The FIRE movement and the 4% rule – the path to financial freedom

FIRE stands for Financial Independence, Retire Early. The movement isn't really about quitting work – it's about building enough capital to choose if, when, and how much you want to work. The core: a high savings rate, low fixed costs, and long-term investing in broad, low-cost index funds.

There are several flavours: Lean FIRE (minimalist lifestyle, lower FIRE number), Fat FIRE (more generous budget, higher number), Coast FIRE (saved enough early to let compounding do the rest) and Barista FIRE (part-time work covers running costs while the portfolio grows). The maths is the same – and that's where the 4% rule comes in.

The 4% rule comes from the Trinity study (1998), which looked at how much of a portfolio you could historically withdraw each year without running out over a 30-year period. The conclusion: a stock-and-bond portfolio survived in most historical scenarios at an annual withdrawal of about 4% of the starting capital, adjusted for inflation.

In practice this means your FIRE number ≈ your annual expenses × 25. If you spend 300,000 SEK per year, you need roughly 7.5 million SEK invested. Want to be more conservative? Use 3.5% (≈ 28.5 × expenses). Comfortable being flexible with withdrawals? 4.5–5% can work.

The rule has limits, of course. It's built on US history, assumes a specific portfolio mix, and ignores Swedish taxes, the ISK schablon, and future sequence-of-returns risk – the risk that the market drops sharply right when you start withdrawing. Many FIRE followers therefore combine the 4% rule with a cash buffer of 1–2 years of expenses and a plan to lower withdrawals temporarily during sharp downturns.

Use the calculator below to see your own FIRE number, how long it takes to get there at your current savings rate, and what you can then withdraw per month. Adjust the withdrawal rate to compare safe and more aggressive strategies.

What matters most isn't exactly which percentage you pick – it's that you start measuring. Once you know your FIRE number, every krona you save becomes concrete: it moves you measurably closer to the freedom to choose for yourself.