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 : Bond tent : Hold 3-5 years expenses in bonds/cash near retirement Cash buffer : 1-2 years living expenses in HYSA Flexible spending : Cut variable expenses in down years Guard rails (Guyton-Klinger) : Adjust withdrawals based on portfolio performance 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% | ## Coast FIRE Status - **Coast FIRE Number (at your age):** $X - **Your current portfolio:** $X - **Coast FIRE achieved?** ✅ Yes / ❌ No (need additional $X) - **What this means** : [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. ## Barista FIRE Plan - **Annual expenses portfolio needs to cover:** $X (after part-time income) - **Barista FI Number:** $X (X% less than full FIRE) - **Years to Barista FI:** XX - **Recommended part-time work:** [employer with healthcare benefits like Starbucks, Costco, REI; or freelance covering $X/yr] ## Geographic Arbitrage Opportunities 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 | ## Withdrawal Strategy Recommendation Given your timeline (XX years in FIRE) and risk tolerance: **Recommended: [4% rule / 3.5% rule / Guyton-Klinger / Dynamic]** | 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) | ## Sequence of Returns Risk Mitigation In the 5 years before AND after FIRE date: 1. Build 2-3 years living expenses in cash/HYSA 2. Hold 5-7 years expenses in bonds (intermediate-term) 3. Plan flexible vs essential spending (cut variable in down years) 4. Consider Barista phase as bridge in early years 5. Don't sell stocks in bear markets — spend from cash/bonds ## Asset Allocation for FIRE | Phase | Stocks | Bonds | Cash | Rationale | |-------|--------|-------|------|-----------|