FIRE — financial independence, retire early — arrives when your portfolio covers your spending forever. The classic rule of thumb: 25 times annual expenses, i.e. a 4% withdrawal rate.
Your FIRE number depends on spending, not income: cutting €500/month of expenses removes €150,000 from the target. The calculator projects your current portfolio plus contributions until they cross it.
The 4% rule stems from historical US data over 30-year retirements; longer horizons or cautious assumptions argue for 3.5% or lower. Coast FIRE answers the related question of when you can merely stop contributing.
The 4% figure came from a study of 30-year retirements funded by a US portfolio, drawn from a period that included the strongest equity century on record. Applying it to a 50-year horizon, a different market, or a portfolio with lower expected returns is an extrapolation rather than a finding.
Sequence-of-returns risk is what the single rate conceals. Two retirements with identical average returns end very differently depending on whether the bad years came first: withdrawals from a portfolio already down force selling more units, and the pot may never recover. Flexibility in the early years is worth more than precision in the rate.
The target also moves with the tax and healthcare position rather than with spending alone. Cover that an employer provided, or a pension that cannot be accessed until a set age, can mean the number needed before that age is quite different from the number needed after it.
Frequently asked questions
What is a FIRE number?
The portfolio size at which a safe withdrawal rate covers your annual spending — commonly 25× yearly expenses, which corresponds to withdrawing 4% per year.
Is the 4% rule safe?
It survived most historical 30-year US periods, but long retirements, high valuations and fees argue for a margin of safety. Many planners now model 3.25–3.75%.
Does FIRE mean never working again?
Not necessarily. Many aim for variants: Coast FIRE (stop saving, keep working), Barista FIRE (part-time work covers some spending) or simply the security of being able to walk away.