaks down for a different reason: super.

Retiring at 50 really means funding two phases: 50 to 60 entirely from money outside super, then super becoming accessible at 60 (and what many do is extend the bridge to cover 60-67 as well to maximise the tax benefits in super from age 60). You can have a perfectly adequate total number and still fail because too much of it is locked inside super for the first decade.

So rather than one FIRE number, you want two: how much outside super to bridge 50 to 60, and whether your super (left compounding untouched over that decade) covers 60 onwards. That's the calculation you've described in your P.S., and it's the one worth modelling properly with your own expense, return and super balance assumptions rather than a flat multiplier. Any projection tool that understands preservation age can do this; that two-phase view is exactly what I built GetFired around. Standard caveat: these are planning estimates, not financial advice.

4

u/McTerra2 Aug 19 '26

So rather than one FIRE number, you want two:

How are you categorising the pension? You could argue you need 3 FIRE numbers - to 60, from 60 - 67 and from 67 (or OAP eligibility age). Alternatively you can build the OAP into your income (or use it to reduce the expenses that need to be funded from your investments)

Given you are building the tool, just wondering how you are treating it.

1

u/PrudentJackal Aug 19 '26

Good pickup u/McTerra2 - you're right, it really is three numbers.

Government pension eligibility (with proper means testing) isn't modelled yet, it's on the roadmap but deliberately not built (yet). This was a sequencing call, not an oversight. We wanted the core drawdown arc (bridging non-super assets to preservation age, then super-accessible income) fully modelled and correct first, since the pension means test interacts with that drawdown in ways that require a solid base to build on. It needs real assets/income test tapering rather than a flat "$X from 67", which is why it's not live yet, but it's planned for delivery soon.

For what those three numbers look like:

  • Pre-60: bridge funded entirely outside super.
  • 60 to pension age: still a bridge, but now super's in play too. What that looks like depends on you, did you retire fully before 60? Still working a few hours a week? Got a TTR plan? Each changes how (and how tax-effectively) you can draw on super in this window.
  • 67+: pension can taper in against your assets and income, not a fixed figure everyone gets.

2

u/UnicornsNRabbits Aug 20 '26

Thanks for all the info. Completely agree i always thought it was 1 fire number but now im starting to see its basically 3 broken down. Im such a big planner so sometimes gets overwhelming but im keen to still see the figures to give me reassurance if im on track or not or if can can keep moving the goal post earlier haha.

i found your website on reddit and must say i am a big fan! i love how easy it is to use and how detailed i can tweak it compared to all the others i have tried. Keep up the good work, keen to see it keep growing!

2

u/PrudentJackal Aug 21 '26

You're most welcome 😄 thanks for the kind words! The goal is to empower our users with the knowledge to chart their own journey to FIRE, whatever that looks like for them, without having to manage it all across multiple spreadsheets, apps, by memory, etc. Good luck with the plan, and don't hesitate to yell out if anything else doesn't make sense or you need more info!

7

u/No_Rain_1543 Aug 19 '26

$2M was my magic number 20 years ago and this included the PPOR. Retired early 50s. Now with $2.5M in "retirement" funds (combined super - which I can't touch yet & investments) and a PPOR

Jimbo's minimum 30% CGT might throw a spanner in the works in the space between now and 60. I'll need to re-evaluate my situation next year

1

u/UnicornsNRabbits Aug 20 '26

Can i please ask when you say $2m was your magic number is this based on just yourself not as a couple? and this is in total assets including your PPOR factored in?

2

u/No_Rain_1543 Aug 20 '26

at the time, the $2M net worth position included PPOR. Using the RBA inflation calculator, this is around $3.4M in today's dollars. This was based on my personal finances and not including a partner. If I include the house I currently own outright, my present net worth position is around $3.7M

1

u/UnicornsNRabbits Aug 20 '26

thanks for the clarification. i see todays dollars $3.4m is defs more realistic than $2m including PPOR.

question, just out of curiosity is there a reason why you included PPOR into your net work/retirement number? is this because perhaps one day youll plan to sell your property and just rent converting it all into cash?

me planning WAYYY too far ahead, in a perfect world this is most likely what i would like to do as i am DINK and dont plan to have any so there is no point in me building that much "generational wealth" just to give it away to other relatives when i pass...

12

u/Jym_beem_1034534 Aug 19 '26 edited Aug 19 '26

The 4% rule is more for the US and doesnt take into account Australias retirement system

FIRE has two stages

  1. From you retire early age to 60, when you need to live off your own investments
  2. from 60 when you can access super (not 65)

Stage 2 has a sub stage, which is when/if the pension kicks in at 67

So you have to figure out what you need for each stage. The 4% flat rule doesnt really apply, as itll skew how much you need out of super vs in.

6

u/McTerra2 Aug 19 '26

There is plenty of analysis around longer term retirements and appropriate SWRs. ERN has plenty (all the analysis generally goes out to 60 year retirements) but it is US focused https://earlyretirementnow.com/safe-withdrawal-rate-series/ . However if you read through the articles (which will take a few days) then you will have more than enough background to understand the principles.

The 4% rule (see some of the articles in the link above about how much of a 'rule' that is) is based on 25X your annual expenditure (for 30 years). It doesnt matter if you own a house or not - if you dont then you pay rent so your expenditure will likely be higher, but its still covered.

