TLDR
- FIRE calculators disagree because each one picks its own return, inflation, withdrawal rate and tax treatment, often without showing you.
- In one example, the same saver reaches financial independence in 20, 29 or 37 years depending only on those assumptions.
- Ignoring inflation is the single biggest flattering assumption. In the example it takes about seven years off the date.
- A calculator that shows every assumption lets you see which one is moving your date, and decide whether you believe it.
Run your numbers through three FIRE calculators and you’ll get three dates. It’s tempting to pick the one you like and close the other tabs.
Don’t. The gap between them isn’t noise. It’s the calculators telling you how much of your plan is assumption.
One person, three dates
Take someone who is 35, has $150,000 invested, spends $6,000 a month and saves $2,500 a month. Nothing about them changes below. Only the assumptions do.
| Assumptions | Years to financial independence |
|---|---|
| 7% return, inflation ignored, 4% withdrawal rate | About 20 |
| 6% return, 2.5% inflation, 4% withdrawal rate | About 29 |
| 5% return, 2.5% inflation, 3.5% withdrawal rate | About 37 |
Seventeen years between the top row and the bottom one. Every row is a set of numbers someone sensible would defend.
The four dials
Return. The growth rate you assume on what you’ve invested. In the example, moving from 6% to 5% adds about four years, and 6% to 7% takes off about three.
Inflation. Whether the calculator counts it. Your spending is in today’s money. If the pot grows at 6% but prices rise 2.5%, it only really grows by about 3.4%. Ignoring that took seven years off the example. It’s the most common way a calculator flatters you.
Withdrawal rate. How much you plan to take out each year once you’re free. At 4%, you need 25 times your spending. At 3.5%, about 28.6 times. At 3%, about 33 times. In the example, 4% to 3.5% adds about three years.
Tax and pension. Whether your balance is before or after tax, and whether a pension arrives later to cover part of your spending. These move the date less in this example, but they can move it a lot for someone with a large pension or a large untaxed pot.
A calculator that hides its assumptions hasn’t removed them. It has made them for you.
What to do with the spread
Find the one dial that moves your date the most. That’s the assumption worth arguing with. The others matter less than they feel.
Then look at what you control. You don’t control the return or inflation. You do control what you spend and what you earn. In the example, earning $1,000 a month more and saving it takes about five years off. Spending $500 a month less takes about four. That’s as much as most of the dials, and neither depends on anyone’s forecast. The spending side has more give than most people think. The earning side is where my own date moved most.
The dial no calculator has
Every calculator above assumes your income is a salary. None of them can count a business: one that pays you while you build it, and might be worth something when you stop. If you own one, that’s a bigger dial than the four above. How much it counts depends on how much of it is you.
Run your own
The Freedom Date calculator puts all four dials on the page. Under your date, it tells you which one is moving it most. If you own a business, the second door counts that too.
Illustrative numbers, not advice. I’m not a licensed adviser; I show the maths, and you run yours.