Your FIRE number

FIRE — Financial Independence, Retire Early — comes down to one number: the portfolio size at which your investments can fund your life indefinitely. The good news is the math is simple. The nuance is in the assumptions.

The 25× rule (a.k.a. the 4% rule)

FIRE number ≈ annual spending × 25.

That’s just the inverse of a 4% withdrawal rate (1 / 0.04 = 25). The rule comes from US research (the Trinity study) but the arithmetic travels fine across the border: a globally diversified stock/bond portfolio has historically supported withdrawing 4% of the starting balance in year one, adjusted for inflation thereafter, with a high success rate.

Spend $80,000/yr → target ~$2,000,000. Spend $120,000/yr → ~$3,000,000.

Spending is the lever

Your FIRE number is driven by spending, not income. Cutting $10k/yr of recurring spend lowers your target by $250k. This is why high earners with high spending can have a larger number than modest earners who live lean.

Where the 4% rule gets shaky for early retirees

The Trinity study assumed a 30-year retirement. Retire at 45 and you might need 50+ years, which changes the math:

• Sequence-of-returns risk — a crash in your first few years of withdrawals does far more damage than the same crash later. The order of returns matters, not just the average.
• Longer horizons favour a more conservative rate. Many early retirees plan around 3.25–3.5% (i.e., 28–31× spending) for safety.
• Flexibility beats precision — being willing to trim spending in down years dramatically raises success rates. A rigid withdrawal is the dangerous one.

The Canadian wrinkles the rule ignores

• CPP and OAS. Government benefits provide an inflation-indexed income floor later in life, which reduces the portfolio you need. Delaying CPP to 70 boosts it substantially — often a better “annuity” than you can buy. The catch: early retirees stop contributing to CPP, which lowers the eventual payment.
• OAS clawback. Above an income threshold (~$90k), OAS is clawed back 15¢ on the dollar — a reason to manage taxable income in retirement.
• Account type matters as much as the number. RRSP/RRIF withdrawals are fully taxable; TFSA withdrawals are tax-free; non-registered gains are half-taxed. Your gross number depends on where the money sits.
• The RRSP-to-RRIF deadline. You must convert your RRSP to a RRIF (or annuity) by the end of the year you turn 71, after which minimum withdrawals are forced — plan conversions around it.
• Healthcare is less of a cliff than in the US — provincial health coverage removes the big pre-Medicare insurance line item Americans face. But budget for dental, prescriptions, vision, and paramedical, which public plans don’t fully cover.

The early-retirement tax play

Between leaving work and starting CPP/OAS, you often have low-income years. Drawing down RRSP/RRIF income (or doing partial deregistrations) in those years — the “RRSP meltdown” — can flatten your lifetime tax bill and reduce later forced withdrawals. Sequencing RRSP vs TFSA vs non-registered withdrawals is where a real plan earns its keep.

Put numbers on it

Use the interactive FIRE calculator to see your target and a rough timeline. Then read registered-account strategy to make sure the money lands in the right buckets along the way.