How the FIRE number is calculated
Your FIRE number is the portfolio value at which investment returns cover your annual expenses indefinitely. The arithmetic is deliberately simple: annual spending divided by your safe withdrawal rate. At a 4% withdrawal rate that is your annual spending multiplied by 25.
The number that actually moves the date is your savings rate, not your income. Someone saving 50% of take-home pay reaches independence in roughly 17 years regardless of whether they earn €40,000 or €400,000, because a higher income spent proportionally raises the target as fast as it fills it. This is the single most counter-intuitive result in the whole field, and it is why the calculator asks for spending rather than salary alone.
Why Europeans should question the 4% rule
The 4% rule comes from the Trinity study, which tested withdrawal rates against US market history — arguably the most successful equity market of the twentieth century. Applying its conclusion to a European portfolio imports a survivorship bias.
European investors face different currency exposure, different inflation history, and different tax treatment on withdrawal. Many long-horizon European investors therefore plan around 3.25% to 3.5% rather than 4%. The difference is not academic: dropping from 4% to 3.5% raises the target portfolio from 25x to roughly 28.5x annual spending.
Common questions
What is my FIRE number?
Your FIRE number is the portfolio value at which investment returns cover your annual expenses indefinitely. At a 4% safe withdrawal rate it is your annual spending multiplied by 25.
Does the 4% rule work in Europe?
The 4% rule comes from US market history. European investors face different inflation, currency and tax conditions, so many use a more conservative 3.25% to 3.5% withdrawal rate.
Educational content, not financial or tax advice. Tax treatment depends on your personal circumstances and on rules that change. Verify anything material with a qualified adviser in your jurisdiction before acting on it.