"The number" in early retirement planning is built entirely from annual expenses — income doesn't appear anywhere in the formula. Two people earning identical six-figure salaries can end up with completely different early retirement targets, purely based on how much of that income they actually spend.
The Formula Has No Income Term
FIRE Number = Annual Expenses ÷ Safe Withdrawal Rate
Someone spending $40,000 a year needs a $1,000,000 portfolio at a 4% withdrawal rate. Someone spending $80,000 a year needs $2,000,000 — twice the target, regardless of what either person earns while working.
Why This Makes Spending the Real Lever
Because the target is a multiple of spending rather than a function of income, reducing expenses does two things simultaneously: it directly lowers the number needed, and it frees up more income to actually save toward that lower number. A dollar of reduced annual spending is worth roughly $25 less needed in the portfolio at a 4% withdrawal rate — a compounding effect that a dollar of additional income doesn't have on its own, since a raise that gets entirely spent doesn't move the number at all.
What This Means for Two People With the Same Salary
A high earner who spends close to their entire income needs nearly as large a portfolio as someone earning far less but living well within their means. The salary number that looks impressive on a resume has no direct bearing on how close either person actually is to their early retirement number — only their spending does.
Find your own number based on what you actually spend
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