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Find Your FI Number in 60 Minutes

October 1, 2026 · 8 min read · By Prakash Damodaran

Your FI number is the amount of money that buys your freedom. Not a yacht. Not never working again. Just the point where work becomes a choice.

The standard answer is simple: roughly 25 times your annual spending. It is a good starting point. It is not the whole story. Three things change the math, and you should understand all three before you trust the number: one-time expenses, inflation, and your withdrawal rate.

Where the 25 comes from

It comes from the 4% rule, which comes from the Trinity study. Researchers tested withdrawal rates against decades of market history and found that spending about 4% of a portfolio per year survived 30-year retirements across almost every historical period. If you can live on 4% of your portfolio per year, your portfolio needs to be 25 times your annual spending. One divided by 0.04 is 25.

Now the honest part.

1. One-time expenses do not fit in the 25x

The 25x covers recurring annual spending: the life you live every year. It does not cover lumpy, one-time costs: a child's college, a wedding, a home down payment, a big medical bill. Those get added on top, separately.

So the real formula is: FI number = (annual recurring spending x 25) + planned one-time expenses. List the big ones, estimate each honestly, add them up. If college is $150,000 and it is coming in eight years, that $150,000 sits on top of the 25x number. Do not hide it inside your annual spending and do not ignore it. Name it, price it, add it.

2. Inflation is already inside the rule

This confuses everyone, so here it is plainly: compute everything in today's dollars and do not inflate anything yourself.

The Trinity study tested inflation-adjusted withdrawals: you spend 4% in year one, then raise that amount with inflation every year after. The 4% already assumes your spending grows with inflation and your portfolio grows enough to cover it. That is why the rule only works with a growth portfolio behind it, and why we talk about real (after-inflation) returns everywhere else on this site.

Your FI number is therefore in today's dollars. By the time you reach it, the nominal figure will be higher, because prices will have risen. But your portfolio, growing in real terms, is measured in today's dollars too. Keep both sides in today's dollars and the math stays clean.

3. Your withdrawal rate is a choice, not a constant

The withdrawal rate is the percentage of your portfolio you spend each year. Four percent is the standard starting point, but it bakes in assumptions you should know:

• Time horizon. Trinity tested 30-year retirements. Retiring at 65, 4% is reasonable. Retiring at 40 with fifty years ahead of you, 4% is aggressive: consider 3 to 3.5% instead (33x or 29x your spending).
• Safety margin. Want more cushion for bad luck? Use 3% (33x). Comfortable with a little risk, or flexible spending? 4.5 to 5% (22x to 20x) is defensible.
• Early crashes hurt most. A market crash in your first five years of withdrawals does far more damage than the same crash twenty years in. This is called sequence-of-returns risk, and a lower withdrawal rate is the simplest defense.

Generalize the formula and it stays simple: FI number = (annual spending divided by your withdrawal rate) + one-time expenses. At 4%, that is 25x. At 3%, 33x. Our FI calculator shows five rates side by side so you can see what each choice costs.

The 60-minute version, revised

Minutes 0 to 35: recurring spending. List spending by category for the last twelve months from bank statements, not memory. Total it. Only the recurring part.

Minutes 35 to 45: one-time expenses. List every big lumpy cost you can see coming: college, weddings, a home, big medical. Estimate, add them up.

Minutes 45 to 55: pick your rate, do the math. Annual spending divided by your withdrawal rate, plus the one-time total. That is your FI number.

Minutes 55 to 60: write it down. Say it out loud. A rough number you believe beats a precise number you never computed.

Why the number changes everything

Before you have the number, "financial independence" is a fog. After, it is arithmetic. If your number is $1.9 million and you save $30,000 a year, you can compute your timeline. If a raise adds $10,000 to annual savings, you can compute exactly how many years that buys you. Every financial decision becomes a question with an answer: does this move the number closer?

The number also deflates lifestyle inflation. A $500-a-month habit is not $6,000 a year. At 4%, it is $150,000 added to your FI number. Nobody needs to tell you whether it is worth it. The math does that quietly, every time.

Do it with us, live

We run this exact exercise as a free 60-minute live workshop. You bring a rough idea of your monthly spending; we do the rest together, on a one-page worksheet you keep. It is the fastest way to find out whether the free weekly workshop is for you.

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