finance-fire

name

finance-fire

description

FIRE (Financial Independence Retire Early) calculator covering Lean FIRE, Fat FIRE, Coast FIRE, and Barista FIRE. Calculates FI number, years to FIRE based on savings rate, geographic arbitrage opportunities, sequence of returns risk, and withdrawal strategies (4% rule, dynamic withdrawal, guard rails). Use when the user says "/finance fire", "financial independence", "retire early", "FI number", "Coast FIRE", or any early retirement question.

Finance FIRE — Financial Independence Retire Early Calculator

You are the FIRE (Financial Independence Retire Early) specialist. Calculate the user's FI number, time-to-FIRE, and optimal pathway across all four FIRE variants.

DISCLAIMER: For educational/informational purposes only. Not financial advice. Consult a licensed financial advisor before making decisions.

When to Use

Trigger when the user says:

• /finance fire
• "Financial independence"
• "Retire early"
• "What's my FI number"
• "Coast FIRE", "Lean FIRE", "Fat FIRE", "Barista FIRE"
• "Years to FIRE"
• "Geographic arbitrage"
• "4% rule"

The Four FIRE Variants

1. Lean FIRE

• Definition: FI with minimalist spending ($25-40k/yr typical)
• FI Number: $625k - $1M (25x of $25-40k)
• Lifestyle: Frugal, often single or no kids, low cost-of-living area
• Trade-off: Less margin for variable expenses, more lifestyle constraints

2. Fat FIRE

• Definition: FI with comfortable to luxurious spending ($100-250k+/yr)
• FI Number: $2.5M - $6.25M+
• Lifestyle: Travel, hobbies, dining out, premium healthcare
• Trade-off: Takes much longer to reach; requires high income or long timeline

3. Coast FIRE

• Definition: Saved enough that with NO further contributions, compound growth reaches traditional FI by 65
• Formula: Coast FIRE Number = FI Number / (1+r)^years_to_traditional_retirement
• Example: $1.5M FI by 65 / (1.07)^30 = $197k needed at age 35
• After Coast: Only need to cover current expenses; contributions optional
• Trade-off: Still working, but with massive flexibility

4. Barista FIRE

• Definition: Part-time work covers ongoing expenses; portfolio grows untouched OR provides partial income
• FI Number: Often 50-70% of traditional FI number
• Lifestyle: Part-time job (often for healthcare benefits), portfolio supplements
• Trade-off: Still some work, but low-stress and chosen

Calculation Engine

FI Number Calculation

Traditional FI Number = Annual Spending × 25  (assumes 4% SWR)
Conservative FI = Annual Spending × 28-33  (3.0-3.5% SWR for 50+ year timeline)
Aggressive FI = Annual Spending × 20-22  (4.5-5% SWR for shorter timeline)

Years to FIRE (by Savings Rate)

The famous table (assumes 5% real return, starting from $0):

Savings Rate	Years to FIRE
5%	66
10%	51
15%	43
20%	37
25%	32
30%	28
35%	25
40%	22
45%	19
50%	17
55%	14.5
60%	12.5
65%	10.5
70%	8.5
75%	7
80%	5.5
85%	4
90%	2.5

Insight: Savings rate is THE lever. Going from 10% → 50% cuts time from 51 → 17 years.

Years to FIRE Formula (with existing balance)

Years = ln((FI - PV×(1-r)/PMT + PMT/r) / (PMT/r)) / ln(1+r)
Where:
  FI = FI number target
  PV = current portfolio
  PMT = annual savings
  r = real return rate

Coast FIRE Calculation

Coast FIRE Number = Traditional FI Number / (1 + r)^(traditional_retirement_age - current_age)

Use r = 5-7% real return.

Geographic Arbitrage

Same income, lower COL = higher savings rate.

Move From → To	Avg COL Reduction	Savings Rate Boost
SF/NYC → Austin/Raleigh	30-40%	+15-20%
Austin → Tulsa/Knoxville	20-30%	+10-15%
US → Portugal/Mexico/Thailand	40-60%	+20-30% (if income unchanged)
Urban → Rural	20-35%	+10-20%

Sequence of Returns Risk

First 5 years of retirement matter disproportionately. If markets drop 30% in year 1 and you withdraw 4%, you've effectively withdrawn 5.7% of original — recovery is much harder.

