The Australian FIRE number, calculated honestly
Every FIRE calculator on the internet was built by an American. The 4% rule comes out of US data. The 25x annual expenses heuristic assumes US tax. The "just max out your 401k" advice doesn't translate to a country where preservation age is 60 and concessional caps sit at $30k.
I've been working on my number for years. It's moved around. Here's how I calculate it now, with the assumptions made explicit.
Step one: figure out your actual annual spend
Not what you wish you spent. What you actually spend. Pull the last 24 months of bank and card data. Sort by category. Sum the year. Divide by two for an annualised number.
The categories I track:
- Housing (mortgage or rent, rates, insurance, maintenance)
- Utilities and connectivity
- Food (groceries plus eating out, separately)
- Transport (fuel, rego, servicing, insurance, public)
- Health (private cover, dentist, scripts, the gym)
- Kids (school, activities, clothes, the bottomless lunchbox)
- Travel
- Personal / discretionary
- Buffer (around 10% for the unknowns)
My number landed at roughly $85k a year for the household I run, kids included. That's lower than a lot of city families and higher than a lot of FIRE bloggers admit they spend.
Step two: project the FIRE-era spend, not today's
This is where most calculators go wrong. Your spend in retirement isn't your spend today.
Things that drop:
- Mortgage (assuming the house is paid off)
- Kids' expenses (they leave, eventually, allegedly)
- Work-related costs (commute, lunches, office wardrobe)
- Possibly insurance (income protection becomes irrelevant)
Things that rise:
- Healthcare (more in your sixties than your forties)
- Travel (more time, more inclination)
- Hobbies (you've got time to spend on them)
For me, the FIRE-era number sits around $70k a year in today's dollars. Lower than current spend because the mortgage is gone and the kids are independent. Higher per dollar because more of it goes to discretionary.
Step three: pick a withdrawal rate honestly
The 4% rule comes from the Trinity study. US data, US tax, 30-year retirement, 50/50 stocks-bonds. It says you can withdraw 4% of your starting portfolio in year one, adjust for inflation each year, and have a high probability of not running out over thirty years.
Three things make 4% optimistic for an AU-based FIRE-er:
- Longer retirement (FIRE at 50 means 35-45 years, not 30)
- Lower forward-looking equity returns than the historical US data
- Sequence-of-returns risk (a bad first decade ruins everything)
I use 3.5% for the planning number. It's more conservative. It costs me roughly an extra 4-5 years of work versus 4%. I think it's worth it.
3.5% means you need about 28.5x annual expenses, not 25x.
Step four: do the maths
Annual FIRE-era spend: $70,000
Withdrawal rate: 3.5%
Required portfolio: $70,000 / 0.035 = $2,000,000
That's the portfolio you need outside of your house, generating $70k a year.
But wait. There's super.
The super wedge changes everything
In Australia, super is a separate bucket you can't touch until preservation age (currently 60 for most people now in their forties). FIRE-ing at 50 means bridging a 10-year gap on assets outside super, then super kicks in.
This changes the maths in a useful way. You don't need to fund the whole 35-45 year retirement from non-super assets. You need to fund the bridge, plus have enough super at 60 to fund the rest.
Rough split for a FIRE-at-50 plan:
- Outside-super portfolio: enough to cover years 50-60 at $70k/year, with growth, say $700k-$900k
- Inside super at 60: enough to fund years 60-95 at $70k/year, withdrawn tax-free above age 60 once the pension phase kicks in
Run the super projection: if you've got $400k in super at 50 and let it compound at 7% nominal for ten years with no further contributions, it lands around $787k. With a $30k/year concessional cap maxed for those ten years, it lands closer to $1.2-1.4m.
Two million is the all-in number. Outside-super + super combined.
Step five: the property wedge
I run a property portfolio. I don't include the family home in the FIRE number (it's a place to live, not a yielding asset). I do include investment properties at their post-tax, post-fees net rental yield.
If a $700k investment property nets $25k a year after everything (rates, insurance, maintenance, agent, vacancy buffer, interest on any remaining loan), it's contributing $25k of the $70k annual need. Which means the rest of the portfolio only needs to generate $45k, or $1.28m at 3.5%.
Property is illiquid, lumpy, and concentrated. I weight its contribution conservatively in my own number. But ignoring it entirely is also wrong.
The honest version of my own number
Here's roughly what I'm working with:
- FIRE-era spend target: around $70k/year
- Outside-super portfolio target: $900k (ETFs + cash)
- Inside-super target at 50: $500k (compounds to ~$1m by 60)
- Investment property net contribution: ~$25k/year (lowers the portfolio target)
- Effective FIRE number: around $1.6-1.8m liquid, plus super, plus the rentals
It's a moving target. Markets move it. Spend changes move it. Tax changes move it. I update the spreadsheet quarterly.
What the number doesn't tell you
A FIRE number is necessary, not sufficient. Hitting the number doesn't mean you should stop working. It means you have the option to.
Most people I know who've hit their number kept working in some form. Different work, fewer hours, more selectivity. The freedom isn't in retiring. It's in choosing.
The number is the unlock. What you do with the unlock is the actual question.
Run the maths. Update it yearly. Adjust as life adjusts.
Not financial advice, talk to an adviser before acting.