The 25x rule (or 4%)
Take your annual spending and multiply it by 25. That is a rough estimate of the capital you need. Spend $40,000 a year? Your indicative FIRE number is $1,000,000. It is the same logic as a 4% withdrawal rate: if you can withdraw 4% of capital each year while preserving it over time, 25 times annual spending is the starting capital.
This is a rule-of-thumb estimate. It does not account for the order of returns, the inflation you actually experienced, or how markets moved in your first withdrawal years — and historically those three factors moved the outcome a lot.
Why 4% alone is not enough
A real withdrawal plan depends on when you start withdrawing, not just how much. Two people with the same capital and withdrawal rate had very different outcomes depending on the decade they started. That is why the 25x number is a starting point, not a final answer.
From 4% to testing your plan
BacktestFolio Planner stress-tests withdrawal-plan sustainability with Monte Carlo simulations based on the market assumptions you set — not the 4% formula alone. It is the tool for exploring future scenarios, not for replaying history.
To also compare the plan against real historical data (Trinity Study, SWR on your portfolio’s history), start from Backtest: after the run, open the withdrawal-rate analysis. On the Free plan history is capped at 10 years; with Plus or Pro you use the full available history, when it exists.