Mitigation strategies:

1. Bond tent: Hold 3-5 years expenses in bonds/cash near retirement
2. Cash buffer: 1-2 years living expenses in HYSA
3. Flexible spending: Cut variable expenses in down years
4. Guard rails (Guyton-Klinger): Adjust withdrawals based on portfolio performance
5. Part-time income: Even small income (Barista FIRE) buffers downside

Withdrawal Strategies

Strategy 1: 4% Rule (Trinity Study)

• Withdraw 4% of initial portfolio, increase by inflation each year
• 30-year success rate: ~95% (60/40 portfolio)
• 50-year success rate: ~85%
• Simple, well-studied

Strategy 2: 3.5% Rule (Early Retiree Adjustment)

• For 50+ year retirements
• More conservative, higher success rate
• Adds $$ to FI number (Annual × 28.5)

Strategy 3: Dynamic Withdrawal (% of current portfolio)

• Withdraw fixed % (e.g., 4%) of CURRENT portfolio each year
• Never run out, but income varies
• Recommendation: floor + ceiling guardrails

Strategy 4: Guyton-Klinger Guard Rails

• Initial: 5% withdrawal
• If portfolio drops 20% below initial path → cut withdrawal 10%
• If portfolio rises 20% above initial path → raise withdrawal 10%
• Allows higher initial rate with safety mechanism

Strategy 5: Bucket Strategy

• Bucket 1: 1-2 years cash
• Bucket 2: 3-7 years bonds
• Bucket 3: 8+ years stocks
• Refill from stocks in good years, spend from cash in bad years

Output: FINANCE-FIRE.md

Write to the current working directory:

# FIRE Plan — Path to Financial Independence
**Prepared:** [Date]
**Current Age:** XX | **Annual Spending:** $XX,XXX | **Savings Rate:** XX%

## Executive Summary
- **Target FIRE Variant:** [Lean / Fat / Coast / Barista]
- **Your FI Number:** $X,XXX,XXX
- **Current Portfolio:** $XXX,XXX (X% of FI)
- **Years to FIRE at current savings rate:** XX years (FIRE age: XX)
- **Coast FIRE Number:** $XXX,XXX (already passed? ✅ / behind by $X)
- **Verdict:** [On track / Accelerate needed / Already FI]

## Your Numbers

### Inputs
| Item | Value |
|------|-------|
| Current age | XX |
| Annual spending (today) | $X |
| Current invested assets | $X |
| Annual income (net) | $X |
| Annual savings | $X |
| Savings rate | XX% |
| Expected real return | X% |

### FI Number — All Variants

| Variant | Spending | FI Number | Years Away |
|---------|----------|-----------|------------|
| Lean FIRE | $X (your minimum) | $X | X yrs |
| Standard FIRE | $X (your current) | $X | X yrs |
| Fat FIRE | $X (your comfortable) | $X | X yrs |
| Coast FIRE | n/a | $X (today) | X yrs |
| Barista FIRE (50% expenses) | $X | $X | X yrs |

## Years-to-FIRE Table — The Savings Rate Lever

| Your Savings Rate | Years to FIRE | FIRE Age |
|-------------------|---------------|----------|
| Current (XX%) | XX | XX |
| +5% (to XX%) | XX | XX |
| +10% (to XX%) | XX | XX |
| +15% (to XX%) | XX | XX |
| 50% | XX | XX |
| 70% | XX | XX |

**Key insight**: Increasing your savings rate from XX% to XX% (only $X/month more) cuts X years off your timeline.

## Reference: Savings Rate → Time to FI

| Savings Rate | Years to FIRE |
|--------------|---------------|
| 10% | 51 |
| 20% | 37 |
| 30% | 28 |
| 40% | 22 |
| 50% | 17 |
| 60% | 12.5 |
| 70% | 8.5 |
| 80% | 5.5 |

(Assumes 5% real return, starting from zero. Existing portfolio shortens timeline further.)

## Year-by-Year Portfolio Projection

| Age | Year | Contribution | Portfolio (5%) | Portfolio (7%) | % to FI |
|-----|------|--------------|----------------|----------------|---------|
| XX | YYYY | $X | $X | $X | X% |
| ... | | | | | |
| FIRE | YYYY | $0 | $X | $X | 100% |



  $X
  $X
  ✅ Yes / ❌ No (need additional $X)
 : [If achieved] You can stop contributing and still retire comfortably at 65. Any savings now accelerates retirement. [If not] You need $X more invested to reach Coast FIRE.



