---
name: fire-planner
description: |
  Financial Independence and Retire Early planning guide covering FIRE number calculation, savings rate optimization, the 4% rule and safe withdrawal rates, sequence of returns risk, Roth conversion ladders, healthcare bridge strategies, FIRE variations (lean, fat, barista, coast), asset allocation in early retirement, and lifestyle design for post-retirement fulfillment.
  Use when the user asks about fire planner, or needs help with financial independence and retire early planning guide covering fire number calculation, savings rate optimization, the 4% rule and safe withdrawal rates, sequence of returns risk, roth conversion ladders, healthcare bridge strategies, fire variations (lean, fat, barista, coast), asset allocation in early retirement, and lifestyle design for post-retirement fulfillment.
  Do NOT use when the request requires professional financial advice or falls outside the scope of fire planner.
license: Apache-2.0
metadata:
  author: foundry-skills
  version: "1.0.0"
  tags: "personal-finance investing guide"
  category: "personal-finance"
  subcategory: "investing"
  depends: ""
  disclaimer: "educational-finance"
  difficulty: "advanced"
---

# FIRE Planner

> **Disclaimer:** This skill provides educational information about financial concepts and general guidance for personal financial planning. It does NOT constitute financial advice, investment recommendations, or tax guidance. Individual financial circumstances vary significantly, and the information provided should not be relied upon as a substitute for professional counsel. Always consult a qualified financial advisor, tax professional, or licensed financial planner before making financial decisions.

You are an expert in Financial Independence, Retire Early (FIRE) planning. You help users calculate their FIRE number, optimize their savings rate, understand withdrawal strategies, plan for healthcare and taxes in early retirement, and design a fulfilling post-work life. You ground advice in established research (the Trinity Study, updated safe withdrawal rate studies) while acknowledging uncertainty in long-term projections.

---

## When to Use

**Use this skill when:**
- User asks about fire planner
- User needs guidance on fire planner topics
- User wants a structured approach to fire planner

**Do NOT use when:**
- Request requires professional consultation beyond educational guidance
- User needs emergency assistance

## Process

1. **Step 1:** Assess current financial position: income, savings rate, net worth, expenses
2. **Step 2:** Calculate FIRE number using the 4% rule (annual expenses x 25)
3. **Step 3:** Determine FIRE variant: traditional FIRE, lean FIRE, fat FIRE, barista FIRE
4. **Step 4:** Build savings and investment strategy to reach FIRE number
5. **Step 5:** Create timeline projection with milestones and adjustment triggers

## Questions to Ask First

```
FIRE PLANNING ASSESSMENT
===========================

1. CURRENT AGE: ___
   TARGET RETIREMENT AGE: ___
   YEARS TO FIRE: ___

2. HOUSEHOLD INCOME:
   Gross annual: $___
   Net (after tax) annual: $___
   Expected trajectory: [ ] Growing  [ ] Stable  [ ] Declining

3. CURRENT ANNUAL EXPENSES: $___
   (Track this carefully -- it is the most important number)
   Expected retirement annual expenses: $___
   (May differ from current due to mortgage payoff, relocation, etc.)

4. CURRENT NET WORTH:
   Retirement accounts (401k, IRA, etc.): $___
   Taxable brokerage: $___
   Cash / Emergency fund: $___
   Home equity: $___
   Other assets: $___
   Outstanding debt: $___
   TOTAL NET WORTH: $___

5. CURRENT SAVINGS RATE: ___% of gross income
   Annual amount saved/invested: $___

6. FIRE VARIATION INTEREST:
   [ ] Lean FIRE (minimal expenses, frugal lifestyle)
   [ ] Regular FIRE (comfortable middle-class lifestyle)
   [ ] Fat FIRE (abundant lifestyle, higher spending)
   [ ] Barista FIRE (part-time work covers some expenses)
   [ ] Coast FIRE (enough invested to stop saving, let it grow)

7. HEALTHCARE PLAN:
   [ ] No plan yet
   [ ] ACA marketplace
   [ ] Spouse's employer plan
   [ ] Health sharing ministry
   [ ] COBRA (temporary)
   [ ] Part-time work with benefits
   [ ] Other: ___

8. DEPENDENTS:
   Spouse/partner: [ ] Yes (working? ___)  [ ] No
   Children: ___ (ages: ___)
   Other dependents: ___

9. GEOGRAPHIC PLANS:
   [ ] Stay in current location
   [ ] Relocate domestically (lower cost of living)
   [ ] Geographic arbitrage (move abroad)
   [ ] Nomadic / Flexible

10. BIGGEST CONCERN ABOUT EARLY RETIREMENT:
    ___________________________________
```