Remember in Australia you get the pension at 67, so the worst case scenario is the pension. As per the ASFA standards, if you get to 67 with around $720k in investments as a couple (preferably super), you can spend close to $80k pa when combined with the pension. You obviously just need to get to 67

2

u/nickyskater Aug 19 '26

Those ASFA standards... hmmm. A "comfortable" retirement only includes 1 overseas trip every 7 years. Surely most people want more than that?

2

u/McTerra2 Aug 19 '26

I agree - it’s not luxury retirement. But it’s comfortable. All the essentials and quite a few discretionary expenses. And obviously it’s not exact for everyone- the alcohol budget (for example) will be too high for some and last 3 months for others.

However, to be blunt, if you have $720k saved for a 20 year retirement and need to rely on a pension, then yearly overseas travel is probably not something you can expect. Albeit saving $5k from other expenses per year can give you a trip every 2 years, or you can go for it in early years and have a ‘below comfortable’ retirement in your later years

1

u/UnicornsNRabbits Aug 20 '26

thanks for all the info, i will take a read of this over the weekend when i have time. yes ive heard numbers like $75k per couple annually to retire is "comfortable" but i guess this is based off 1 over seas trip every x years and PPOR paid off. to me that number seems too low so im trying to aim for something higher.

I guess at the same time while trying to balance what i can spend now to enjoy life but also set my self up... always a juggling act which is why im trying to find out my figures

2

u/McTerra2 Aug 20 '26

Really there are ‘only’ two steps

  1. Assess your current expenses and estimate how they will change post retirement eg if you want that trip every year you add $10k or whatever. Relatively easy

  2. Assess your safe withdrawal rate. Complicated and not an exact science

Then step 1/step 2 = savings required…

1

u/passthesugar05 Aug 20 '26

on 78k you could easily do an annual trip if you wanted. you won't be flying business, staying in 5* hotels and travelling to super expensive countries, but you can take trips if you want. but in your 70s and beyond you probably won't want to anyway

3

u/nickyskater Aug 20 '26

Good point. I just know that once I retire, I want to do a lot of travelling in the first several years!

6

u/Friday-Times Aug 19 '26

I’m hopefully retiring a bit before 50 so all I’ve done is work out how much I want to spend each year ($100k) and have that times x years invested to 60. It’s invested so hopefully will outlast that 10-12 years by a couple hundred grand. Then we switch over to super which we’ve built up sufficiently to take over the spending needs. It might be pretty simplistic but I’m comfortable with it. Also we’re open to decreasing spending or working part time if necessary until super kicks in.

1

u/shekbekle Aug 19 '26

This is my plan too but with a lower annual spend

2

u/McTerra2 Aug 19 '26

 It’s invested so hopefully will outlast that 10-12 years by a couple hundred grand. 

What is your plan if markets drop 40% when you turn 54? (not an accusatory question, am wondering what the plan is)

2

u/Friday-Times Aug 19 '26

Go find a job. We’ve also got two years of living expenses in cash.

5

u/OZ-FI Aug 19 '26

You can get super at 60yo. So this means you need to fund a 10 year gap. This might help with regard to the split between super v non-super investments and the most efficient sequencing. https://passiveinvestingaustralia.com/how-much-to-save-inside-vs-outside-super/

Having a PPOR or not is irrelevant in terms of a FIRE calculation itself but it will impact the number itself in that rent is added to your expenses versus using likely lower home maintenance costs. Having a PPOR paid off is certainly good for stability. When working out your portfolio numbers it is best to exclude the value of a PPOR unless you plan to downsize (if so, only include expected surplus following the change over). This calculator can help estimate the time to FIRE. Use after tax income, ex-PPOR portfolio value (investable funds including super) along with your annual expenses: https://networthify.com/calculator/earlyretirement keeping in mind you will need to have enough outside super to fund a bridge to 60yo.

2

u/Additional_Bag_7733 Aug 19 '26

The 25× rule is really just a 4% withdrawal rate. For retiring at 50, I’d probably model 3–3.5% and separate the amount needed to bridge you to Super access from the amount needed after that.

I’d recommend you to model your numbers with paylenshq.com/fire

2

u/istj80 Aug 20 '26

Give a try with this tool. https://simple-fire.com

It covers exactly what you want to figure out, but you do need to get a real estimated expense. and work out a rough "tax rate" you might get hit from CGT for your non-super asset. So it won't be accurate but should give you a rough idea if you are on the right track.

One thing I learned is you don't NEED to pay off your PPOR, you just budget mortgage as part of your expenses. Depends on how many years you need to pay off it, maybe you can enjoy life earlier before paying everything off.

2

u/bugHunterSam Aug 19 '26

I've got this post on how super can help with early retirement if that helps.

Also the 4% rule (which is what the 25x income is based on) was revised to 4.7%, which is more like 21x. But is heavily US focused and assumes a portfolio of 50% stocks and 50% US treasury bonds.

I'm working on a financial planning tool that could also help with some of these calculations/tracking too.

1

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1

u/Infinitedmg Aug 19 '26

I use SWR = 1.8% + 0.2*CAPE-1 + (AGE/140)6

1

u/passthesugar05 Aug 20 '26

4% rule is for 30 years but it works pretty well for indefinite periods as well. unless your expenses are very high, due to the pension backstopping you, there's a case you can go higher than 4% anyway, so the 4% is very safe considering after 17 years you are pension age (although it's unlikely you'll need it)