Before You Start
- Basic understanding of personal finance (budgeting, net worth, inflation)
- Access to your monthly and yearly spending data (bank statements or spending tracker)
- Knowledge of your country’s tax treatment for investments
- Familiarity with investment platforms available in Europe (e.g., Trade Republic, DEGIRO, Scalable Capital)
- Calculator or spreadsheet (Google Sheets recommended)
Time needed: 45–90 minutes
What you'll need: Internet access, calculator or spreadsheet, access to your financial records
Calculating your FIRE (Financial Independence, Retire Early) number is the cornerstone of planning for financial freedom. But most online guides focus on US dollars and American assumptions. As a European investor, you need a EUR-based approach that accounts for local cost of living, taxes, and investment options. This guide breaks down exactly how to calculate your FIRE number in Europe, step by step, using the latest tools and real-world examples for France, Germany, Spain, and the Netherlands.
Step 1: Calculate Your Annual Spending in EUR
What to do: Tally up your total yearly expenses. This includes housing, food, transport, insurance, entertainment, and any unique costs (e.g., childcare, travel, healthcare not covered by public systems).
- Review the last 12 months of bank and credit card statements.
- Sum all outgoings, excluding income taxes (since investment withdrawals will be taxed differently).
- Adjust for any planned lifestyle changes in FIRE (e.g., moving to a different city or country, selling your car, etc.).
Why it matters: Your FIRE number is directly tied to your annual spending. Underestimating leads to running out of money; overestimating may mean working longer than needed.
What can go wrong: Missing irregular expenses (car repairs, medical copays, gifts), not accounting for inflation, or assuming current lifestyle will remain unchanged.
EUR-Based Sample Budgets (2026, per year, single person)
- France (Lyon): €27,000 (Rent €900/month, groceries €300/month, public transport €70/month, utilities €100/month, insurance €80/month, leisure €150/month, healthcare top-up €50/month)
- Germany (Berlin): €25,000 (Rent €800/month, groceries €350/month, public transport €80/month, utilities €120/month, insurance €90/month, leisure €130/month, healthcare top-up €30/month)
- Spain (Valencia): €19,000 (Rent €600/month, groceries €250/month, public transport €50/month, utilities €80/month, insurance €60/month, leisure €100/month, healthcare top-up €20/month)
- Netherlands (Rotterdam): €28,000 (Rent €950/month, groceries €350/month, public transport €90/month, utilities €130/month, insurance €100/month, leisure €140/month, healthcare top-up €60/month)
Pro Tip
Use a free tool like Spendee or Money Dashboard to automate expense tracking, or export your bank transactions to Google Sheets for full control.
Step 2: Adjust for Inflation and Future Lifestyle
What to do: Project your annual spending into the future, considering inflation and any expected lifestyle changes.
- Use an average EU inflation rate (2024–2026 average: ~3%).
- If you plan to FIRE in 10 years, use this formula:
Future Spending = Current Spending × (1 + Inflation Rate) ^ Years
Why it matters: Inflation erodes purchasing power. A FIRE number based on today’s costs will fall short in the future.
What can go wrong: Ignoring inflation, or overestimating it (leading to an unnecessarily high FIRE number).
Example: If you live in Spain and plan to retire in 10 years:
- Current annual spending: €19,000
- Inflation: 3%
- Future Spending = €19,000 × (1.03)^10 ≈ €25,541
Pro Tip
Use the Inflation Tool calculator for EUR inflation projections.
Step 3: Choose a Safe Withdrawal Rate (SWR)
What to do: Decide what percentage of your portfolio you’ll withdraw each year during FIRE. The standard US-based “4% rule” is often used, but in Europe, a more conservative 3.5%–4% is advisable due to lower expected returns and higher taxes.
- Most European FIRE planners use 3.5%–4% as a starting point.
- Consider your country’s tax on capital gains/dividends when selecting your SWR.
Why it matters: The SWR determines how much you need to save. Too high, and you risk depleting your funds; too low, and you may save more than necessary.
What can go wrong: Using the US 4% rule without adjusting for European taxes, or not considering your own risk tolerance and investment horizon.
Example: If you pick a 3.5% SWR, you’ll withdraw €3,500 per €100,000 of investments each year.
Pro Tip
Check your country’s tax authority for up-to-date investment tax rates. For example, see the French tax office for capital gains/dividends.
Step 4: Apply the 25x Rule (or 28.6x for 3.5%)
What to do: Multiply your inflated annual spending by the inverse of your SWR to get your target FIRE number.
