Investment Calculators · Canada
Financial independence.
Calculate your FI number, savings rate, and years to retire early. Includes Lean, Coast, and Fat FIRE targets plus an optional Canadian CPP/OAS offset.
Inputs
Your FIRE plan
Fill the form and press Calculate.
The 4% rule and FIRE flavors
FI Number = annual expenses divided by your safe withdrawal rate (25x at 4%). Lean FIRE assumes 60% of normal expenses, Coast FIRE is the amount needed today to grow to FI by age 65 with no further contributions, and Fat FIRE assumes 125% of expenses for a more generous lifestyle.
TNAADO Inc. · Toronto
The 4% rule is a research finding, not a law
A FIRE target is normally annual spending times 25, which is simply the inverse of a 4% withdrawal rate. That figure comes from studies of historical US market returns over 30-year retirements. It described what would have survived; it did not promise what will. Applied to a Canadian portfolio, to a retirement longer than thirty years, or to a decade that happens to open with a crash, 4% is an optimistic assumption rather than a conservative one.
The mistake people make. Treating the multiple as the whole plan. Sequence-of-returns risk, meaning a bad first few years, does more damage than the average return does. The number also ignores tax completely: $40,000 of spending funded from an RRSP is a different target from $40,000 funded from a TFSA, because one is fully taxable on withdrawal and the other is not.
Disclaimer
Educational only. Returns and inflation will vary in practice. Sequence-of-returns risk in the first years of retirement is real; consider a cash/bond buffer or variable withdrawals.