The FIRE Calculator: How to Find Your Number (And Why Most People Get It Wrong)

The article discusses the common mistake people make when calculating their FIRE number, which is based on the 4% rule from the 1994 Trinity Study. This rule assumes 100% of expenses are funded by the portfolio, but in reality, people often have other income sources such as pensions or social security. The article provides examples of how to adjust the FIRE number to account for these income sources and highlights the importance of considering local market conditions, healthcare, and family financial responsibilities. It also emphasizes the need to consider sensitivity analysis and the impact of different savings rates on reaching FIRE. To correct the common mistake, engineers should consider their local pension or social security equivalent and adjust their FIRE number accordingly, and also consider other factors such as healthcare and family financial responsibilities.