Here’s the magic formula:
The basic mathematics of Fire are that you need a net worth of 25 times your annual spending, invested sensibly in the stock market in low-cost tracker funds or in buy-to-let property.This is all based on an assumed safe withdrawal rate from your fund of 4 per cent each year so that you don’t run out of money. For someone happy to live on £25,000 a year in mortgage-free retirement, that means accruing a pot of £625,000. If you want to spend £50,000 a year, you need £1,250,000.
“If you can save 50 per cent of your take-home pay, it will take 19 years to go from broke to never needing to work again. If you can save 75 per cent, it will take seven to eight years.”