Core answer: Your FIRE number = annual spending × 25. If you spend ¥8,000/month (¥96k/year), you need ¥2.4M of investable assets; withdrawing 4% in year one (¥96k, then adjusted for inflation) historically carried a <5% chance of depleting the portfolio within 30 years.
What the 4% rule is
The 1998 Trinity Study found that a 50%–75% stock/bond portfolio, withdrawing 4% in year one and adjusting that amount for inflation each year after, survived 30 years in 95%+ of rolling periods using 1926–1995 US data — and in most scenarios ended larger than it started.
Corollary: save 25× your annual spending and the portfolio's returns can fund your life indefinitely (approximately).
The FIRE number formula
FIRE number = annual spending × 25 = monthly spending × 300
Variants:
- Lean FIRE: minimal spending × 25 — small number, tight life
- Fat FIRE: generous spending × 25 — big number, comfortable margin
- Barista FIRE: portfolio × 4% + part-time income = spending — slashes the required principal
Table by spending level
| Monthly spend | Annual spend | FIRE number (×25) | Conservative (×33, 3% SWR) |
|---|---|---|---|
| 3,000 | 36k | ¥900k | ¥1.19M |
| 5,000 | 60k | ¥1.5M | ¥1.98M |
| 8,000 | 96k | ¥2.4M | ¥3.17M |
| 10,000 | 120k | ¥3M | ¥3.96M |
| 20,000 | 240k | ¥6M | ¥7.92M |
Every ¥1,000/month cut from spending removes ¥300k from the target — frugality is a far bigger lever than most people realize.
Worked example: a family of three on ¥8,000/month
Example 1: a family in a third-tier city, ¥8,000/month all-in with a paid-off home — ¥96k/year.
- FIRE number = 96k × 25 = ¥2.4M
- 60% broad index funds + 40% bonds/deposits, withdrawing ¥96k/year
- With 15+ years of social-insurance contributions each, pensions take over at 60 — the portfolio only needs to bridge to pension age
Example 2 (Barista FIRE): same spending but ¥3,000/month of part-time income:
- Passive income only needs to cover 8,000 − 3,000 = 5,000/month
- FIRE number = 5,000 × 12 × 25 = ¥1.5M — the target drops by ¥900k instantly
Where the 4% rule stops applying
- Built on US markets: a century of ~10% US equity returns is not a universal constant
- 30-year horizon: planning a 40–50 year early retirement? Use 3%–3.5%
- Asset allocation is a prerequisite: 4% withdrawals from a 2% bank deposit will fail, guaranteed
- Sequence-of-returns risk: a deep bear market in the first retirement years is the killer — hold a 2–3 year cash buffer
Adjustments for the Chinese context
- Haircut the SWR to 3%–3.5%: A-share volatility is higher and long-run returns lower than US markets — target annual spending × 29–33
- Keep social insurance alive: medical insurance needs 20–25 contribution years (varies by city) for lifetime retirement coverage — continue as a flexible-employment contributor during FIRE
- Exclude your home: a self-occupied home produces no cash flow; but once the mortgage is gone, spending drops and so does your FIRE number
- Assume 2.5%–3% inflation: education and healthcare inflate faster than CPI — families with children should add margin
Common mistakes and myths
- "¥3M means I can coast" — only if your spending is stable and the number is spending × 25. The most common failure is spending inflation (kids' education, parents' medical care) against a number with no margin.
- "Withdraw a fixed 4% every year" — it is 4% in year one, then inflation-adjusted; in bad markets, flexible (smaller) withdrawals raise success rates substantially.
- "Counting your home as an asset" — only investable assets (deposits, index funds, bonds, rental property) count toward the FIRE number.
- "FIRE = never working again" — most practitioners shift to low-stress work or monetized hobbies; semi-retirement supplements cash flow and preserves social connection and meaning.
Use the [FIRE Calculator](/c/finance/fire) to get your number from spending and assets, and the [Compound Interest Calculator](/c/finance/compound) to see how long monthly investing takes to reach it.