---

## The FIRE Number

### Calculating Your Target

```
FIRE NUMBER CALCULATOR
========================

STEP 1: Determine annual retirement expenses
  Current annual spending:                    $__________
  Adjustments for retirement:
    Remove: Commuting costs                  -$__________
    Remove: Work clothes/meals               -$__________
    Remove: Savings contributions             -$__________
    Add: Healthcare (if losing employer plan) +$__________
    Add: Hobbies/Travel                      +$__________
    Add: Insurance adjustments               +$__________
    Other adjustments:                       +/-$_________

  ESTIMATED ANNUAL RETIREMENT EXPENSES:       $__________

STEP 2: Apply the 25x Rule (based on 4% withdrawal rate)
  Annual expenses x 25 = FIRE Number

  Example: $50,000/year x 25 = $1,250,000

STEP 3: Adjust for your risk tolerance
  Conservative (3.25% WR): Expenses x 30.8  = $__________
  Moderate (3.5% WR):      Expenses x 28.6  = $__________
  Standard (4.0% WR):      Expenses x 25.0  = $__________
  Aggressive (4.5% WR):    Expenses x 22.2  = $__________

YOUR FIRE NUMBER: $__________
```

### FIRE Variations

| Variation | Annual Expenses | Approx. FIRE Number (25x) | Description |
|-----------|----------------|--------------------------|-------------|
| Lean FIRE | $25,000-$40,000 | $625K-$1M | Highly frugal, minimal lifestyle |
| Regular FIRE | $40,000-$70,000 | $1M-$1.75M | Comfortable middle-class life |
| Fat FIRE | $70,000-$150,000+ | $1.75M-$3.75M+ | Abundant lifestyle, travel, luxury |
| Barista FIRE | Partial coverage | Lower than full FIRE | Part-time work covers gap |
| Coast FIRE | N/A (stop saving) | Varies by age | Investments grow to full FIRE at traditional retirement |

---

## Savings Rate: The Most Powerful Lever

```
SAVINGS RATE TO FIRE TIMELINE
================================
(Assumes 5% real investment returns, starting from $0)

Savings Rate    Years to FIRE
-----------    --------------
  10%              51 years
  15%              43 years
  20%              37 years
  25%              32 years
  30%              28 years
  35%              25 years
  40%              22 years
  45%              19 years
  50%              17 years
  55%              14.5 years
  60%              12.5 years
  65%              10.5 years
  70%               8.5 years
  75%               7 years
  80%               5.5 years

KEY INSIGHT:
  Savings rate matters more than income or investment returns.
  A $50K earner saving 50% reaches FIRE faster than a
  $200K earner saving 15%.

  Savings Rate = (Income - Expenses) / Income

  Every dollar you don't spend counts TWICE:
  1. It gets invested (grows your portfolio)
  2. It proves you need less (lowers your FIRE number)
```

### Increasing Savings Rate

```
SAVINGS RATE OPTIMIZATION CHECKLIST
======================================
THE BIG THREE (housing, transport, food = ~60-70% of spending):

HOUSING:
  [ ] House hack (rent spare rooms, live in duplex)
  [ ] Relocate to lower cost-of-living area
  [ ] Downsize (smaller home, fewer rooms)
  [ ] Refinance to lower interest rate
  [ ] Evaluate rent vs. buy decision for your market

TRANSPORTATION:
  [ ] Drive a reliable used car (buy 3-5 years old)
  [ ] Reduce to one car if feasible
  [ ] Bike/walk/transit for commute if possible
  [ ] Minimize new car purchases (largest depreciating asset)

FOOD:
  [ ] Meal plan and cook at home (batch cooking)
  [ ] Reduce restaurant/takeout spending
  [ ] Track grocery spending, reduce waste

INCOME SIDE:
  [ ] Negotiate salary (biggest single lever for high earners)
  [ ] Pursue promotions and skill development
  [ ] Side income / Side business
  [ ] Monetize skills (consulting, freelancing)
  [ ] Rental income

EVERYTHING ELSE:
  [ ] Audit subscriptions quarterly
  [ ] Optimize insurance (shop annually)
  [ ] Reduce lifestyle inflation as income grows
  [ ] Apply the 72-hour rule for non-essential purchases
```

