Define spending
Use annual spending in today’s dollars. Separate essentials, flexible spending, one-time costs, taxes, health coverage, insurance, housing changes, and irregular repairs.
FIRE methodology
Build a FIRE number you can stress-test
A FIRE number is not a finish line printed by a formula. It is a planning estimate that changes when your spending, taxes, investment assumptions, health-coverage costs, account access, or willingness to adjust changes.
Educational note: FireBasis provides general educational information, not individualized investment, financial, tax, insurance, health-coverage, legal, or retirement advice.
The method in four steps
Choose a withdrawal test
A withdrawal assumption is an input, not a universal safe rate. Compare more than one and label the period, fees, taxes, inflation treatment, and spending behavior.
Match dollars and returns
Real returns describe growth after inflation; nominal returns describe growth before it. Record the basis and inflation treatment next to every scenario.
Stress-test the result
Change spending, returns, withdrawals, taxes, fees, health coverage, income, and the timing of poor returns. A scenario is a question to investigate, not a forecast.
A simple starting relationship
estimated portfolio target = annual spending ÷ withdrawal-rate assumption
This educational approximation is intentionally incomplete. It does not by itself model taxes, account rules, fees, inflation, changing spending, a mortgage, health coverage, income, or market-return order. Use it to understand sensitivity, then inspect a fuller calculator and your own assumptions.
Three scenarios — label the assumptions, not the outcome
01
Scenario A: Conservative stress test
What if spending is higher, real returns are lower, withdrawals are more restrained, and the first years are difficult?
Use higher or uncertain costs, a lower real-return assumption, documented withdrawals, taxes and health-coverage costs where they apply, and a difficult early-return test. Write down any dependency on reduced spending, income, or another account.
A resilience test is not a prediction of failure or a guarantee.
02
Scenario B: Baseline planning case
What does my current best estimate look like if I state every major input?
Record current spending, the real-or-nominal return basis, a chosen withdrawal assumption, known fees, taxes, health coverage, income, inflation, and account access. Date each rule or cost assumption.
A snapshot of inputs is not a probability statement.
03
Scenario C: Flexible or guardrail case
What if I can adjust spending, earn some income, or delay withdrawals when conditions are unfavorable?
Model flexibility explicitly: for example, part-time income, a spending floor and ceiling, a delayed purchase, or a review trigger. State who can change what and when; do not assume flexibility is available or call it safe.
Keep an essential-spending estimate separate from lifestyle flexibility.
Assumptions that can move the result
Spending
Include healthcare, insurance, taxes, housing, family support, maintenance, and irregular costs when they belong in the plan.
Returns and inflation
Label every return and balance as real or nominal. Fees, taxes, and asset allocation affect realized results.
Taxes and account access
IRS early-distribution rules may impose tax or additional tax depending on the distribution and exceptions described by the IRS.
Health coverage
Health coverage options and Marketplace information may vary; use HealthCare.gov to find current state information.
Sequence risk
The order of returns can matter when withdrawals begin. A single average-return line is not a sequence-risk test.
Fees
Fund, account, advisory, transaction, and other recurring costs can compound. Identify known costs and test sensitivity.
Use FireBasis tools as lenses, not verdicts
Before relying on a result, check units, timing, rounding, taxes, fees, account types, and whether the model includes the costs you care about.
FIRE calculatorInspect a starting estimate and record its assumptions.Compound-interest calculatorExplore accumulation mechanics, not a market forecast.Retirement-savings calculatorCompare savings and retirement inputs.Fee analyzerExamine modeled fee sensitivity using your inputs.Investment toolsSee the available investment-tool family.GlossaryLook up FIRE, inflation, compounding, and withdrawal rate.
A three-scenario worksheet
| Input | Conservative stress test | Baseline planning case | Flexible / guardrail case |
|---|---|---|---|
| Annual spending | Higher or uncertain costs | Current best estimate | Essential floor plus range |
| Return basis | Document real or nominal | Match spending basis | Document flexibility |
| Taxes / coverage | Buffer unknowns | Current documented inputs | Test contingencies |
| Review trigger | Shortfall or rule change | Scheduled review | Spending or income trigger |