Every early-retirement plan eventually boils down to one figure: how big does the pile need to be before you can walk away. Here's how I got to mine, and why the famous 4% rule is a decent starting point but a bad place to stop.
The number you need depends on two things: what you spend in a year, and how much of your portfolio you're willing to pull out annually to cover it. That second number is your withdrawal rate, and it's the single assumption that moves your retirement date more than anything else. Lower it and you need a bigger portfolio but a much sturdier plan. Raise it and you can quit sooner, with thinner margins if the market misbehaves.
If you've read anything about early retirement, you've hit the 4% rule. It says you can withdraw 4% of your portfolio in year one, bump that dollar amount up with inflation each year after, and have a low chance of running dry over 30 years. It traces back to a 1994 paper by a planner named William Bengen, who did something obvious in hindsight: instead of using long-run average returns, he tested withdrawal rates against the actual market history, year by year, including the worst times to retire. Averages, it turns out, lie. A retiree who hits a rough patch early can run out even when the long-term average looks fine.
A few years later three Trinity University professors ran the question a different way, scoring how often various withdrawal rates left money on the table across decades of history. Their work, now nicknamed the Trinity Study, is where the "95% success rate" line attached to 4% comes from.
Flip a withdrawal rate upside down and you get a savings target. 4% is the same as needing 25 times your annual spending, since 1 divided by 0.04 is 25. That's the rule of 25, and it's how most people first sketch a FIRE number.
| Withdrawal rate | You need | If you spend $60k/yr |
|---|---|---|
| 4.0% | 25× expenses | $1.50M |
| 3.5% | ~28.6× expenses | ~$1.71M |
| 3.0% | ~33.3× expenses | ~$2.00M |
Here's the part the bumper-sticker version skips. The 4% rule was built for a 30-year retirement, which roughly fits someone leaving work at 65. Quit at 45 and you might need the money to last 50 years or more, a stretch nobody in those original studies tested. A longer retirement means more chances to run into a bad decade, so the rate that's safe for 30 years isn't automatically safe for 50. That's why most people retiring early aim lower, somewhere in the 3 to 3.5% range. Later reassessments of Bengen's own work, including the Financial Planning Association's look at his SAFEMAX rate, land in the same place: the right number depends heavily on how long you'll be retired and whether you're willing to trim spending in down years.
The calculator starts at a 3.5% rate against an assumed 7% real return (that's after inflation), and there's a reason. At that combination the portfolio doesn't slowly bleed out. It tends to grow, even while it's paying your bills. You end up living on part of the real growth and leaving the base alone. To me that's a fundamentally different goal than the classic "don't run out before you die," and it's the whole idea behind keeping your principal intact. Of course, a steady 7% every year is a fiction; you'll actually live through one specific run of good and bad years, which is exactly what the historical stress test is for.
Your withdrawal rate sets the gross number. What you actually get to spend depends on taxes, and most calculators just ignore them. Long-term capital gains get friendly federal rates, 0% or 15% for a lot of early retirees, which is why selling from a brokerage account is so efficient. But a few states, California and New York especially, tax those gains like ordinary income, which can meaningfully raise the portfolio you need. I pulled the federal figures straight from the IRS 2026 inflation adjustments and the bracket tables, and the calculator runs the real math for your state and filing status so the spendable number it shows you is the after-tax one. I go deep on this on a separate page: taxes in early retirement, including the 0% capital-gains bracket and the California and New York problem.
A conservative rate also leans on a cash buffer, roughly 2.5 years of expenses you can live off during a downturn so you're not selling shares at the bottom. The rate sets the target; the buffer is what lets you trust it.
Run your own number with real tax mathNot financial advice. Consult a fee-only fiduciary CFP for personalized guidance. Tax figures use 2026 brackets.