---

## Safe Withdrawal Rates (SWR)

### The 4% Rule Explained

The "4% rule" comes from the Trinity Study (1998, updated by William Bengen's original 1994 research). It found that a 4% initial withdrawal rate, adjusted for inflation annually, survived at least 30 years in over 95% of historical scenarios (using a 50-75% stock portfolio).

```
SWR DECISION FRAMEWORK
=========================

FACTOR                           ADJUST SWR
------                           ----------
Retirement length >30 years      Lower (3.0-3.5%)
Retirement length ~30 years      Standard (4.0%)
Retirement length <25 years      Higher OK (4.0-4.5%)

High equity allocation (80%+)    Slightly higher success historically
Low equity allocation (<50%)     Lower SWR needed

Flexible spending (can cut 20%)  Higher SWR viable
Fixed spending (cannot reduce)   Lower SWR for safety

Social Security eventually       SWR can be higher pre-SS
Pension income                   Reduces amount drawn from portfolio

Geographic arbitrage (LCOL)      Need less, effective SWR drops
High cost of living area         May need lower SWR for buffer

RECOMMENDED APPROACH FOR EARLY RETIREES (40-50 year horizon):
  Start with 3.25-3.5% withdrawal rate
  Build in flexibility to reduce spending in down markets
  Have 1-2 years of cash buffer for sequence of returns risk
  Reassess annually based on portfolio performance
```

### Sequence of Returns Risk

```
SEQUENCE OF RETURNS: THE BIGGEST EARLY RETIREMENT RISK
=========================================================

WHAT IT IS:
  The ORDER of investment returns matters enormously in
  early retirement. Bad returns in the FIRST few years of
  retirement can permanently damage a portfolio, even if
  average returns over the full period are normal.

EXAMPLE:
  Portfolio: $1,000,000 | Withdrawal: $40,000/year

  Scenario A (bad years first):
    Year 1: -20%  Portfolio after withdrawal: $760,000
    Year 2: -10%  Portfolio after withdrawal: $644,000
    Year 3: +25%  Portfolio after withdrawal: $765,000
    (Significant hole that is hard to recover from)

  Scenario B (good years first):
    Year 1: +25%  Portfolio after withdrawal: $1,210,000
    Year 2: -10%  Portfolio after withdrawal: $1,049,000
    Year 3: -20%  Portfolio after withdrawal: $799,200
    (Much stronger position despite same average returns)

MITIGATION STRATEGIES:
  1. Cash buffer: Hold 1-2 years of expenses in cash/bonds
     Draw from this during market downturns instead of selling equities
  2. Flexible spending: Reduce withdrawals by 10-20% in bad years
  3. Part-time income: Even small earnings in early years help enormously
  4. Glide path: Start with higher bond allocation, shift to stocks over time
  5. Guardrails: Set upper/lower withdrawal limits (Guyton-Klinger rules)
```

---

## Accessing Retirement Funds Before Age 59.5

```
EARLY ACCESS STRATEGIES
==========================
Traditional retirement accounts (401k, IRA) impose a 10% penalty
for withdrawals before age 59.5. FIRE requires strategies to
access these funds.

STRATEGY 1: ROTH CONVERSION LADDER
  How it works:
    1. Convert Traditional IRA/401k funds to Roth IRA each year
    2. Pay ordinary income tax on the converted amount
    3. Wait 5 years (seasoning period)
    4. Withdraw the CONVERTED AMOUNT tax-free and penalty-free
    5. Pipeline: Convert each year, access money 5 years later

  Example timeline (retire at 40):
    Age 40: Convert $50K from Trad IRA to Roth (pay tax)
    Age 41: Convert $50K (pay tax)
    Age 42: Convert $50K (pay tax)
    ...
    Age 45: Withdraw year-40 conversion ($50K, no penalty)
    Age 46: Withdraw year-41 conversion, and so on

  KEY: You need 5 years of living expenses from OTHER sources
  (taxable brokerage, savings, Roth contributions) to bridge the gap.

STRATEGY 2: ROTH IRA CONTRIBUTIONS (always accessible)
  Roth IRA contributions (not earnings) can be withdrawn at
  any age, tax-free and penalty-free. No waiting period.
  This is your first bridge source.

STRATEGY 3: RULE OF 55
  If you leave your employer in or after the year you turn 55,
  you can withdraw from THAT employer's 401k without penalty.
  Does NOT apply to IRAs. Does NOT apply if you left before 55.

STRATEGY 4: 72(t) / SEPP (Substantially Equal Periodic Payments)
  Take "substantially equal" distributions from an IRA based on
  life expectancy calculations. Must continue for 5 years or
  until 59.5 (whichever is later). Inflexible. Use as last resort.

STRATEGY 5: TAXABLE BROKERAGE ACCOUNT
  No age restrictions. No penalties.
  Pay capital gains tax on gains (long-term rate if held 1+ year).
  This is the most flexible early retirement funding source.

OPTIMAL APPROACH: Layer multiple strategies
  Years 1-5: Roth contributions + taxable brokerage + Roth conversions
  Years 5+: Roth conversion ladder kicks in
  Age 59.5+: Full access to all retirement accounts
```

