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FIRE Calculator Assumptions That Actually Matter

Every FIRE calculator asks for the same inputs. Most people guess.

Here's which assumptions actually move the needle—and how to set them without fooling yourself.

The Inputs That Matter Most

1. Expected Return (Massive Impact)

This single number changes everything.

Expected Return	FIRE Number for $50K/year
10% (optimistic)	$500,000
7% (moderate)	$714,000
5% (conservative)	$1,000,000

That's a 2x difference based on one assumption.

What to use:

• Historical US stocks: ~10% nominal, ~7% real (after inflation)
• BlackRock's 10-year forecast: 6.5%
• Vanguard's forecast: 4-6%
• Conservative approach: 5-6% real returns

Don't use: The 10% number without adjusting for inflation, unless your expenses are also in future dollars.

2. Inflation Rate (Often Ignored)

Many calculators assume 2-3% inflation. Recent years showed us 6-8% is possible.

Inflation affects:

• Your future expenses
• Real returns (returns minus inflation)
• Whether your "number" actually buys what you need

What to use: 2.5-3% for long-term planning. But run a scenario at 4% to see how sensitive your plan is.

3. Withdrawal Rate (The Famous 4%)

The 4% rule is a starting point, not a law.

Withdrawal Rate	Success Rate (Monte Carlo)
3.0%	97%
3.5%	93%
4.0%	85%
4.5%	75%

Your acceptable success rate determines your withdrawal rate, which determines your FIRE number.

What to use:

• 4% if you have flexibility (can cut spending, earn some income)
• 3.5% if you want more cushion
• 3% if you want near-certainty

4. Volatility (The Hidden Variable)

Most simple calculators ignore volatility. They assume you get 7% every year.

Reality: you might get +25%, -15%, +12%, -30%, +8%... averaging 7%.

The path matters as much as the average. That's sequence of returns risk.

What to use: 15-20% standard deviation for a stock-heavy portfolio. Monte Carlo calculators handle this; simple calculators don't.

The Inputs That Matter Less

Social Security: Matters, but arrives late. Plan to FIRE without it; treat it as bonus.

Tax Rate: Important for accuracy, but most people's effective rate in early retirement is low anyway (qualified dividends, capital gains harvesting).

Exact Retirement Date: Don't optimize to the month. Markets don't care about your timeline.

The Sensitivity Test

Before trusting any FIRE number, stress-test it:

Scenario	Your FIRE Number
Base case (7% return, 4% withdrawal)	$1,250,000
Lower returns (5%)	$1,500,000
Higher inflation (4%)	$1,400,000
Both bad	$1,750,000

If you can handle the worst-case scenario, your plan is robust. If you're counting on best-case, you're gambling.

What "Success Rate" Should You Target?

Monte Carlo gives you a probability. What's acceptable?

• 95%+: Very conservative. You'll likely die with too much money. Maybe that's fine.
• 85-95%: Reasonable. Some risk but manageable with flexibility.
• 75-85%: Aggressive. Requires willingness to adjust spending or earn income.
• Below 75%: Rethink the plan.

There's no right answer—it depends on your flexibility, backup plans, and risk tolerance.

Key Takeaways

1. Expected return is the biggest lever—get it wrong and everything else is noise
2. Use institutional forecasts (5-7%) not historical highs (10%)
3. Volatility matters—use Monte Carlo, not simple calculators
4. Stress-test with pessimistic assumptions before trusting your number
5. Pick a success probability you can live with

Your FIRE number is only as good as your assumptions. Get them right.

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