Australian FIRE Number: How to Calculate Yours

Your FIRE number is the amount of money you need invested so that you never have to work again. Get there, and your investment returns cover your living expenses indefinitely. This guide walks through how to calculate yours with real Australian numbers, including the superannuation bridge that most global FIRE content ignores entirely.

Key takeaways

• Your FIRE number is based on your annual expenses, not your income. Lower expenses = lower target.
• The standard formula: annual expenses / safe withdrawal rate. At a 4% withdrawal rate, you need 25x your annual expenses.
• In Australia, your FIRE number has two parts: a pre-60 bridge (investments outside super) and your superannuation balance for post-60.
• Franking credits, the 50% CGT discount, and super's concessional tax rates all work in your favour -- but you need to plan around them.
• Track your FIRE progress as a percentage: current net worth / FIRE number.

What is a FIRE number?

FIRE stands for Financial Independence, Retire Early. Your FIRE number is the portfolio size that generates enough passive income to cover your living expenses forever. Once you hit it, work becomes optional.

That depends on three things: your annual expenses, your safe withdrawal rate, and how long you need the money to last. In Australia, superannuation adds a fourth variable that changes the maths significantly.

Step 1: Calculate your annual expenses

This is the foundation. Not your income -- your actual spending. Track your spending for at least three months and annualise it. Include everything:

The FIRE community uses rough tiers:

Most Australians targeting FIRE land in the $50k -- $70k range once the mortgage is paid off.

Step 2: Choose your safe withdrawal rate

The safe withdrawal rate (SWR) determines how much you pull from your portfolio each year. The most widely cited research is the Trinity Study, which found that a 4% annual withdrawal rate survived almost every 30-year period in US market history.

FIRE number at different expense levels

Step 3: Factor in superannuation

This is where Australian FIRE planning diverges from the American playbook. You cannot access your superannuation until preservation age (60 for most people). That means your FIRE number has two components:

1. Pre-60 bridge: investments outside super that fund your expenses from early retirement until you can access super.
2. Post-60 super balance: your superannuation, which covers expenses from age 60 onwards.

Worked example: retiring at 45

Sarah is 40. She wants to retire at 45. Her annual expenses are $60,000.

Pre-60 bridge (age 45 to 60 = 15 years):

She needs 15 years of living expenses funded from investments outside super. Using the simple approach: $60,000 x 15 = $900,000 outside super.

In practice, her bridge portfolio will still earn returns during those 15 years, so the actual required amount is lower. A more precise calculation using a 4% real return brings the figure closer to $700,000.

Post-60 (superannuation covers the rest):

From age 60 onwards, she draws from super. Using the 4% rule: $60,000 / 0.04 = $1,500,000 in super at age 60.

If her current super balance is $200,000 at age 40, and employer contributions plus returns compound at 7% nominal for 20 years, that $200,000 grows to roughly $774,000 -- plus ongoing contributions. She is likely on track.

Sarah's total FIRE number: $900,000 outside super + enough super to reach ~$1,500,000 by age 60.

The key insight: the earlier you retire, the larger your bridge needs to be. Retire at 55 instead of 45, and that bridge drops from $900,000 to $300,000.

Step 4: Account for Australian tax

Outside superannuation

Investment income earned outside super is taxed at your marginal rate. But in early retirement, your taxable income is likely much lower, which means a lower marginal rate.

• 50% CGT discount. Hold investments for more than 12 months and only half the capital gain is taxable.
• Franking credits. Australian company dividends often come with franking credits. If your marginal rate is below 30%, the excess credits are refunded to you.
• Tax-free threshold. The first $18,200 of taxable income is tax-free.

A retiree drawing $60,000 from a mix of fully franked dividends and capital gains (held 12+ months) may pay an effective tax rate under 10%.

Inside superannuation

• Accumulation phase (pre-60): investment earnings taxed at 15%. Capital gains on assets held 12+ months taxed at 10%.
• Pension phase (post-60): investment earnings taxed at 0%. Withdrawals taxed at 0%.

Every dollar inside super in pension phase generates roughly 15-30% more after-tax income than the same dollar outside super.

Step 5: Track your progress

Your FIRE progress is a single number:

FIRE progress = current net worth / FIRE number

If your net worth is $600,000 and your FIRE number is $1,500,000: $600,000 / $1,500,000 = 40% FIRE.

Track this monthly. The maths is non-linear -- compounding means the second half goes faster than the first.

Lean vs regular vs fat FIRE comparison

Common mistakes

Not including superannuation in the plan. Global FIRE content ignores super entirely. Australian FIRE planning must account for it.

Not adjusting for inflation. A $60,000 lifestyle today costs roughly $78,000 in 10 years at 2.5% inflation. Your FIRE number needs to be in future dollars.

Underestimating expenses. People forget about car replacements, home maintenance, dental work, appliance failures. Add a 10% buffer.

Ignoring healthcare costs. Once you leave employment, you lose any employer health benefits. Private health insurance for a couple over 40 runs $300-$500/month.

Assuming constant returns. The 4% rule works on average, but sequence-of-returns risk is real. Having 1-2 years of expenses in cash or bonds as a buffer mitigates this.