The maths behind FIRE for Australians
FIRE distils to one ratio: your savings rate. The higher the proportion of income you save and invest, the fewer years of work it takes to build a portfolio that funds your spending forever — regardless of your salary.
The 25× rule
Your FIRE number is roughly 25× your annual spending — the inverse of a 4% safe withdrawal rate. Spend $50,000 a year? You need $1.25m invested. Spend $80,000? $2m. Notice how the lever isn't income — it's spending. Cut $10k of annual spending and you cut your FIRE number by $250k.
Savings rate sets the timeline
Assuming 7% real returns from a zero start: 25% savings rate = 32 years to FIRE. 50% savings rate = 17 years. 65% savings rate = 11 years. 75% = 7 years. The relationship is non-linear because higher savings means lower spending — which shrinks the number you're aiming for at the same time it grows your pot faster.
The Australian super wrinkle
Preservation age is 60. If you want to retire at 45, you need a "bridge" portfolio outside super big enough to fund 15 years, then super takes over. Many Australian FIRE plans split: a brokerage account of ETFs to bridge to 60, plus salary-sacrificed super to maximise tax efficiency post-60.
Should you trust the 4% rule in Australia?
The 4% rule is from US 30-year retirement data. Australian-specific work suggests 3.5–4% is sensible for a 30-year horizon. If you're retiring at 40 with a 50-year horizon, model 3.25–3.5% to be safe — or stay flexible and cut spending in down years (variable withdrawal strategies).