- For a 4% SWR: 25x your annual spending
- For a 3.5% SWR: 28.6x your annual spending
Calculation Examples (2026, adjusted for 10 years of 3% inflation):
- France (Lyon): €27,000 × (1.03)^10 ≈ €36,312
FIRE number @ 3.5% SWR: €36,312 × 28.6 ≈ €1,038,523 - Germany (Berlin): €25,000 × (1.03)^10 ≈ €33,648
FIRE number @ 3.5% SWR: €33,648 × 28.6 ≈ €962,333 - Spain (Valencia): €19,000 × (1.03)^10 ≈ €25,541
FIRE number @ 3.5% SWR: €25,541 × 28.6 ≈ €730,483 - Netherlands (Rotterdam): €28,000 × (1.03)^10 ≈ €37,683
FIRE number @ 3.5% SWR: €37,683 × 28.6 ≈ €1,077,736
Why it matters: This is your target investment portfolio value to safely support your future lifestyle, in EUR, accounting for inflation and a conservative withdrawal rate.
What can go wrong: Failing to adjust for inflation or taxes, or using the wrong multiplier for your chosen SWR.
Step 5: Account for State Pensions and Other Income
What to do: Subtract any expected income from government pensions, private pensions, rental properties, or side businesses that will persist after you reach FIRE.
- Obtain an estimate of your national pension (e.g., France, Germany, Spain, Netherlands).
- Estimate the annual post-tax value of these incomes in today’s EUR.
- Subtract this from your annual spending before applying the SWR.
Why it matters: Most Europeans will receive some state pension. Factoring this in can significantly reduce your required FIRE portfolio.
What can go wrong: Overestimating pension income or not adjusting for the age you’ll receive it (often 65+). If you plan to FIRE before pension age, only subtract pension income for the years after you start receiving it.
Example: If your expected French pension is €8,000/year post-tax and you plan to retire at 55 (with pension starting at 67):
- Your portfolio must cover the full €36,312/year (inflated spending) for the first 12 years
- After age 67, your portfolio needs to cover only €36,312 – €8,000 = €28,312/year
Pro Tip
Many FIRE calculators let you model “bridge periods.” Try the Engaging Data FIRE Calculator and set your pension as “Other Income” starting at the relevant age.
Step 6: Use a Free FIRE Calculator (EUR-Friendly)
What to do: Enter your numbers into a reputable, EUR-compatible FIRE calculator for a sanity check and to model different scenarios (market crashes, early retirement, etc).
- Recommended tools:
- FI Laboratory (set currency to EUR)
- Networthify (supports custom currency, adjust for EUR numbers)
- Engaging Data FIRE Calculator
- Input your annual spending (inflated), expected SWR, current investments, and expected returns (use 6–7% before inflation for global equity ETFs, 3–4% after inflation for conservative planning).
Why it matters: Calculators let you stress-test your plan, visualize timelines, and see the impact of saving more or spending less.
What can go wrong: Using unrealistic return assumptions, forgetting to set currency to EUR, or not modeling taxes and pensions appropriately.
Pro Tip
Model a “bad years” scenario: Set your investment return assumption to 2% below the long-term average to see if your FIRE plan still holds up.
Step 7: Set Up Your Investment Plan (Europe-Friendly Platforms)
What to do: Choose a broker accessible in your country, and set up a regular investment (ETF savings plan) targeting global diversification and low fees.
- Recommended brokers: Trade Republic, DEGIRO, Scalable Capital
- Popular ETFs for European investors:
- iShares Core MSCI World UCITS ETF (Acc) – ISIN: IE00B4L5Y983
- Vanguard FTSE All-World UCITS ETF (Acc) – ISIN: IE00BK5BQT80
- Set up a monthly automated savings plan. For example, in Trade Republic:
- Open the app
- Tap Portfolio → Savings Plan → Select ETF (e.g., iShares Core MSCI World)
- Enter monthly amount (e.g., €500)
- Confirm and set up recurring transfer
Expected outcome: You should now see your first ETF purchase confirmed in your portfolio, with a value of approximately your monthly contribution (minus any fees).
Why it matters: The only way to reach your FIRE number is consistent, diversified investing with low costs and tax efficiency.
What can go wrong: Picking high-fee or unregulated platforms, choosing niche or illiquid ETFs, or failing to automate your contributions.
Pro Tip
For maximum tax efficiency, check if your country offers tax-advantaged investment wrappers (e.g., PEA in France, ETF Sparplan in Germany, or Dutch pension products).
Common Mistakes
- Underestimating future spending or ignoring inflation
- Using US-centric rules (like the 4% rule) without adjusting for European taxes and returns
- Not factoring in state pension or other guaranteed income
- Relying on overly optimistic investment returns
- Neglecting to update your plan as your life situation changes
Next Steps
- Review your FIRE calculation annually and update for changes in spending, inflation, and investment returns
- Explore tax-advantaged investment products available in your country
- Increase your savings rate or reduce expenses to reach your FIRE number faster
- Connect with local FIRE communities for support and shared experiences
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.