FIRE Number With a State Pension
Most financial independence calculators assume your portfolio pays for everything, forever. If you expect a state pension, the capital you actually need is much smaller. This one separates the bridge years from the years the pension covers.
How much capital do you need?
What counting on your state pension saves you, from the day it starts.
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How does it split?
Before the pension you live on your portfolio alone; after it, the pension pays part of the bill.
Your retirement has two phases, and they don't cost the same
This is why retiring early is so expensive: during the gap, your portfolio pays for everything on its own.
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What if you change the plan?
What each extra working year is worth, and what happens if the pension isn't what you expect.
Every extra year you keep working
Delaying your exit shortens the bridge and lowers the capital you need. Your age is highlighted.
| You stop working at | Bridge years | Capital needed | Compared with your age now |
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This table explains why so many people chasing financial independence end up choosing a partial exit instead of a full one: every bridge year you avoid is worth a lot of money.
And if the pension is different from what you expect
Nobody knows what the system will look like in thirty years. This table tells you what being wrong would cost.
| If your pension were | Per year | Capital needed | Difference |
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What each figure means
A quick look at every input and every result.
What you want to be able to spend each year, in today's dollars. If you're not sure, start from what you spend now, remove what will disappear (a paid-off mortgage, work expenses) and add what will appear.
What you'll receive per month before tax. The tool multiplies it by 12 to get the yearly figure. Use your official forecast rather than a guess.
The years between when you stop working and when you start receiving the pension. During that gap the portfolio pays one hundred percent of your spending, which is why it's the most expensive part of the plan.
The percentage of your capital you take out in the first year. The lower it is, the more capital you need, but the more margin you have. To see how it held up historically, use the safe withdrawal rate simulator.
The difference between the capital you'd need ignoring the pension and the capital you need counting it. It's usually a big number, and the reason a standard FIRE calculator overstates your target if you'll receive a pension.
Everything is calculated in current purchasing power: both your spending and your pension are assumed to keep up with inflation. That way you don't have to imagine inflated future figures.
How to fill in this calculator
- Annual spending you want to cover: what you need to spend each year, in today's dollars. Start from what you spend now, subtract what will disappear (the mortgage when it ends, commuting costs) and add what will appear.
- You stop working at: the age you stop earning a salary. It's the dial that moves the result the most, because the length of the bridge depends on it.
- Withdrawal rate: the percentage of capital you'll take out in the first year. 4% is the classic reference; for very long horizons it's wiser to go down to 3 or 3.5%. To see how each rate held up in real history, visit the safe withdrawal rate simulator.
- Estimated pension: what you'll receive per month before tax. Don't invent it: ask your country's official pension service, which calculates it from your real contribution record. Set it to zero if you'd rather not count on it.
- You start receiving it at: your pension age, which depends on your country and on the years you've contributed. If you plan to claim earlier than the standard age, remember to lower the estimated pension too: early-claiming reductions aren't applied for you here.
- Read the result in two pieces: the colored bar shows how much of the capital goes to the bridge (the years without a pension) and how much covers, for good, what the pension doesn't pay. Then go down to the pension table: if your plan holds up with half of what's forecast, it doesn't depend on the system staying intact.
Frequently asked questions about this calculator
Is it prudent to count on a state pension?
With caveats, yes. The system can change — and probably will — but it's unrealistic to plan as if it would disappear entirely if you already have years of contributions behind you. The sensible approach is not to bet everything on a single figure: look at the table below, which shows what would happen if your pension turned out 25% or 50% lower than expected. If your plan still stands with half, you can sleep easy.
Why is the bridge so expensive?
Because in those years the portfolio carries all of the spending, with no help. And that money is spent in full: it isn't capital that stays behind generating income, it's capital that disappears. That's why retiring two years earlier costs much more than it seems, and why delaying a little has such a large effect on the final number.
Does it include taxes?
No, and it's worth keeping in mind twice over: the pension is usually taxed, and what you withdraw from your investments may be taxed too, depending on your country. A prudent way to use this tool is to enter the spending you need after tax and, for the pension, an estimate net of tax rather than gross.
How is this different from the FI number calculator?
That one assumes your portfolio pays one hundred percent of your spending forever, which is the usual assumption in the FIRE movement. This one recognizes that most people will receive a state pension, and splits the problem in two: the gap until it arrives and what's still missing afterwards. If you set the pension to zero, both calculators give exactly the same number.
What if I retire before the standard pension age?
In most systems the pension is reduced if you claim early, depending on how much earlier, so it's not enough to move the age here: you'd also need to lower the estimated pension. Your official pension service can calculate that effect with your actual record. This tool doesn't apply those reductions for you, precisely because they depend on very personal circumstances.
What if my pension is paid in 13 or 14 installments?
Some countries pay pensions in 13 or 14 installments a year. This tool multiplies your monthly figure by 12, so enter the total you'll receive in a year divided by 12. For example, if you'll receive 14 payments of $1,400, enter about $1,633 a month.