The formula
How to calculate portfolio needed
Working backwards from the income you want gives the portfolio you need. This version subtracts fees from the withdrawal rate, because charges are paid out of exactly the returns that fund your spending.
A 0.4% total cost against a 4% withdrawal rate is a tenth of your income, not a rounding error. Expressing it as a reduced net withdrawal rate is the honest way to see what it costs in capital.
The inputs, one by one:
- Monthly income wanted
- Withdrawal rate (%)
- Annual platform and fund fees (%)
Everything recalculates as you type, and the numbers in the address bar update with it, so a link to this page carries your figures with it.
The order the fields are filled in makes no difference to the result — the calculator recomputes the whole formula from whatever is currently in every field, not step by step. That means it is safe to adjust one number, watch the result change, and adjust it back, without worrying about resetting anything first.
Why portfolio needed matters
FIRE stands for Financial Independence, Retire Early — reaching a portfolio large enough that investment income covers your living costs, so paid work becomes a choice rather than a necessity. It is not a specific account or product, just the point at which the figures below cross over.
A calculation like this usually gets used at a decision point rather than out of curiosity — comparing two real options, checking a number a lender or adviser has quoted, or working out whether a plan that sounded fine in conversation still holds up once it is written down with actual figures. The maths itself is rarely complicated; what is hard is remembering which figures to use and in what order, which is exactly what a dedicated calculator is for.
Beyond a one-off check, the same calculation is worth revisiting whenever the underlying numbers change — a new interest rate, a change in income, a different term. Because the figures live in the page's own web address, coming back to update just one field and compare the new result against the old one takes seconds rather than starting again from a blank page.
The reason a page like this exists at all, rather than leaving the calculation to a spreadsheet or a textbook appendix, is that the formula behind portfolio needed is fiddly enough to get wrong by hand but not complicated enough to need specialist software. That middle ground — real enough maths to matter, simple enough to check instantly — is exactly what a dedicated calculator is for, and it is why the same figure recalculated here should match a careful manual calculation almost exactly.
In practice, most people arrive at a page like this one having already tried a version of the calculation by hand or in a spreadsheet, and use the calculator here to confirm it rather than replace it. That is a reasonable way to use it — the two should agree to the last decimal place if the same inputs and the same formula are used, and if they do not, the formula shown above is the one to check your own working against first.
Worked example
Work through the defaults on this page:
- Monthly income wanted: 3,000
- Withdrawal rate: 4 %
- Annual platform and fund fees: 0.4 %
That gives:
- Portfolio needed: 1,000,000
- Portfolio needed if fees were zero: 900,000
- Extra capital the fees require: 100,000
These figures are only the calculator's own starting values, included so the working is visible rather than hidden inside the tool above. Replace them with your own numbers and the same arithmetic applies — nothing about the method changes, only the inputs feeding it.
Reading the result
The fee line is the point of this page. Cutting total charges from 1.2% to 0.25% on a £3,000-a-month target lowers the portfolio required by well over £200,000 — a larger effect than most people achieve by saving harder.
Where this goes wrong. Counting only the platform fee. The total is platform plus fund OCF plus any advice charge plus trading costs; a "0.25% platform" holding 0.9% funds is costing 1.15%.
A useful check on any unfamiliar result is to compare it against a rough mental estimate first — round the inputs to convenient numbers and see whether the calculator's answer lands in roughly the same territory. A wildly different figure usually means one of the fields was entered in the wrong unit, most often a percentage typed as a whole number where a decimal was expected, or the reverse.
Around £900,000 at a clean 4% withdrawal rate, or roughly £1 million once typical fees are taken into account. At a more cautious 3.5% net rate it is closer to £1.16 million.
Over an accumulation phase they compound against you, and in retirement they come directly out of the sustainable withdrawal. One percentage point of annual cost is roughly a quarter of a 4% withdrawal rate.
The answer it gives you is portfolio needed. With 3,000 monthly income wanted, 4 % withdrawal rate and 0.4 % annual platform and fund fees, that comes to 1,000,000. Change any field and the figure moves with it.
Whenever one of the underlying figures changes — a new interest rate, a different balance, an updated term — since the result only reflects what is currently in the fields. There is no need to keep a separate record of past results; the web address for a filled-in version already carries the figures used to produce it.
Not unless a tax rate or a fee is explicitly one of the inputs above. Where it is not, the figure shown is a gross calculation, and any tax due depends on your personal circumstances and current tax rules, which are worth checking separately.
The arithmetic itself is exact — the calculator applies the formula shown above precisely, with no rounding until the final figure is displayed. The uncertainty, where it exists, is entirely in the inputs: an estimated rate or an approximate balance carries that same approximation through to the result.