Question 1

What is the 4 % rule?

Accepted Answer

The 4 % rule comes from the 1998 Trinity Study (Cooley, Hubbard & Walz), which back-tested 30-year retirement windows from 1926–1995 and found that withdrawing 4 % of a starting portfolio in year 1 — then increasing that dollar amount by inflation each year — succeeded in 95 %+ of cases for a 50/50 stocks/bonds split. The implication: a portfolio of 25× your annual expenses is "enough" by historical standards. It is a guideline, not a guarantee.

Question 2

Lean FIRE, Standard FIRE, Fat FIRE — what’s the difference?

Accepted Answer

Lean FIRE means retiring on a tight budget (typically under $40k/year of expenses) with the standard 25× multiplier. Standard FIRE uses your real expenses and 25×. Fat FIRE adds margin — a 30× or higher multiplier (≈ 3.3 % withdrawal) so you can survive a sequence-of-returns disaster like retiring at the start of the 2000–2002 bear market.

Question 3

How does the calculator handle Canadian taxes?

Accepted Answer

It doesn’t — the inputs are your after-tax expenses and after-tax savings rate, and the FIRE number is the portfolio you need before tax. Withdrawals from your TFSA are tax-free, RRSP/RRIF withdrawals are fully taxable, non-registered withdrawals are partially taxable (capital gains, eligible dividends). A fee-only Canadian CFP can build the actual withdrawal sequence.

Question 4

Is 5 % real return realistic?

Accepted Answer

For a globally diversified equity-heavy portfolio, 4–6 % real (after-inflation) is roughly the historical band. Bond-heavy or all-cash portfolios will be lower; concentrated tech-stock portfolios may be higher in any given decade. Sequence-of-returns risk is the real killer in the early withdrawal years — a 30 % market drop in year 1 of retirement can permanently break the plan even with average long-run returns.

FIRE number calculator

The 4 % rule in plain English

Why Fat FIRE / 30× exists

Savings rate dominates returns over a decade

Canadian-specific notes

Sources