FIRE Calculator

A sophisticated Financial Independence, Retire Early (FIRE) calculator with realistic market volatility simulation using Monte Carlo methods.

Features

Core Functionality

• Monte Carlo Simulation: Runs 100 independent simulations to show the range of possible outcomes
• Realistic Market Volatility: Uses log-normal distribution with 30% annual volatility to simulate market ups and downs
• Inflation Modeling: Simulates inflation with randomized yearly rates (volatility: 1.5%)
• Mathematically Constrained: Ensures geometric mean return and inflation match your targets over 30 years
• Nominal vs Real Toggle: Switch between future dollars and today's purchasing power

Interactive Visualizations

• Percentile Chart: Displays 10th, 25th, 50th, 75th, and 90th percentile outcomes over 30 years
• Summary Cards: Shows median, best case (90p), and worst case (10p) final balances
• Advanced Diagnostics: Expandable section showing year-by-year breakdowns for debugging

User Experience

• Configurable parameters:
  • Starting assets
  • Long-term annual return (0-15%)
  • Initial annual contribution
  • Contribution growth rate (0-10%)
  • Long-term inflation rate (0-6%)
• URL Parameter Sync: All inputs are reflected in URL parameters for easy sharing
• Mouse wheel support for sliders
• Responsive design with dark mode
• Real-time chart updates when toggling nominal/real views

How It Works

The Simulation Model

The calculator uses a log-normal distribution to generate realistic returns:

1. Generate Random Returns: For each year, generate a random return using Box-Muller transform with:

   • Mean: ln(1 + targetReturn)
   • Standard deviation: 30%

2. Constrain to Target: Adjust returns so that:

   ∏(1 + r_i) for i=1 to 30 = (1 + targetReturn)^30
   

3. Apply Returns: For each year:

   • Add annual contribution
   • Apply market return
   • Track cumulative inflation
   • Calculate real (inflation-adjusted) balance

This approach ensures:

• Returns can be negative (market crashes)
• Returns stay above -100% (can't lose more than everything)
• Geometric mean matches your target over the full period
• Realistic volatility patterns

Why This Matters

Different return sequences with the same average produce different outcomes due to:

• Sequence of returns risk: Early losses hurt more than early gains help
• Compounding effects: Volatility drag reduces geometric mean compared to arithmetic mean
• Contribution timing: Regular contributions benefit from dollar-cost averaging

Getting Started

Prerequisites

• Node.js 20+ (uses nvm: nvm use 24)

Installation

# Install dependencies
npm install

# Run development server
npm run dev

Open http://localhost:3000 to use the calculator.

Build for Production

npm run build
npm start

Tech Stack

• Framework: Next.js 16.1.2 with App Router
• Language: TypeScript
• Styling: Tailwind CSS v4
• UI Components: shadcn/ui
• Charts: Recharts
• Fonts: Geist Sans & Geist Mono

Project Structure

src/
├── app/
│   ├── page.tsx           # Main entry point
│   ├── layout.tsx         # Root layout with metadata
│   └── globals.css        # Global styles and theme
├── components/
│   ├── FIRECalculator.tsx # Main calculator component
│   ├── FIREChart.tsx      # Percentile chart visualization
│   └── ui/                # shadcn/ui components
└── lib/
    ├── simulation.ts      # Monte Carlo simulation logic
    └── utils.ts           # Utility functions

Key Files

src/lib/simulation.ts

Contains the core simulation logic:

• generateRandomizedReturns(): Generates constrained random returns
• generateRandomizedInflation(): Generates constrained inflation rates
• runSimulation(): Executes a single 30-year simulation
• runMonteCarloSimulation(): Runs 100 simulations
• calculatePercentiles(): Extracts percentile values for charting

src/components/FIRECalculator.tsx

Main UI component with:

• Parameter inputs (sliders and text fields)
• Simulation trigger
• Results display with toggle
• Advanced diagnostics

src/components/FIREChart.tsx

Recharts-based visualization showing:

• 5 percentile bands (10p, 25p, 50p, 75p, 90p)
• Interactive tooltips
• Responsive design

Usage Tips

1. Start with defaults: The calculator comes with reasonable defaults (7% return, 2.5% inflation, 5% contribution growth)

2. Adjust for your situation:

   • Conservative: 5-6% return, higher inflation
   • Aggressive: 9-10% return, lower inflation

3. Use Real values: Toggle to "Real" to see inflation-adjusted purchasing power

4. Check diagnostics: Expand "Advanced Diagnostics" to verify:

   • Geometric means match your inputs
   • Returns show realistic volatility
   • Inflation behaves as expected

5. Understand the spread: The gap between 10p and 90p shows the impact of timing and sequence risk

6. Share your scenario: Copy the URL to share your exact parameters with others. Example:

   http://localhost:3000/?startingAssets=100000&annualReturn=0.07&initialContribution=20000&contributionGrowthRate=0.05&inflationRate=0.025&view=real&seed=123456
   

   URL Parameters:

   Param	Description
   startingAssets	Initial portfolio value
   annualReturn	Target annual return (decimal, e.g., 0.07 for 7%)
   initialContribution	First year contribution
   contributionGrowthRate	Annual increase in contributions
   inflationRate	Target inflation rate
   view	Display mode: real (default) or nominal
   seed	Random seed for reproducible simulations

Mathematical Details

Why Log-Normal?

• Stock returns are better modeled as log-normal than normal
• Prevents returns below -100%
• Matches real-world return distributions

Volatility Constraint

With the adjustment step, we ensure:

sum(log(1 + r_i)) = 30 × log(1 + targetReturn)

Which guarantees:

exp(sum(log(1 + r_i))) = (1 + targetReturn)^30

Inflation Floor

Inflation rates are constrained to be non-negative using Math.max(0, ...), which may cause slight deviation from the target in low-inflation scenarios.

Reproducibility

Simulations use a seeded pseudo-random number generator (Mulberry32). The seed is:

• Auto-generated on first calculation
• Stored in the URL for sharing
• Guarantees identical results when sharing links

Limitations

1. No market correlation: Each simulation is independent; doesn't model market regime changes
2. Constant contributions: Assumes smooth contribution growth; doesn't model job changes or gaps
3. No taxes: All returns are pre-tax
4. No fees: Assumes zero investment fees
5. No withdrawals: Focuses on accumulation phase only

License

MIT

Acknowledgments

Built with Claude Code.