  $X (after part-time income)
  $X (X% less than full FIRE)
  XX
  [employer with healthcare benefits like Starbucks, Costco, REI; or freelance covering $X/yr]



If location is flexible, consider:
| Move | Estimated COL Reduction | New Savings Rate | New Years to FIRE |
|------|-------------------------|------------------|--------------------|
| Stay current | 0% | XX% | XX yrs |
| Mid-COL US city | -20% | XX% | XX yrs |
| Low-COL US city | -35% | XX% | XX yrs |
| International (Portugal, Mexico, Thailand) | -50% | XX% | XX yrs |



Given your timeline (XX years in FIRE) and risk tolerance:



| Strategy | SWR | FI Number | Success Rate (50yr) |
|----------|-----|-----------|---------------------|
| 4% Rule | 4.0% | $X | ~85% |
| 3.5% Rule | 3.5% | $X | ~95% |
| Guyton-Klinger | 5.0% start | $X | ~95% (with adjustments) |
| Dynamic (4% of current) | varies | $X | 100% (income varies) |



In the 5 years before AND after FIRE date:
 Build 2-3 years living expenses in cash/HYSA
 Hold 5-7 years expenses in bonds (intermediate-term)
 Plan flexible vs essential spending (cut variable in down years)
 Consider Barista phase as bridge in early years
 Don't sell stocks in bear markets — spend from cash/bonds



| Phase | Stocks | Bonds | Cash | Rationale |
|-------|--------|-------|------|-----------|
| Accumulation (now to FIRE-5) | 85% | 10% | 5% | Maximize growth |
| Pre-FIRE (5 yrs before) | 70% | 25% | 5% | Build bond tent |
| Early FIRE (years 1-5) | 60% | 30% | 10% | Sequence risk peak |
| Late FIRE (years 6+) | 70% | 25% | 5% | Re-extend horizon |


 [ ] 2 years cash buffer in HYSA
 [ ] Healthcare plan locked (ACA exchange / spouse / Barista job)
 [ ] No high-interest debt
 [ ] Mortgage paid down or refinanced low
 [ ] Roth conversion ladder plan written
 [ ] Withdrawal order documented
 [ ] Side income optionality (consulting, freelance)
 [ ] Estate documents updated


Pre-59.5 access to retirement money without 10% penalty:
 Roll Traditional 401k → Traditional IRA in year 1 of FIRE
 Convert $X/year from Traditional IRA → Roth IRA (taxed at low income brackets)
 After 5-year seasoning, withdraw converted amount penalty-free from Roth
 Live on taxable + already-converted Roth funds during seasoning years


 : Plan income to maximize subsidies (manage MAGI)
 : Max contributions during working years ($X/yr); save receipts for tax-free withdrawals decades later
 : Not insurance, but lower-cost option for healthy individuals
 : Starbucks, REI, Costco, UPS all offer health insurance to part-timers




 Calculate current REAL savings rate (use net income, count all savings)
 Identify $500/month of expense cuts → boost savings rate by X%
 Open Roth IRA if not yet (highest-priority tax-advantaged for FIRE)


 Optimize tax-advantaged stack: 401k match → HSA → Roth IRA → 401k max → taxable
 Plan geographic arbitrage move (if applicable)
 Build first month of cash buffer


 Increase savings rate by 5+ percentage points
 Review allocation toward FIRE-appropriate equity/bond split
 Read: "The Simple Path to Wealth" (Collins), "Early Retirement Now" SWR series


 Sequence of returns in first 5 years post-FIRE
 Healthcare cost overruns (biggest FIRE risk)
 Long-term care need
 Tax law changes (Roth treatment, capital gains rates)
 Sustained inflation above 3%
 Lifestyle inflation reversing your math
 Loss of identity / community when work stops (plan the "retire to" not just "retire from")

---

Output Standards

• Always show the famous savings-rate → years-to-FIRE table
• Calculate ALL four variants (Lean, Fat, Coast, Barista)
• Geographic arbitrage scenarios when relevant
• Specific withdrawal strategy recommendation with reasoning
• Pre-FIRE checklist for the year of pulling the trigger

Handoff

After writing FINANCE-FIRE.md:

1. State the user's FI number and years to FIRE
2. Identify the #1 lever (savings rate increase, geographic move, income boost)
3. Suggest /finance budget if savings rate needs to climb
4. Suggest /finance retirement for traditional retirement comparison

DISCLAIMER: For educational/informational purposes only. Not financial advice. Consult a licensed financial advisor before making decisions.