Traditional FIRE: what the number is and how to work it out
Traditional FIRE is your annual spending divided by your withdrawal rate. At 4%, that is 25 times what you spend in a year. Spend €3,500 a month, or €42,000 a year, and the number is €1,050,000. It is the strictest version of financial independence, and the most expensive one.
The formula
Annual spending ÷ withdrawal rate. Most people use 4%, which comes from US research on 30-year retirements. A lower rate means a bigger number and more safety.
Assumptions: 4% withdrawal rate, 8% growth before inflation, age 35 targeting 60. Stated in full in the methodology.
Worked example: €3,500 a month
This is not a round number. It is what my own living costs were at the point passive income covered them, which is the moment I would call being free.
Full annual spending at a 4.0% withdrawal rate.
And here is how long that takes, by what you put in every month.
| Invested each month | Time to Traditional FIRE |
|---|---|
| €1,000 | 26 yr 3 mo |
| €2,000 | 19 yrs |
| €3,500 | 13 yr 9 mo |
Look at what changes between those rows. The gap between them is a pay question, not an investing question, and that is the whole argument of this site. The calculator works out how much more you could be putting in without changing job.
Who it suits
People who want the work question closed for good, and who are comfortable with a long build.
What I think of it
This is the number most calculators show you first, and it is the reason so many people close the tab. A million euros is a word, not a target. It is so big it stops you rather than starting you. Every other model on this page exists because somebody looked at this number and asked whether there was a cheaper version of the same freedom. There usually is.
Questions
Is the 4% rule safe?
It is a rule of thumb, not a guarantee. It came from US research on 30-year retirements, and it assumes a long horizon, a stock-heavy portfolio and US tax treatment. Use it to compare two plans, not to promise yourself an income.
Should I use 3% instead?
A lower rate is more cautious and makes the target bigger. At 3% you need 33 times your annual spending instead of 25. If you are retiring young, the longer horizon is a real argument for it.
Does the number include my house?
Only if the house produces income. A home you live in does not pay your bills, so it does not count towards a number whose whole job is paying your bills.
The other eight
- Lean FIREI need very little
- Fat FIREFreedom and a great lifestyle
- Coast FIREWhen can I stop needing to save?
- Barista FIREI only need to work a little
- Flamingo FIREThe halfway strategy
- FI, not REWork because you want to
- Slow FIDon't sacrifice your 30s for your 60s
- Geoarbitrage FIRESame portfolio, cheaper life
None of this is financial advice and I am not an adviser. Read what this is and what it is not.