FIRE Calculator

What FIRE is, and its variants

FIRE stands for "Financial Independence, Retire Early": building up enough capital that the returns on that capital cover your expenses, without depending on a salary. It isn't a single goal -- there are variants depending on lifestyle and the path to get there:

Lean FIRE: living on a reduced budget with a lower target number, often with a minimalist lifestyle or moving somewhere with a lower cost of living.

Coast FIRE: you already have enough invested that, through compound growth alone (with no further contributions), your capital reaches your FIRE number by around the normal retirement age. You keep working to cover current expenses, but no longer need to save more for the future.

Barista FIRE: a middle ground -- you have enough invested to cover most of your expenses, but keep working part-time to cover the rest (and, in some countries, to keep benefits like health insurance).

Where the 4% rule comes from, and why many people use 3.5%

The "4% rule" originates from William Bengen's work (1994) and became popular through the Trinity Study (1998), an academic study that tested withdrawal rates against the historical US market. The conclusion: withdrawing 4% of the initial capital per year (adjusted for inflation afterward) survives the vast majority of historical 30-year periods in the US.

The problem is that study uses only US data, which had one of the best stock market records of the 20th century. Research looking at other developed countries (notably Wade Pfau's, covering 20 markets between 1900 and 2010) shows that outside the US, a historically safe rate is closer to 2.8% to 3.5%, because European markets suffered more from wars, hyperinflation and exchange closures over the 20th century. That's why many people in Europe use 3% to 3.5% as a safety margin instead of the classic 4%, especially if the portfolio isn't broadly globally diversified.

Why this calculator works in real terms

Every figure here -- the desired income, the FIRE number, the capital accumulated over time -- is in today's euros, not future nominal euros. The nominal return you enter is converted internally into a real return (above inflation), so you don't have to think separately about inflation's effect on each figure.

Sequence-of-returns risk

Average returns over several years don't tell the whole story: the order in which returns happen matters, especially in the first few years after you stop working. If markets drop right at the start of your early retirement and you keep withdrawing the same amount, you're selling more units at lower prices, which can deplete capital much faster than the historical average suggests, even if the average return over the whole period ends up being good. That's why the safe withdrawal rate tends to be more conservative than a simple average of expected returns.

What this calculator ignores

It doesn't model capital gains tax (which reduces the net amount you can actually withdraw), management or transaction fees, or the real evolution of your salary or contributions over your career. It assumes a constant return every year, which real markets never offer. It's a tool for understanding the order of magnitude and the mechanism, not an exact forecast of your path.