---

## Healthcare in Early Retirement (US)

```
HEALTHCARE BRIDGE STRATEGIES
===============================

ACA MARKETPLACE (Affordable Care Act):
  Primary option for most early retirees.
  Subsidies based on Modified Adjusted Gross Income (MAGI).
  FIRE advantage: In early retirement, MAGI can be very low
  (especially with Roth conversions managed carefully).
  At low MAGI, subsidies can be substantial.

  KEY: Manage MAGI carefully to stay in subsidy range.
  ACA subsidy cliff was eliminated through 2025 legislation
  (extensions may change -- check current law).

ESTIMATED COSTS (2024 baseline, varies by state/age/plan):
  Individual (age 40-50, silver plan, no subsidy): $400-700/month
  Family of 4 (same): $1,200-2,200/month
  With ACA subsidies: Can be dramatically less

OTHER OPTIONS:
  Spouse's employer plan: If spouse continues working
  Part-time work with benefits: Some employers offer benefits at 20-30 hrs
  Health sharing ministries: Not insurance; limited protections; faith-based
  COBRA: 18 months continuation, but very expensive (full premium + 2%)
  Medical tourism: For specific procedures; not a full healthcare plan
  Move abroad: Many countries have affordable healthcare systems

BUDGET RULE: Budget $500-1,500/month for healthcare per person
in early retirement until Medicare eligibility (age 65).
This is often the most underestimated FIRE expense.
```

---

## Asset Allocation for Early Retirees

```
EARLY RETIREMENT PORTFOLIO STRUCTURE
=======================================

BUCKET STRATEGY:

BUCKET 1: CASH (1-2 years of expenses)
  High-yield savings account or money market
  Purpose: Covers expenses during market downturns
  Prevents selling equities at a loss
  Refill from Bucket 2 when markets are up

BUCKET 2: BONDS / STABLE (3-5 years of expenses)
  Bond index funds, TIPS, short-term bonds, CDs
  Purpose: Medium-term stability and income
  Refills Bucket 1 annually

BUCKET 3: EQUITIES (remaining portfolio)
  Total market index funds, international funds
  Purpose: Long-term growth to outpace inflation
  Replenishes Buckets 1 and 2 over time

EXAMPLE ($1,500,000 portfolio, $50,000 annual expenses):
  Bucket 1: $75,000-100,000 cash (1.5-2 years)
  Bucket 2: $150,000-250,000 bonds (3-5 years)
  Bucket 3: $1,150,000-1,275,000 equities (remainder)

  Overall: ~75-85% equities / 10-17% bonds / 5-7% cash
  Adjust based on risk tolerance and market conditions.
```

---

## FIRE Tracking Dashboard

```
ANNUAL FIRE PROGRESS REVIEW
==============================
Date: ___________

CURRENT NUMBERS:
  Total invested assets:              $__________
  FIRE Number target:                 $__________
  Progress: ___% of FIRE Number

  Annual expenses (last 12 months):   $__________
  Annual savings (last 12 months):    $__________
  Savings rate:                       ___%

  Current portfolio return (YTD):     ___%
  Current asset allocation:
    Equities: ___% | Bonds: ___% | Cash: ___%

PROJECTIONS:
  Years to FIRE at current pace:      ___
  FIRE date estimate:                 ___________

MILESTONES:
  [ ] Coast FIRE reached ($_____)
  [ ] 25% of FIRE Number
  [ ] 50% of FIRE Number (halfway -- but compound growth accelerates)
  [ ] 75% of FIRE Number
  [ ] FIRE Number reached

ADJUSTMENTS:
  Changes to expenses this year:      ___
  Changes to income this year:        ___
  Rebalancing needed:                 [ ] Yes  [ ] No
  Tax optimization opportunities:     ___

QUALITATIVE CHECK:
  Am I enjoying the journey, not just the destination?
  Am I building the life I want to retire TO (not just FROM)?
  Am I maintaining relationships, health, and purpose?
```

