Your retirement number is the size your invested portfolio has to reach before it can cover your yearly spending on its own, so that paid work becomes a choice rather than a necessity. It is worked out from spending, not from income: take the annual spending the portfolio must fund and divide it by the withdrawal rate you are willing to assume. Dividing by a rate is the same as multiplying by a factor, so a 4% rate implies 25 times annual spending, and a more cautious 3% implies about 33 times.
Worked example
An illustrative case. You expect to spend $40,000 a year. At a 4% withdrawal rate the arithmetic is 40,000 ÷ 0.04 = $1,000,000, which is the same as 40,000 × 25. Assume a more cautious 3.5% instead and it becomes 40,000 ÷ 0.035 = $1,142,857. If $10,000 of that spending is already covered by income from elsewhere, only $30,000 has to come from the portfolio, so at 4% the target falls to 30,000 ÷ 0.04 = $750,000. The figures are round numbers chosen to show the method.
Why it matters
The number matters because it turns "enough to retire" into something you can measure progress against, and because it is driven by spending rather than income: every recurring cost you remove lowers the target and frees money to invest, so it works on both sides at once. The limits are just as plain. A withdrawal rate is a widely used rule of thumb drawn from how markets have behaved in the past, not a promise about the future, so a single figure carries a wide margin of uncertainty. Spending is not flat across a retirement either, so keep the number in today's money and recalculate it whenever your costs change materially.
Frequently asked questions
The arithmetic is the same, annual spending divided by a withdrawal rate. The framing differs. A FIRE number usually describes leaving work well before a conventional retirement age, which stretches the money over a longer horizon and often leads people to assume a lower rate. The retirement number is the general version of the same target, at any age.
Coast FIRE is the smaller amount you need invested today for growth alone to reach your retirement number by your target date, with no further saving. Barista FIRE means part-time or partial income covers some of your spending, so the portfolio only has to fund the rest and the number falls accordingly. Both are measured against the retirement number rather than replacing it.
Start from what you actually spend today, in today's money, and adjust only for changes you can name: a loan that will be paid off, children who will have left home, travel you intend to add. Guessing at a distant future figure adds a large error to a calculation that is already an estimate, so recalculate as your real spending changes.