Question 1

What is FIRE (Financial Independence Retire Early)?

Accepted Answer

FIRE stands for Financial Independence Retire Early. It's a movement focused on aggressive saving and investing so you accumulate enough wealth to live off investment returns indefinitely — without needing employment income. The goal is to reach a portfolio size (your 'FIRE number') where withdrawals cover your annual expenses forever.

Question 2

What is the 4% rule and does it work in the UK?

Accepted Answer

The 4% rule comes from the 1998 Trinity Study, which found that withdrawing 4% of a US stock/bond portfolio in year one (then adjusting for inflation) had a high probability of lasting 30+ years. It's based on US historical returns. UK investors may face lower expected returns, different inflation, and different tax treatment — many UK FIRE planners use a more conservative 3-3.5% withdrawal rate.

Question 3

How do I calculate my FIRE number?

Accepted Answer

Your FIRE number = annual expenses in retirement / safe withdrawal rate. For example, if you need £25,000 per year and use a 4% withdrawal rate, your FIRE number is £25,000 / 0.04 = £625,000. If you use a more conservative 3.5% rate, it's £714,286. The lower the withdrawal rate, the larger the portfolio you need — but the safer it is.

Question 4

What are safe withdrawal rates for UK investors?

Accepted Answer

The classic 4% rule is based on US data. UK-specific research suggests 3.0-3.5% may be more appropriate due to historically lower equity returns and higher inflation volatility. Your ideal rate depends on your asset allocation, retirement length, flexibility to cut spending in bad years, and whether you have other income sources like the State Pension.

Question 5

Does the FIRE calculator account for tax?

Accepted Answer

No. This calculator shows gross figures. In practice, pension drawdown is taxed as income (your personal allowance of £12,570 is tax-free, then basic rate at 20%). ISA withdrawals are tax-free. A mix of pension and ISA wrappers is typically the most tax-efficient approach for FIRE. Factor in tax when deciding how much income you actually need.

When can you retire early?