The 4% rule is a planning shortcut. It says that a portfolio can often support annual withdrawals of about 4% of its starting value, adjusted for inflation, over a long retirement.
That is why many FIRE calculators multiply annual spending by 25. If you need $40,000 per year, a rough target is $1,000,000.
It is useful because it turns a fuzzy goal into a concrete number. It is limited because it depends on future returns, spending flexibility, taxes, and how long you need the money to last.
A good FIRE plan uses the 4% rule as a starting point, then pressure-tests it with savings rate, location, taxes, and a margin of safety.