---

## Common FIRE Mistakes

| Mistake | Why It Is a Problem | Better Approach |
|---------|-------------------|----------------|
| Underestimating expenses | Retirement spending is often higher than planned | Track carefully for 1+ year; add 10-20% buffer |
| Ignoring healthcare costs | Can be $10K-25K+ annually pre-Medicare | Budget explicitly; research ACA subsidies |
| No flexibility in withdrawal strategy | Fixed 4% fails more often over 50-year horizons | Use guardrails, flexible spending, variable withdrawal |
| Over-optimizing frugality | Burnout, relationship stress, no enjoyment | FIRE is about freedom, not deprivation |
| Not having purpose after FIRE | Depression, loss of identity, boredom | Plan what you retire TO; build structure and community |
| Retiring without testing | Shock of actual retirement lifestyle | Take a mini-retirement or sabbatical first |
| Ignoring inflation | $50K today is not $50K in 20 years | Use real (inflation-adjusted) return projections |
| Single-income household risk | If working spouse stops, plan collapses | Both partners should understand and agree on the plan |

---

## Output Format

When guiding a user on FIRE planning, provide:

1. **Current position assessment** -- Where they stand relative to their goal
2. **FIRE Number calculation** -- Specific to their expenses and chosen SWR
3. **Timeline projection** -- When they can reach FI at their current savings rate
4. **Optimization opportunities** -- Specific ways to increase savings rate or income
5. **Withdrawal strategy** -- How to access funds considering account types and age
6. **Healthcare plan** -- Bridge strategy from retirement to Medicare
7. **Risk assessment** -- Sequence of returns, longevity, inflation, and mitigation strategies
8. **Life design prompt** -- Encourage thinking about what they will DO, not just the financial target
9. **Disclaimer** -- Reiterate that projections involve uncertainty and professional guidance is essential

## Example

**Input:** "I am 30, make $100,000/year, spend about $50,000/year, and have $150,000 saved. Can I retire early? When?"

**Output:**

## FIRE Analysis

**Age:** 30 | **Income:** $100,000 | **Expenses:** $50,000/yr | **Saved:** $150,000
**Savings rate:** 50% ($50,000/year invested)

### Your FIRE Number
Annual expenses x 25 = $50,000 x 25 = **$1,250,000**
This is the portfolio size that can sustain $50,000/year withdrawals (4% rule).

### Timeline Projection (7% average annual return)
| Age | Year | Portfolio Value | Status |
|-----|------|----------------|--------|
| 30 | 0 | $150,000 | Starting point |
| 35 | 5 | $511,000 | 41% to FIRE |
| 40 | 10 | $1,015,000 | 81% to FIRE |
| **42** | **12** | **$1,260,000** | **FIRE reached** |
| 45 | 15 | $1,593,000 | Fat FIRE buffer |

**Projected FIRE age: 42** (12 years from now)

### FIRE Variants for Your Situation
| Variant | Annual Spending | FIRE Number | Years to Reach |
|---------|----------------|-------------|----------------|
| Lean FIRE | $35,000 | $875,000 | ~9 years (age 39) |
| Traditional FIRE | $50,000 | $1,250,000 | ~12 years (age 42) |
| Fat FIRE | $75,000 | $1,875,000 | ~16 years (age 46) |
| Barista FIRE | $50K - part-time income | $625,000-$875K | ~7-9 years |

### Key Levers to Accelerate
| Action | Impact on Timeline |
|--------|-------------------|
| Increase savings rate to 60% | FIRE at 40 instead of 42 |
| Reduce expenses by $5K/year | FIRE number drops to $1,125,000 |
| Side income of $10K/year | FIRE at 40 instead of 42 |
| All three combined | FIRE at 37-38 |

### Investment Strategy
- Tax-advantaged first: max 401k ($23,000), max Roth IRA ($7,000)
- Remainder ($20,000/year) in taxable brokerage
- Asset allocation: 90/10 stocks/bonds at age 30, shift to 70/30 as you approach FIRE date
- Low-cost index funds: total market + international (expense ratio under 0.10%)

### Risks to Plan For
1. Sequence of returns risk (market crash right at retirement -- keep 2 years cash buffer)
2. Healthcare costs (biggest expense before Medicare at 65) -- budget $500-$800/month
3. Lifestyle inflation (the biggest FIRE killer -- track expenses religiously)

## Edge Cases

- **Incomplete information:** Ask clarifying questions before proceeding. Do not assume details the user has not provided.
- **Out of scope requests:** Redirect to appropriate professional resources when the request exceeds educational guidance.
- **Conflicting requirements:** Present trade-offs clearly and let the user decide priorities.
