The five-second target
Multiply your annual spending by 25. That is the whole rule. The result is the pot a 4% withdrawal rate supports, and nothing else in personal finance buys this much orientation with one multiplication. Spend £30,000 a year and your number is £750,000. Spend £45,000 and it is £1,125,000.
Nothing new is hiding underneath, either. The rule is the withdrawal rate rearranged: if 4% of a pot must equal your spending, then
and the multiplication is just the division wearing friendlier clothes. Prefer a more cautious rate and the multiple moves with it, so 3.5% becomes 28.6× and 3% becomes 33.3×.
It matters where that 4% came from, because the multiple inherits every assumption behind it. The figure traces back to the Trinity study, which tested withdrawal rates against 30-year US retirements and nothing longer. Retire at 45 and you are asking a 30-year rule to stretch across 50 years; most research on horizons like that points closer to 28–33×, and the withdrawal rate explorer maps that territory in detail. So read the multiple by horizon. For a conventional retirement it is a reasonable target. For a long early one, treat it as a floor rather than a finish line. There is a fuller piece on when 25 is the wrong number if you want that reasoning laid out.
Spending, seen as capital
Most people have no idea what number they are aiming at, which leaves every financial decision floating free. Converting the goal into a single figure takes about five seconds and changes how ordinary costs look afterwards. A £200-a-month subscription habit is not £2,400 a year; it is £60,000 of pot you must build to sustain it forever. That reframing is the part that actually changes behaviour, because once recurring costs read as multiples rather than monthly figures, decisions about them feel different. Pay rises pick up a second meaning too: a raise that is entirely spent moves the target up, while the same raise saved moves the date closer. And progress finally becomes measurable, since a pot divided by 25× spending gives a percentage that means something, unlike a raw balance.
Be deliberate about what goes into "annual spending". A mortgage payment belongs there only for the years it exists; if the loan ends before retirement does, size the number on post-mortgage spending, which is often dramatically lower. The house itself stays out entirely. The number refers to invested assets you can actually draw from, and the property you live in produces no income and cannot be spent. It belongs in the net worth tracker, not in the pot.
What cancelling £250 bought Sofia
Sofia spends £34,000 a year. At 4% her number is £850,000. At 3.5% it is £971,000 (£121,000 more for the same lifestyle), and at 3% it climbs to £1,133,000.
The reverse direction is often the more actionable one. She identifies £250 a month of spending she does not value, £3,000 a year, and her number falls from £850,000 to £775,000. One recurring decision, £75,000 less to accumulate. At her savings rate that is roughly two and a half years of work. The savings rate calculator shows the same trade as a timeline rather than a target, and running the relationship backwards (pot in, income out) is what the pot to income calculator does. That is usually the more natural direction when you are staring at an existing pension statement.
The lifetime the multiple flattens
One number stands in for decades that will not be uniform. Spending typically falls in later retirement and spikes for care, and a single multiple smooths over both. Guaranteed income punches a hole in it from the other side: a state pension arriving at 67 means the pot only has to bridge the years before it, so the true target can sit much lower than 25× suggests. Planning to keep some part-time work going does the same thing, since earnings cover part of your spending and a smaller pot carries the rest; Barista FIRE models that directly.
Tax is absent too. If your withdrawals will be taxed, the pot has to support your gross requirement, not your net spending. And underneath everything sits a quiet portfolio assumption: the multiple only holds if the money is invested in something that returns something. Cash at 25× will not last 30 years once inflation is applied, and the inflation calculator shows why.