How Other Retirement Income Can Change a FIRE Number

The Adjusted FIRE Number Formula

Standard formula (no outside income): FIRE Number = Annual Expenses x 25

With expected outside income: Adjusted FIRE Number = (Annual Expenses - Expected Annual Income) x 25

The FIRE Number Calculator includes this as an optional "Expected other income" field — enter an annual, after-tax amount in today's dollars, not a monthly figure — so you can enter it directly instead of subtracting by hand. Like the formula above, it still assumes that income is available for your entire modeled retirement and holds its value in today's dollars throughout (see the bridge-year note below).

Illustrative example: - Annual expenses: $70,000 - Social Security expected: $18,000/year - Pension: $12,000/year - Expected income total: $30,000 - Net expenses needing portfolio coverage: $40,000 - Adjusted FIRE Number: $40,000 x 25 = $1,000,000

Without accounting for SS and pension: $70,000 x 25 = $1,750,000. The difference is $750,000 less needed in this illustrative scenario. How much working time that actually saves — if any — depends on your current portfolio, ongoing savings and contributions, investment returns, income, spending, and when the outside income actually starts; it is not a fixed number of years.

Important: this simplified formula assumes the guaranteed income is already being received for the entire retirement period. Social Security cannot be claimed before age 62, and many pensions have their own start age — so if you plan to retire earlier than that, you still need a separate portfolio (or bridge account) large enough to cover 100% of expenses until that income actually begins. See "Social Security for Early Retirees" and the FAQ below for how to model the gap years.

How Different Income Assumptions Change the FIRE Number

At $60,000/year expenses (standard FIRE number: $1,500,000). The income amounts below are illustrative examples only, not typical or average figures for any population:

United States Example: Social Security for Early Retirees

Social Security rules and benefit ages are specific to the United States and can change. Verify current details with the Social Security Administration before relying on an estimate.

Reduced benefits from fewer working years. Social Security retirement benefits are calculated using your 35 highest-earning years of indexed earnings. If you have fewer than 35 years of earnings, the missing years are counted as zero in that calculation — so retiring well before a full 35-year career can reduce your benefit, depending on your actual earnings record. See the Social Security Administration's guidance on stopping work before retirement for the official methodology.

Delayed claiming increases benefits. Each year you delay claiming beyond full retirement age (66-67, depending on birth year) increases your monthly benefit, up to age 70. For workers born in 1960 or later, official SSA tables show a benefit of about 70% of the full-retirement-age amount at age 62, rising to about 124% at age 70 — roughly 1.8 times as much, not double, and these exact percentages apply only to that birth cohort (SSA age-62 reduction, SSA delayed-retirement credits). Use your own personalized SSA estimate for your birth year rather than a rule of thumb.

Strategy: Many early retirees prefer to build their portfolio to fund 100% of expenses independently, then treat eventual SS as a bonus that shortens the portfolio's later-years drawdown — rather than baking it into the number from day one, as the worked example above does. If you do include guaranteed income in your Adjusted FIRE Number, make sure your bridge-year plan (above) actually covers the years before that income starts.

Pension Lump-Sum Equivalent Value

To compare a pension to portfolio assets, calculate the equivalent lump sum:

Pension Equivalent = Annual Pension / Withdrawal Rate

At a constant 4% withdrawal assumption, $30,000 of annual pension income offsets the same first-year spending amount as $750,000 of portfolio value. The risks and inflation features are not equivalent.

Rental Income and FIRE

Rental income reduces your FIRE number dollar-for-dollar times 25. Use net rental income (after mortgage, taxes, insurance, maintenance, and vacancy), not gross rent. A property generating $2,500/month gross might produce $1,200-1,500/month net — always use the net figure.

Frequently Asked Questions

Should I count pension income before or after taxes? After taxes. Calculate your expected net pension income after federal and state income taxes, then use that figure to reduce annual expenses. Pre-tax income overstates the actual spending reduction.

What if my pension has a cost of living adjustment? A pension with a COLA is more valuable than a fixed pension — it maintains real purchasing power over time. This is a significant advantage that effectively hedges inflation for that portion of retirement income.

Can I retire early with a pension that starts at 60? Yes — but you need to fund the gap years from your portfolio. The pre-pension years need full portfolio coverage; from the pension's start age on, the portfolio covers only expenses minus pension. The FIRE Number Calculator estimates a target using its own same-year offset, which does not model the delayed start. For one continuous month-by-month projection that models the bridge years and the pension's later start together, use the Retirement Withdrawal Calculator's optional recurring-income start age field.